How to Apply for the Public Service Loan Forgiveness Program

How to apply for the Public Service Loan Forgiveness ProgramWith the average student loan debt in the U.S. hovering around $25,000, it’s safe to say many people are interested in how to pay off their student loan debt. To that end, we thought we’d explain how you can apply for the Public Service Loan Forgiveness Program (and describe how exactly the program works):

The Public Service Loan Forgiveness Program (PSLF) is one of the more interesting and exciting programs approved by Congress in recent years. This program is designed to allow those who work for eligible public service organizations to get something of a break on their student loans. With student loans now the largest collective debt we have, it makes sense to look for ways to reduce the costs.

If you are interested in getting something of a break on your student loans, you can consider working for a qualifying public service organization. After you have made on-time payments on your student loans for 10 years, you can apply to have the balance forgiven under the PSLF program.

Who is Eligible for the Public Service Loan Forgiveness Program?

As you might imagine, student loan forgiveness isn’t available to just anyone. You have to meet certain requirements in order to qualify for the Public Service Loan Forgiveness program:

  • Only the loans that you receive under the Direct Loan program from the government are eligible. Perkins Loans and Federal Family Education Loans are not considered eligible for this program, nor are private student loans.
  • You have to use one of the government’s qualified repayment plans to make your 120 on-time, full monthly payments. These plans include the Income-Based and Income-Contingent plans, as well as the standard repayment plans offered by the government.
  • Payments have to be made after October 1, 2007 to qualify.
  • All of your payments have to be made while you work full-time at a public service organization that qualifies as such. These organizations include local, state, and federal government agencies, as well as non-profit organizations that have a 501(c)(3) designation from the IRS. However, the time you spend in receiving religious instruction, attending worship services, or proselytizing does not count as “full-time employment” activities.

You don’t have to be working at the same organization the whole 10 years, though. If you change to another qualified place of employment, and you keep making your payments, you can still be eligible for the PLSF.

Tracking Your Public Service Loan Forgiveness Eligibility

Your best bet, since you will have to justify your qualifications for the PLSF program over the course of 10 years and 120 loan payments, is to track your eligibility over time. The government offers a handy certification form. The Employment Certification for Public Service Loan Forgiveness (PDF) can be filled out regularly and submitted. You can submit it each year to FedLoan Servicing, or just submit one for each organization you work for as you change jobs.

Submitting the form allows you to see whether you qualify on a regular basis. Additionally, it can give you a heads up if you are missing some information. Submitting this form also ensures that you have good records of your qualifying, since FedLoan Servicing will also help you tally up the number of qualifying payments you have made, and keep you up to date so that you aren’t scrambling at the end of 10 years to try and verify your payments.

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While you can submit your Employment Certification for Public Service Loan Forgiveness form now, the actual application for forgiveness under the PSLF program is still being developed. Since it takes 10 years from 2007 for the first batch of graduates to be eligible, there is no need for the form until 2017.

But, until then, you can keep track of your payments now, and work on ensuring that you eligible when the time comes. Let us know if you have further questions about how to apply to the Public Service Loan Forgiveness Program, and if you’re worried about making your student loan payments try reading our blog post on what to do if you can’t pay your student loans.

Also, don’t forget to try ReadyForZero, a free tool that lets you manage all your debt accounts in one place and helps you stay motivated on your debt-payoff journey!

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  • alloro

    So do I have this correct? Work for the government and the taxpayers will pay your student load for you?

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      It’s a program for people who work in non-profit and public service jobs, open to anyone but especially relevant to people who get expensive degrees (law degrees, etc.) and choose to work in fields that are geared toward public service with a relatively lower salary.

    • Tracy Shannon

      Based on the assumption that government employees are not compensated as well as private employees. I disagree. Where are the breaks for the honest taxpayer who does not work for the government but contributes to society and to our economy? Can’t forgive half the interest or anything?
      I think the tax payers would rather see something comeing back over nothing and some people could pay off balances if some of the interest was forgiven. I am planning to pay the entire balance off, or maybe I could just not pay it since there are no breaks for me as a hard working individual. Sure would be nice to get a break, but I don’t qualify for a discount b/c I am a private employee.
      I am quitting my job and staying home with the kids. There will be no wages to garnish and no tax refund to go after and I don’t need good credit anymore. I am tired of the gov’t choosing winners and losers,
      I could get behind a discount for certain professions (public and private) that need harvesting here in the USA. I do not support incentives to grow gov’t jobs.

      • disenfranchised

        It’s like OBAMA SAID: The only good job is a Federal job.

    • fpleti2

      Not really. Most of us do not qualify.

