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

Qualifying for Public Service Loan Forgiveness isn’t automatic, but a few minutes of time can help ensure that you don’t miss out.

Written By: Michael P. Lux, Esq.

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Public Service Student Loan Forgiveness (PSLF) is a much-discussed topic. However, those discussing the program often overlook the basics and the fine print.

With news of a high rejection rate, many borrowers may wonder what the eligibility requirements are. Though the basic requirements are relatively simple, confusing red tape and fine print have led to many borrower mistakes and application rejections.

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 here and, where appropriate, address more situation-specific details.

PSLF Requirements

Regardless of how much you owe, if you are enrolled in an eligible repayment plan and work full-time in a public service job, the government can forgive your eligible student loans after ten years of on-time payments.

In other words, you need:

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

Public Service Jobs and Eligible Employers

If you work for the government or a 501(c)(3) non-profit organization, the government considers your job to be public service. This definition includes most teachers, social workers, and first responders. The Department of Education has details on qualifying employers.

The critical factor for this requirement is who your employer is – not the job that you work. An ER doctor might be eligible for Public Service Loan Forgiveness if they work in a non-profit hospital. However, the same doctor doing the same job at a for-profit hospital would not qualify.

Some borrowers may have some uncertainty about whether or not they qualify. If you think your employer may be in a PSLF gray area, the process for confirming eligibility is straightforward.

Eligible Repayment Plans

The eligible repayment plans are those under an income-driven repayment plan, such as Revised Pay As You Earn (REPAYE), IBR (Income-Based Repayment), PAYE (Pay As You Earn), or ICR (Income-Contingent Repayment). If you’re not enrolled in one of these repayment plans, your payments will not count towards Public Service Loan Forgiveness.

Important Update: Legislation might help borrowers who were ineligible because they were on the wrong repayment plan. Sadly, the program is a temporary fix. The details are available here.

Ten Years to Forgiveness

Payments don’t have to be made consecutively for you to achieve loan forgiveness through PSLF. The actual requirement is that you make a total of 120 certified payments – a total of 10 years worth of qualifying payments.

For instance, it is acceptable to make five years of eligible payments and then leave for a private-sector job. If you return to an eligible employer, you pick back up where you left off. You also wouldn’t start from scratch if you’re late on a couple of payments seven years down the road. Those late payments simply won’t count towards your 120 qualifying payments.

Sherpa Tip: Forgiveness can take a bit longer than ten years, even if you do everything right.

A key requirement is that the PSLF applicants work for an eligible employer at the time they apply for forgiveness and at the time the loans are forgiven.

Why the High Rejection Rate?

Hopefully, the three basic steps towards Public Service Loan Forgiveness seem relatively straightforward.

Unfortunately, early applicants to the PSLF program have had mostly bad news. The media has reported rejection rates as high as 99%.

Rejection rates have fallen, but they are still troublingly high. Qualifying for PSLF is challenging, but not as hard as some media reports make it sound. Well-prepared borrowers will see better outcomes.

Tracking Progress Towards Loan Forgiveness

Any borrower working towards forgiveness needs to get their payments certified. Your employer fills out a certification form stating when you worked there. Your student loan servicer then processes that form.

When a borrower submits employer certification forms, the loan servicer counts the borrower’s eligible payments. To complete this count, the loan servicer verifies that the loans are eligible and that the borrower is on an eligible repayment plan. Employer certification forms are the best way of tracking progress and confirming that you have met the PSLF requirements. Consequently, we highly recommend completing these forms every year.

Technically speaking, there is no timing requirement for submitting your certification forms. You can complete the certification after all ten years have passed. Practically speaking, however, 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 it also prevents the hassle of tracking down an employer you worked for years ago.

If you have questions about the certification process, necessary forms, or employer eligibility, the Department of Education’s PSLF Help Tool is an excellent resource.

Miscellaneous Details

We have tried to cover the essential 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.

How do I know if I have an eligible student loan?

Not all federal student loans are eligible for Public Service Student Loan Forgiveness. Determining whether or not your loan is eligible can be somewhat complicated. Further confusing matters is the fact that some loans aren’t eligible, but can be consolidated into an eligible loan.

Fortunately, there are resources in place to help you get things under control. Start by visiting the government’s Student Loan Database. There you will find a list of all your federal loans, the companies that service your loans, and details about each loan. Next, visit the Department of Education website on student loan forgiveness for a list of eligible loans. If you have loans that are not eligible, call your lender to determine if consolidating them into a federal direct loan will make them eligible.

