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Who gets public service loan forgiveness?
What are the new rules for public service loan forgiveness?
Is public service loan forgiveness right for me?
What disqualifies you from public service loan forgiveness?
The Public Service Loan Forgiveness (PSLF) program is a debt cancellation offering for those who choose to dedicate their careers to public service. In this article, we'll cover:
From there, we'll address some of the more commonly asked questions surrounding PSLF.
The Public Service Loan Forgiveness plan allows borrowers with outstanding student debt to have their loans forgiven, provided they enter one of a specific set of professions and make at least 120 qualifying student loan payments (or 10 years' worth).
In other words, you must have qualifying federal student loans, work in an eligible full-time profession, and make qualifying student loan payments for a decade or more before being considered for student loan debt cancellation.
Careers eligible for PSLF are in public service. These include government services, the U.S. military, or nonprofit work, such as certain charitable organizations or educational institutions.
A qualified monthly payment is one you make toward your federal student loans under the following conditions:
Here, "qualifying repayment plan" refers to the repayment plans available to borrowers via the federal government. These allow borrowers to make reasonable payments based on how much they earn or on a predetermined 10-year payment schedule.
Fortunately, to fall within the bounds of the PSLF, your 120 months of qualified repayments don't need to be consecutive. So you could work for a nonqualifying employer without losing credit for prior qualifying payments.
The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, of 2020 also allowed for months during which your payments were on pause as part of automatic forbearance to count as payments, so long as you could certify your employment during that time. Note that according to the Federal Student Aid site, this pause is set to end on Aug. 30th, 2023.
In other words, if you remained employed at your public service job during the payment pause, you still received credit for those months -- even if you didn't actually make payments toward your student loan balance.
A qualifying repayment plan refers to federally approved methods for paying off federal student loans. These may include standard, 10-year repayment plans or income-driven repayment plans.
Income-driven repayment plans are typically best for maximizing the benefits of PSLF. These include the following plans:
In these cases, you'll make payments toward your loan each month based on how much you earn. After making 120 payments, you'll likely still have a loan balance, which you can apply to have forgiven under PSLF rules.
If you make payments under a standard repayment plan, you'll likely have paid off your entire debt balance by the time 10 years have passed. While this is great, you'll have missed the opportunity to have part of your loan forgiven.
To qualify for loan forgiveness, you'll need to meet the below requirements:
Note that you'll also need to have an outstanding federal loan balance for it to be forgiven. If you repay your loans through a standard 10-year repayment plan, you might not have anything left to forgive. Make sure you consider this when you choose a qualified repayment plan.
Qualified public service generally includes work in the following:
Public service is not:
A Direct loan is a federal student loan made directly by the U.S. Department of Education. If you took a loan from the Education Department on or after July 1, 2010, you're likely working with a Direct Loan.
Types of Direct Loans include:
There are forms to fill out on the U.S. Department of Education website to apply for loan forgiveness. Recall that 120 payments are required under a qualified repayment plan to be eligible for PSLF, so you'll need to have made payments for at least 10 years.
There is also a new-and-improved PSLF Help Tool to assist borrowers with filling out forms and confirming their eligibility. Learn more about the public service loan forgiveness program at studentaid.gov.
President Biden's student loan forgiveness plan, as a whole, includes improvements to PSLF. For instance, instead of having to be on an income-based repayment plan to be eligible for loan forgiveness, borrowers on any Direct Loan repayment plan will be eligible for relief.
Overall, President Biden has made it easier for borrowers to seek loan forgiveness. That's particularly true for those who have signed up for a career in public service.
People may have their PSLF application rejected for a few reasons:
All-in-all, it's now easier to qualify for PSLF than ever before, but it's also necessary to follow all instructions to ensure your application for forgiveness isn't denied.
Naturally, if you can have a portion of your student debt forgiven, it's certainly worth going for it. PSLF is generally available to those who have committed their lives to a career in public service and, at the same time, have managed to stay on top of their finances for an extended period following graduation.
The key is in the fine print. You'll need to make sure you're in a qualified profession (on a full-time basis) and that you make payments consistently. The U.S. Department of Education tends to be a stickler for details, so if you're missing documentation or haven't met even one of the requirements, a denial may be coming your way.
Ultimately, PSLF is absolutely worth pursuing for those who rightfully qualify. If this is you, be sure to have your ducks in a row to maximize this valuable benefit.
