What is public service loan forgiveness and who qualifies?


  • The Public Service Loan Forgiveness, or PSLF, is primarily intended for government and nonprofit workers.
  • You will need to make 120 qualifying monthly payments to qualify for the pardon.
  • The program’s track record has been fragile, so don’t rely on forgiveness as a panacea.
  • Learn more about Insider loan coverage here.

Federal student loan debt across the country is skyrocketing, leaving many borrowers unable to pursue other financial goals. The total amount owed to the government is $ 1.59 trillion, according to the last digit from the US Department of Education.

While the situation may seem grim, if you have a qualifying job in the public service, you may be able to take advantage of the Public Service Loan Forgiveness, a federal program designed to alleviate some of that financial burden.

What is the Public Service Loan Discount (PSLF)?

Public Service Loan Forgiveness, or PSLF, was enacted in 2007 and cancels the debts of graduates working in the public sector after at least 10 years of service and qualifying payments. Your specific job doesn’t matter, just that you work for a public service employer. There is no cap on the amount of money that can be forgiven.

You will not be eligible for the program if you work for a union, partisan political organization, or for-profit business (this includes government contractors).

A full-time job is defined as working at least 30 hours per week or meeting your employer’s definition of full-time, whichever is greater. All direct loans are eligible for the program, and if you have an ineligible federal loan from the Federal Family Education Loans Program (FFEL) or Perkins Loan Program, you can consolidate those debts into a direct consolidation loan for be eligible.

Income-Based Repayment Plans (IDR) base your monthly payments on your income – and you can pay less per month with an IDR than with a standard 10-year repayment program.

While payments made under a standard 10-year repayment program are eligible payments, you will have already paid off your entire loan balance after 120 months, and there will be nothing left to forgive. To take advantage of the PSLF, you’ll want to opt for an IDR plan.

However, your payments may increase with an IDR plan depending on how much you owe and your income, so you might not benefit from the PSLF program even if you qualify for it.

How to qualify for the PSLF

You cannot make a qualifying payment while you are in school or when your loans are deferred, forborne, or in a grace period.

You will not qualify for PSLF earlier by making higher monthly payments; you need to make payments to cover 120 separate months. These payments do not need to be consecutive.

You will need to submit this form every year or when you change employer. The government will use the information you provide to let you know if you are making qualifying PSLF payments.

Private student loans are not eligible for PSLF.

Is the PSLF a reliable program?

During the coronavirus pandemic, the government suspended federal student loan payments until September 30, 2021. If you continue to work for a qualifying employer during this period, you will receive credit to PSLF as if you continued to do so. time Payments.

However, you should not bet on canceling student loans through the PSLF, as the program’s fragile track record has left many borrowers in a bind.

The program has been criticized by lawmakers and borrowers for its high refusal rate; recent Ministry of Education The data found that 98% of borrowers are still rejected from the PSLF. Biden has campaigned to fix the program, but some experts and lawmakers say a confusing system is at fault.

In a letter sent to Education Secretary Miguel Cardona in May 2021, Democrats pushing to fix the program described it as “beset by numerous ‘donut holes’ that disqualify certain types of loans, repayment plans and loans. payments themselves “.

While the PSLF program can help you get student debt relief, its real-world implementation has been disappointing. Consider all of your repayment options before relying on the PSLF.


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