Important Note: Some loans, such as FFEL loans, are not eligible, but if they are part of a direct consolidation loan, they become eligible. However, loan consolidation resets the forgiveness clock. Additionally, there is no way to undo a student loan consolidation. So, make sure you understand all of the consequences of your consolidation efforts.

Do I have to pay extra taxes on my loans forgiven through PSLF?

You may have read that student loans forgiven under IBR and PAYE cause higher taxes. This is technically true. The IRS treats any forgiven debt as ordinary income. Fortunately, there is an important exception that applies only to Public Service Student Loan Forgiveness. If the government forgives your loans under this program, there is no additional tax to pay.

Does my work have to be full-time employment?

Generally speaking, your employer will have to consider you a full-time employee. If you work multiple part-time eligible public service jobs, you can also qualify for PSLF. You just need to average at least 30 hours per week combined. More details on the hourly requirements are available here.

Should I pay for Federal Student Loan Consolidation or Public Service Forgiveness?

Absolutely not. Companies that charge you to consolidate your loans or to sign you up for Public Service Loan Forgiveness should not get your business. They are charging you for free government services that you can do yourself. If they advertise special relationships with the Department of Education, they are lying. No such relationships exist, and government agencies are going on the offensive to shut down this behavior.

If you want to pay them just so you can have an “expert” there to prevent you from making a mistake, you will only make things worse. While this process can be a bit confusing, adding another party only increases the risk of an error. Anyone who played a game of telephone as a child knows that the more people involved in relaying information, the more likely it is to get scrambled. This is not a service provided by reputable companies, and it is a waste of your money.

What if my IBR, REPAYE, or PAYE payment is zero, can it still count towards forgiveness?

Yes. As long as you are working for an eligible employer during the time your payment is zero, these months will count towards forgiveness.

This is a scenario that most commonly happens if someone starts a new public service job after a period of unemployment. Your payment can stay at zero dollars per month until it is time to re-certify your income. At that point, the government calculates your new payment based on your most recent tax return.

The zero-dollar payment scenario can also happen if you work in public service. For this to happen, your income must be less than 150% of the federal poverty level.

Can I change repayment plans?

Absolutely. All that matters is working your way towards the 120 certified payments. If you started repayment on IBR and then switched to the REPAYE plan, all of the payments should be eligible. Similarly, if you make a great deal of money one year and lose your IBR eligibility, you can sign up for the standard 10-year repayment plan, and then get back on IBR if your income drops again.

Just make sure that you stick with plans that are eligible for PSLF.

If you do change repayment plans, certify your payments within a few months of starting the new plan. You don’t want to miss out on a year or more towards forgiveness because of a clerical error.

Is Public Service Forgiveness the best way to pay off my student loans?

Not necessarily. It is possible to spend more money chasing after forgiveness than you would spend just paying off your loans. It all depends on how the numbers shake out.

Typically when you pay off student loans, you want to pay them off as fast as possible because you are in a constant battle with daily interest. When you are chasing after forgiveness, you want to pay as little as possible each month with the goal being to have as much forgiven as possible.

The problem with going after forgiveness is that you still have interest added each month to your loan, and many federal loans can have interest rates over 8%. Additionally, as your salary increases, your IBR and PAYE payments will also go up. By the time your debt is forgiven, there could be very little left to forgive, and you may have spent a ton on interest over the past ten years. Depending on how the math plays out, you might be better off paying off locking in a lower interest rate with a private student loan refinancing company and just paying off the loan in full.

Will Public Service Forgiveness still be around when I apply?


It is a big question, but there is no way to know the answer for sure. However, we do know the following:

Congress would have to pass a law and have it signed by the President to eliminate the Public Service Student Loan Forgiveness Program.
Even if the government eliminates the program, the government can choose to “grandfather in” existing borrowers.
The Master Promissory Note (the borrower’s contract with the government) includes PSLF terms, meaning the government would have to break that contract to eliminate PSLF for existing borrowers.

The only thing that borrowers can do at this point to ensure that Public Service Forgiveness sticks around is to vote for candidates who won’t change it.

How much debt can I get forgiven through PSLF?

At present, the government hasn’t placed a cap on the amount eligible for forgiveness through the PSLF program. This means that the government can forgive whatever debt you have remaining after 120 qualified payments.

However, there has been some discussion on capping PSLF limits during both the Obama and Trump administrations.

If the government does place a cap on public forgiveness, it will likely “grandfather in” existing loan holders.

