The Public Service Loan Forgiveness (PSLF) Program helps qualified applicants obtain forgiveness on student loans by working full-time for a qualifying employer and meeting other program requirements.
Established in 2007 by President George W. Bush as part of the College Cost Reduction and Access Act (CCRAA), the Public Service Loan Forgiveness (PSLF) Program encourages professionals with student debt to choose full-time jobs in public service in order to have their loans forgiven completely.
How to Qualify for the Public Service Loan Forgiveness (PSLF) Program
To get approved for PSLF, you’ll need to complete a few important steps to determine your eligibility.
Employer Requirements for PSLF
The first requirement for the PSLF program is to work full-time at a government agency, which includes federal, state, local or tribal government organizations. Full-time employees of IRS-approved 501(c)(3) non-profit organizations are also eligible for the program.
While full-time AmeriCorps and Peace Corps volunteers are also considered eligible for the PSLF Program, employees of labor unions, partisan political organizations, for-profit organizations, and non-profits not recognized as a 501(c)(3) organizations don’t currently qualify.
The Department of Education considers full-time employment working at least 30 hours per week for a qualifying employer, or whatever is defined by your employer as full-time. In addition, having more than one part-time job at a qualifying employer can also help you qualify, as long as you work more than 30 hours per week between the two jobs.
Loan Requirements for PSLF
The next step in determining your eligibility for the PSLF program is understanding which loans are covered by the program. Currently only Direct Loans qualify for PSLF. These include:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans (for qualified parents)
- Direct Consolidation Loans
It should be noted that these loans only qualify if they aren’t currently in default. If you have defaulted loans that qualify for PSLF and you’d like to take advantage of the program, we can help you get out of default and switch your loans to a more favorable income-driven repayment plan.
Income-driven repayment plans include:
- Income-Based Repayment (IBR) Plan
- Income-Contingent Repayment (ICR) Plan
- Pay As You Earn (PAYE) Plan
- Revised Pay As You Earn (REPAYE) Plan
Borrowers of other federal student loan programs, which include Federal Family Education Loans (FFEL) and Federal Perkins Loans, aren’t eligible for the PSLF Program. However, if these loans are consolidated into a Direct Consolidation Loan, they may be eligible for the PSLF Program.
Loan Payment Requirements for PSLF
As part of your eligibility for the PSLF Program, you’ll also need to make sure your payments qualify you for forgiveness.
In addition to having eligible loans, you’ll need to make 120 qualifying payments on these loans while working for a qualified employer. These payments must also have been made after October 1, 2007, which is the date the program officially launched.
Payments on your loans aren’t required to be consecutive, meaning you won’t lose credit towards your 120 qualifying monthly payments while working for a nonqualifying employer.
If you’ve consolidated your loans or converted your loans into an income-driven repayment plan, only 120 payments made on the new qualifying loan is considered part of the program’s repayment period.
Ready to take the next step? Get a free consultation with our experts to find out if you’re eligible for the Public Service Loan Forgiveness (PSLF) Program.
How the Public Service Loan Forgiveness (PSLF) Program Works
The Public Service Loan Forgiveness (PSLF) Program is designed to eliminate the remainder of your qualifying student debt, up to any amount, once you meet the conditions of the program. However, even if you meet all the requirements for the PSLF Program, the earliest you could have your student loans forgiven is October 2017, due to the mandatory 10-year repayment period that begins after October 1, 2007.
An additional benefit of getting approved for the PSLF Program, beyond having your student loan debt forgiven, is that the amount forgiven will not be considered taxable income by the IRS. This means that even if your student loans are forgiven, you won’t have to file the forgiven amount on your taxes.
The PSLF Program Under President Trump
Since President Trump took office, the Public Service Loan Forgiveness program has become a controversial topic. One of the main reasons for the controversy is the President’s opinion that eliminating the PSLF program could save taxpayers up to $100 to $200 billion annually.
However, the White House made a surprising move in March 2018 when President Trump signed the $1.3 trillion omnibus spending bill – a bill that gives $350 million in funding to the PSLF program over the next several years.
With the program now funded for the foreseeable future, eligible applicants can begin submitting paperwork for Public Service Loan Forgiveness. This includes borrowers who work for qualifying agencies and have extended or graduated repayment plans. Prior to the bill being signed, only applicants with income-driven repayment plans qualified for the program.
TEPSLF is Launched
In May 2018, the Department of Education launched a new program called Temporary Expanded Public Service Loan Forgiveness (TEPSLF). Using a portion of the $350 million in funding for PSLF, this program helps borrowers whose applications were denied for PSLF due to ineligible loan types.
If you applied to the PSLF program and had your application denied because your loans didn’t qualify, you could be eligible for TEPSLF. Funding for TEPSLF isn’t expected to last very long, so it’s important to submit your new application as soon as possible to be reconsidered.
Aim Higher Act is Introduced
House Democrats introduced a new measure aimed at protecting low- and middle-income student loan borrowers. As part of the proposal, Democrats hope to protect the PSLF from repeal and expand it to include more eligible applicants and loan types, and make the process of obtaining and repaying loans easier. The bill is still waiting to be voted on before moving to the Senate.
2019 Update on PSLF
In March 2019, President Trump released his 2020 education budget with his sights on the PSLF Program once again. The budget proposed big changes to some student loan programs, including PSLF, which President Trump plans to repeal for certain types of loans and qualified borrowers.
If this new budget proposal is approved, borrowers who aren’t already enrolled in school won’t be given access to PSLF. What’s more, the budget would eliminate Subsidized and Perkins loans from being eligible for the program.
One of the more significant changes, however, is how this budget would affect income-driven repayment plans. According to the budget, the Trump administration would replace these programs with a single income-driven program that offers a 30-year repayment timeframe. Undergraduates under this plan would earn loan forgiveness after making 15 years of qualifying payments, while graduates would need 30 years to obtain debt forgiveness.
These programs work on a “first-come, first-served” basis, making it important to submit your application as soon as possible. For more details on debt forgiveness through the PSLF or TEPSLF programs, fill out our form or get in touch with our experts at (800) 771-6358.
STUDENT LOAN FORGIVENESS Student loan repayment has undergone tremendous reform over the past few decades. As part of these federal student debt relief initiatives, new options have become available to…
STUDENT LOAN FORGIVENESS Student loan repayment has undergone tremendous reform over the past few decades. As part of these federal student debt relief initiatives, new options have become available to those looking to benefit from today’s student loan forgiveness programs.Learn More