cutting the fine print on PSLF

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

Michael Lux Basics, Student Loan Blog, Student Loans 13 Comments

Public Service Student Loan Forgiveness is a much-discussed topic, but very rarely are all the necessary details covered. Getting the government to forgive your student loan debt requires close attention to detail. Failure to meet any requirement could be a costly mistake. With news of a high rejection rate, many borrowers may wonder, who is eligible for Public Service loan forgiveness and how do I qualify?

All federal student loan borrowers can qualify for Public Service Loan Forgiveness (PSLF). 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 first and then gradually get into the more situation-specific details where appropriate.

PSLF Requirements

If you work in a public service job and enroll in an eligible repayment plan, your eligible federal student loans can be forgiven after ten 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

Public Service Jobs and Eligible Employers

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 details on qualifying employers.

An important note here is that the job you work is not the key detail. The critical part is your employer. An ER doctor might be PSLF eligible if he or she works in a non-profit hospital, but the same doctor doing the same job at a for-profit hospital would not be eligible.

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 very simple.

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.

Important Update: New legislation might help those that were ineligible because they were on the graduated or extended repayment plans but met all other requirements. The details are available here. However, this program is a temporary fix, and once the funding has run out, the exception is essentially eliminated.

Ten Years to Forgiveness

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

That means that it is acceptable to 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.

Why the High Rejection Rate?

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

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

The good news is that some of these issues are fixed fairly easily. For 28% of the rejected applications, the problem was an incomplete form. Others were rejected because they used the wrong form or hadn’t yet made 120 payments towards their loan.

Qualifying for Public Service Loan Forgiveness certainly isn’t a breeze, but it isn’t as tricky as some media reports make it sound.

The key to qualifying for PSLF is to document your progress each year…

Two Important Steps to Approval

The first step towards forgiveness is getting your payments certified. This certification is done after the fact, meaning your employer fills out a form stating when you were employed. Your student loan servicer then processes that form.

When employer certification forms are submitted, the borrower’s eligible payments are counted. 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. As a result, completing these forms every year is highly recommended.

Technically speaking, there is no timing requirement for 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 it also prevents 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 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. Making things extra confusing is the fact that some loans are not eligible, but they can be consolidated into a federal direct consolidation loan and become eligible.

Fortunately, there are resources in place to help you get things under control. Start by visit the government’s National 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. With other loans, such as Parent PLUS loans, if you consolidate them with eligible loans, like a standard federal direct loan, they become eligible for forgiveness. However, the new consolidated loan no longer qualifies for IBR or PAYE. If you have these types of loans, several conversations with your lender and lots of research will be necessary to make sure you don’t mess things up.

Making things even more complicated is the fact that there is no way to undo a student loan consolidation. You will need to get things right from the start, so make sure you understand all of the consequences of your consolidation efforts.

If my loans are forgiven, do I have to pay extra taxes that year?

You may have read that student loans forgiven under IBR and PAYE result in higher taxes. While that is technically true, as any forgiven debt is treated as ordinary income by the IRS, there is an important exception that only applies to Public Service Student Loan Forgiveness. If your loans are forgiven after ten years of public service, there is no additional tax to pay the year they are forgiven.

The letters that the Department of Education has sent out to borrowers who met the requirements for forgiveness all contain language stating that there is no additional tax to be paid on the forgiven debt.

Does my work have to be full-time employment?

Generally speaking, your employer will have to consider you a full-time employee. However, if you work multiple part-time public service jobs and average at least 30 hours per week combined, you can also qualify for public service forgiveness.

Full details on the hourly requirements are available with the Department of Education.

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 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 finally 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 screwed up. This is not a service provided by reputable companies, and it is a waste of your money.

That all being said, private consolidation of your federal loans is an entirely different thing. When you go the private consolidation route, your loans cease to be a federal loan, and you no longer qualify for forgiveness programs or federal repayment plans, but you can lower your interest rates. Private consolidation is an entirely different process, and not to be confused with the sleepy companies offering to consolidate federal loans with the federal government.

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, your new IBR/PAYE payment will be calculated based upon 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 new 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.

That all being said, if you do change repayment plans, get your payments certified 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 program was eliminated, existing borrowers could potentially be “grandfathered in.”
  • 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 be forgiven under Public Service Forgiveness and will the cap ever change?

At present, there is no cap on the Public Service Student Loan Forgiveness Program, meaning that whatever debt you have after 120 payments is entirely gone.

However, there is growing support for putting a ceiling on Public Service Forgiveness.  When President Obama hinted at exploring a cap, we made our feelings known. The Trump administration has proposed eliminating the PSLF program.

If a cap on public forgiveness is created, it will take a change in federal law. Even then, existing loan holders could be grandfathered in.

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

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Mark Miazga
Mark Miazga

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.

The Student Loan Sherpa
Reply to  Mark Miazga


Great questions. I actually just wrote an article that should help with your situation:

I’d also note that there should not be any fees associated with federal student loan consolidation. That is a free service provided by the department of education.


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?

The Student Loan Sherpa
Reply to  Lori

That is awful. Have you looked into filing a complaint with the CFPB? Counting only 18 of 70 payments is terrible.


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….

The Student Loan Sherpa
Reply to  Lori

You are definitely in good company with the PSLF issues.

I’m shocked by how often people are running into this issue.


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.

Angie Bardysh
Angie Bardysh

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?!?!

Reply to  Angie Bardysh

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.

Megan W
Megan W

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?

The Student Loan Sherpa
Reply to  Megan W

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.

Krysten Axelson
Krysten Axelson

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!

The Student Loan Sherpa

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.