Putting a limit on forgiveness is by no means inevitable. However, it is a possibility that borrowers should monitor.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

13 thoughts on “Public Service Student Loan Forgiveness: The Basics and the Fine Print”

  1. Hello, I am currently paying my loans with IBR, and also enrolled in PSLF, I have 5 years of payment history, and re-certify every year like clockwork. All of my payments are recorded as eligible. I have a $200,000 loan balance with roughly $4500 in outstanding interest. My rate is 7.6%. My question is, considering the capitalized interest penalty, would it be smart to switch to PAYE or REPAYE from IBR since the loan balance will eventually be forgiven anyway? It would reduce my payment from roughly $1000/mo to $700/mo. Thank you in advance!

    • Great question. I have a couple thoughts:

      – Switching to REPAYE will clearly save you some money right away. The interest capitalization is a concern, but if you are 5 years away from forgiveness, it just means more debt will be forgiven tax-free.

      – The risk is if you don’t end up qualifying for PSLF. The larger balance will be even more to eventually pay off. Even if you get forgiveness after 20 or 25 years, the traditional IDR forgiveness is taxed.

  2. Is there any way to guarantee $0 payments with PAYE will qualify? I recently graduated, consolidated my loans to wave my grace period, applied for PAYE, and have submitted my PSLF Employment Certification Form. I think I have everything set up correctly but am nervous that I could have missed something. Once FedLoans processes my certification form will I get confirmation that my payments are qualifying?

    • You are correct. The best way to track your progress is to send in yearly employment certification forms. They not only check that you have an eligible employer, they also check to see if your loans are eligible and if you are on an eligible repayment plan.

  3. I have a terrible situation. My student loans are in my mom’s name but I have been making every payment. I have known about the forgiveness rule since I started paying my loans in 2009, but my mom did not know of the law, and failed to tell me until two days ago that she works in a non-profit and has for the past 18 years. We have checked our loan, and it is the correct loan for the forgiveness plan, but we are on the wrong repayment plan. I have been paying around $650 a month for the past 8.5 years, and we were told we would need to resign up and non of the payments I have made will count toward forgiveness. I need to make 120 new payments! To me, this seems absolutely insane. Is there any way around this rule? I believe the payments I have been making are more per month than the qualifying repayment plans would be. I am utterly devastated, and I have no idea what to do. I just can’t believe all of the money I have paid would not count. Is there anything I can do?!?!

    • Look into TEPSLF . And good luck. I am in a VERY similar sitation myself…. And am desperate for a more-than-fair shot as well! Also, check your loans account for qualifying paymeny updates after submitting anything for the TEMPORARY (key word here – time is of the essence as this program is only available as long as the limited funding available allows)TEPSLF. I never received a response, yet found ages afterward that my online loans account is showing qualifying paymenys dtatus for both PSLF and TEPSLF.

  4. I talked to the PSLF people today only to find that even though I consolidated correctly in 2011, that I’ve either been early making payments (how is that even possible?! I pay them when I get paid), late (hasn’t happened), or not paid enough (also hasn’t happened) and that in the past 8 years of my service to the public as a 911 operator and police dispatcher, only 18 of my 70+ payments have counted. How do you work around that?

      • I didn’t know I could, but I will now! I got a ‘payment history’ from the FedLoan Servicing people ‘explaining’ why my payments didn’t count. They claimed I was in forbearance when I wasn’t, said my payments were all late (which I never was) or too early (they don’t have it in EXPLICIT writing, but making a payment anything more than 30 days early is grounds for not counting a payment). Also, since I only found out about the program in 2011 and consolidated once I knew, they refused to count any of my 4 years prior to that. I requested a review and we’ll see what they say, but I plan to do everything I have to to get this righted. Cause if not, what’s the point? I could have been done with my loan in 2 years instead of another 6-8….

      • I’m not surprised now that I’ve been through it. It’s how the government will be able to avoid actually helping those in public service.

  5. Any thoughts on my situation where I’ve had loans since graduating in 1996 and have been in public interest work since 2000 but I consolidated right away in 1997 and my type of loan doesn’t qualify for public service forgiveness unless I re-consolidate. What I don’t know is whether the clock starts over for the ten years after I re-consolidate or whether I would get credit for my payments going back to 2007. I’ve dealt with GLHESC and the Department of Education and can’t get a straight answer although one rep recommended re-consolidating and then asking for the credit back to 2007 when 2017 comes along. I just want to know it’s likely to be granted before incurring the added fees involved in re-consolidating.


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