The Ultimate Guide to Public Service Loan Forgiveness (PSLF)


One year ago, the first round of public servants became eligible for Public Service Loan Forgiveness. These early recipients were the first to have their Direct student loans forgiven with the PSLF program.With growing awareness of the program, and an increased number of income-driven repayment plans, more and more people are becoming eligible for loan forgiveness. Are you a person who could become eligible for loan forgiveness? Find out in our ultimate guide to student loan forgiveness.If you want to get any questions answered around PSLF or how to apply outside this guide, check out our .If you want a tool to analyze your loans, see if your loans qualify, and even track your eligible payments, check out . It’s a tool we collaborated on to simplify the PSLF process. It will track your eligibly and help make sure you qualify and get the forgiveness you deserve. Check out LoanBuddy here >>

Public Service Loan Forgiveness (PSLF) is a federal program that allows loan forgiveness for qualified employees who work full-time for a variety of employers. Full-time work requires working at least 30 hours per week.After 120 on-time payments (10 years) of federal student loans (more on that below), qualified applicants will have the remainder of their federal loans forgiven.Qualified employers of public service jobs include:Advocacy groups, political groups, and labor unions are not qualified employers.

To actually get loan forgiveness, you have to make 120 “qualified” payments on your student loans. Qualified payments have to meet the following criteria:The 120 payments don’t have to be consecutive. So if you take a few years off of public service work, you can come back in where you started.However, if you consolidate your loans, the clock on the 120 payments restarts. That’s right. The clock on the 120 payments resets when you consolidate your student loans. The best time to consolidate your student loans is at the beginning of the loan forgiveness process. The second best time is never.Some tips for making the most out of PSLF:

You can begin making qualifying PSLF payments once the in-school deferment and grace period on your loans ends. If you want to start making payments right away, consolidate your loans and begin repayment immediately.Warning: Consolidating loans can “reset the clock” on PSLF! Remember, consolidating your federal loans resets the clock on Public Service Loan Forgiveness. Don’t consolidate if you’ve already made eligible payments under PSLF.

First, you’ll want to complete and submit the Employment Certification form for Public Service Loan Forgiveness annually or when you change employers.You’ll mail the form to:U.S. Department of EducationFedLoan ServicingP.O. Box 69184Harrisburg, PA 17106-9184After you submit this form, FedLoan Servicing will become your loan servicer. At this point, FedLoan Servicing will review your loan payment history to determine how many qualified payments you made. If you had multiple employers, be sure to submit multiple Employment Certification forms.Each year, you should continue to submit your Employment Certification form. But you should also save IRS W-2 documents and other documents that can prove you were a full-time employee. This will make it much easier for FedLoan Servicing to track your payments (and you’ll avoid major hassles once your 120 payments are complete).FedLoan Servicing allows you to check on the number of payments you’ve made through its account access area.Once you’ve reached 120 payments (congratulations!), you can apply for student loan forgiveness.You can simply upload the form to MyFedLoan.org/FileUpload or mail it in to:U.S. Department of EducationFedLoan ServicingP.O. Box 69184Harrisburg, PA 17106-9184FedLoan Servicing will let you know that your application is approved, and you’ll receive notifications of loan balances of zero!

Private student loans are not eligible for loan forgiveness. PSLF is only a program for student loans of the Federal Direct Loans type. These include:If the loan isn’t on the list above, it’s not eligible for loan forgiveness.

Direct Consolidation Loans are eligible for loan forgiveness, but with several important caveats.First, if you and your spouse consolidated onto a Direct Consolidation Loan, and only one of you met the employment requirements, the portion of the balance attributable to the qualified employee is forgiven. The rest is not.Additionally, joint consolidation loans from the Federal Family Education Loan (FFEL) Program cannot be forgiven.Finally, any time you consolidate your federal loans, you restart the 120-payment requirement.

Up until June 2010, Federal Family Education Loan (FFEL) Program loans were one of the biggest federal loans issued to student borrowers. Unfortunately, these loans were not issued by the U.S. Department of Education, and do not qualify for PSLF.You could consolidate these loans into a Direct Consolidation Loan, but that will reset the clock on your PSLF.

One of the best perks of PSLF is that the loan forgiveness is not taxable. No matter how much interest you’ve accrued, the full balance of the loan is forgiven, and the amount forgiven isn’t taxed.

If you’re on an income-driven repayment plan, you should never default on your loans. Paying your student loans should be one of your highest financial priorities.That said, any debt in default is not counted as a qualifying payment on your loan. That includes any time you spend “rehabbing” the loan to current status.Keep your student loans out of default by prioritizing repayment. Remember, if your income adjusts downward (say you lose your job), you can reset your repayment plan in the middle of the year.

PSLF is one of the favorite punching bags for Congress. An act of Congress could eliminate the program today. That said, it’s more likely that the rules for qualified employment will be narrowed rather than the program being completely eliminated.If you’re very worried about it, you may want to continue making the standard payments on your student loans. Just remember, all of the potential changes are just proposals. Check out the full list of Trump Student Loan Forgiveness Proposals here.

In 2018, Congress created Temporary Expanded Public Service Loan Forgiveness. This program is designed to help borrowers who were on the wrong repayment plan, but otherwise would have been eligible to have their loans forgiven under PSLF.This is a complicated exception to the program, and it only applies to certain borrowers on the wrong repayment plan (not wrong loan type of disqualified employment). We break down the full requirements and how it works here: Temporary Expended PSLF (TEPSLF)

PSLF is a great program, but it does require you follow very strict rules to get your loans forgiven.If you’re unsure about what to do or how to fill out the certification forms, check outand see if it can help you better track your PSLF eligibility.

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