Public Service Student Loan Forgiveness: The Basics and the Fine Print

Michael Lux Basics, Blog, Student Loans 10 Comments

Public Service Student Loan Forgiveness is a much discussed topic, but very rarely are all the important details covered.  In order to get the government to forgive your student loan debt, the details are critical.  Failure to meet any requirement could be a very expensive mistake.

Breaking up the terms of Public Service Student Loan Forgiveness can make for a tedious read, but it is the only way to ensure that nothing gets missed.  We’ve tried to cover the basics first and then gradually get into the more situation specific details where appropriate.

PSLF Basics

If you work in a public service job and enroll in an eligible repayment plan, your eligible federal student loans can be forgiven after 10 years of on-time payments, regardless of how much you still owe.

In other words you need:

  1. The Right Job,
  2. The Right Repayment Plan, and;
  3. Ten Years Worth of Payments

1) A Public Service Job

If you work for the government or a 501(c)(3) non-profit organization, your job is considered public service.  This definition includes most teachers, social workers, and first responders.  The department of Education has a full list of qualifying employers.

An important note here is that the job you work is not the key detail.  The critical part is who you work for.

2) Eligible Repayment Plans

As of right now, the eligible repayment plans are Revised Pay As You Earn (REPAYE), IBR (Income-Based Repayment), PAYE (Pay As You Earn), ICR (Income-Contingent Repayment), and the standard 10-year repayment plan.  If you are not enrolled in one of these repayment plans, your payments will not count towards student loan forgiveness.

March 2018 Update: New legislation might help those that were ineligible because they were on the graduated or extended repayment plans but met all other requirements.  Details available here.

3) 10 Years to Forgiveness

In order to get your loans forgiven, the payments do not have to be consecutive payments.  The real requirement is that you make 120 certified payments… in other words, a total of 10 years worth of payments.

That means that if you make five years of eligible payments, and then leave for a private sector job, if you return, you pick back up where you left off.  It also means that if you are late on a couple of payments seven years down the road, you don’t start from scratch.

Two Important Steps

The first step towards forgiveness is getting your payments certified.  The government has records of the repayment plan you are on, so the part being certified is that you work for an eligible employer.  This certification is done after the fact, meaning your employer fills out a form saying that you did in fact work there.  That form is then processed by your student loan servicer.

Technically speaking, there is no timing requirement to submitting your certification forms.  The certification can be done after all ten years have passed.  Practically speaking, procrastinating on the certification is a terrible idea.  If you happen to be on the wrong repayment plan, or your employer isn’t eligible, you want to find out right away.  Finding out years down the road can be devastating.  Once you have started working for an eligible employer, complete the certification form as soon as possible.  Get your payments certified yearly, or when you make any employer or repayment plan changes.  Not only does this avoid wasting years on the wrong repayment plan, but is also avoids the hassle of tracking down an employer you worked for years ago.

The second step is to complete your application form for Public Service Student Loan Forgiveness.  For borrowers who believe they have completed all of the requirements, the form is available with the Department of Education.  For everyone else, the important thing is to send in employer certification forms yearly and to be aware that one final form will need to be completed.

Miscellaneous Details

We have tried to cover the important details that apply to everyone.  Because each situation is different, there are questions you may have about your specific student loans.  The following Frequently Asked Questions should hopefully address many of these issues.