    • republican122

      NO SILLY THE STUDENT LOAN WILL FORGIVE BUT THE IRS WILL GIVE IT RIGHT BACK TO YOU AS INCOME EARNED AND TAX THE HELL OUT OF YOU POOR STUDENT. SAY YOU TOOK TOTAL OF 160THUSAND WILL THAT WHAT YOU WILL PAY TAXES ON. UNLESS WE GET SOME MEMBER OF CONGRESS TO FIX THIS MESS

  • aidadvisor

    The author neglects to tell people that loans originated under the FFEL program (where students borrowed Stafford or Graduate PLUS loans from a bank or other private lender) and Perkins loans can be consolidated into the Direct Loan Program and then become eligible for the loan forgiveness program. However, parent PLUS loans don’t count and neither do loans that are already consolidated that include a parent PLUS loan.
    Borrowers who have Perkins loans should be leery about consolidating those loans, though, because Perkins loans have several other options for forgiveness on an incremental basis (part of the loan for each year the borrower is employed in an eligible position) and are often fully forgiven in 5 years. Consolidating the Perkins loan will result in the loss of this opportunity as well as not having the loan accrue interest during the grace and any deferment periods. In addition, when the loan is consolidated, the interest rate will be based on the weighted average of the interest rates on the loans being consolidated, rounded up to the next 1/8th of a percentage point.
    Some loan forgiveness programs (though not the Public Interest forgiveness) result in a tax liability for the amount forgiven, so borrowers should be prepared to shell out a little more to the IRS to cover the taxes on the loans forgiven.
    I strongly recommend that anyone with loans meet with their financial aid advisor before or after graduation to learn about the latest repayment and forgiveness programs and updates on how to minimize payments and taxes. Even if you’ve been out of school awhile, you might want to visit your old college financial aid advisor for updates. Most would be more than willing to help you because it is in the interest of the schools to keep their graduates in good standing with the federal government.

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Thanks for this comment. It appears you have a lot of knowledge about this subject. Let me know if you would like to write a guest post for our blog explaining some of the details of these programs and the different loan types. Thanks!

  • bob

    I have a student loan that has been in default for 25 years , The loan was issued threw the Fl. Dept of education guaranteed threw Fed. Gov. Threw original balance of 10K is now 30K , is there any way to get loan forgiveness or at least blow off the access interest ! I am not a public employee !

    • republican122

      DO NOT FORGET TO ASK IF THE IRS WILL FORGIVE YOU THE INCOME RECIVED ON THE LOAN AS THEN YOU WILL BE PAYING A HUGE INCOME TAX ON SAY 160 THOUSAND INCOME DEBT. IT IS A MESS WE NEE THE CONGREESS TO FIX THIS ASAP

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Usually a statute of limitations does not apply to federal loans, so unfortunately there is no way to forgive them (that I know of). Our student loan resource center might be helpful for more information:
      https://www.readyforzero.com/resources/student-loan-debt

  • ttex

    There may have been a time when Govt employees were paid far less than their counterparts not in Govt. This was a trade off for the benefits usually associated with a Govt position (retirement, health, security of position). That has been gone for a long time. I know many IT people working for local Govts (non contractually) that make 15-20k more than I do.

  • republican122

    listen if or when you get loans fixed or forgiven these proGRAMS NEED TO GET THE IRA TO FORGIVE THE TAXESAT SAME STIME BECAUSE YOU GET FORGIVEN BUT THEN IRS GIVES THE LOANS ALL BACK TO YOU IN INCOME SO IT NOT FORGIVEN. THAT NEED FIXED POST HASTED

  • Iriquois Rose

    Isn’t there a program for persons in certain professions, such as teachers and medical personel, that if you are willing to work on an Indian reservation, or in a specifically designated needy location, that there is loan forgiveness for all goverment loans in consideration of your willingness to work where your are needed. The pay in those locations is lower, but the laon forgiveness means when your term of service is over (3-4 years) you still have a solid work history, not student loan dept, and the option tho move to a location of your choice for future employment.

  • Billy Bob

    Why is it that a student can’t pay off a $25K student loan, yet can pay off a $25K car in 5 years?

  • Howard Brown

    Are there any loan forgiveness programs if you teach in a poor country outside the US? Example, Colombia or Thailand?

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Not that I’m aware of, Howard. I think in that case you may need to look for some kind of grant or non-profit funding.

  • Leslie Wiesehan Hymbaugh

    So.. maybe you can help me. I am a teacher. My loans once were Direct Loans but were consolidated and sold back and forth several times over the years ending with Sallie Mae. I have 48K left. I was told by Sallie Mae in 07 and several times after that my loans qualified under public service forgiveness and whatever was left in 2017 would be forgiven. When the paperwork finally became available and was submitted it was denied. Apparently the loans have to be reconsolidated with Direct loans and the 120 payments begin again. By the end of that I will be making larger payments than I can afford and have nothing left to forgive. Does anybody really qualify and benefit from this program??? Was there a change that happened? I noticed up above it says, “Only the loans that you receive under the Direct Loan program from the government are eligible.” No that had to continue to be with Direct Loans…
    Thanks Leslie

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Hi Leslie, sorry to hear about that. I’m sure you must be really frustrated. It sounds like you did everything right. I’m not sure why they would have denied your application. I suppose it must have something to do with the consolidation, but I don’t understand why. It might be worth inquiring with someone else at the Department of Education or even submitting a complaint to the Consumer Financial Protection Bureau. This page might be helpful too: http://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service.

  • Reader

    Hi everyone,

    The Dept. of ED’s FY15 budget includes a proposed cap of $57,500. The President’s budget makes vague references to “reforms”. Both budget reforms are silent on whether the implementation of a cap would apply retroactively to those of us who are already well in to our 10 year repayment periods. There are proposed changes to PAYE to include: … Capping PublicSector Loan Forgiveness (PSLF) at the aggregate loan limit for independent undergraduate students (which is $57,500) … Establishing a 25-year forgiveness period for borrowers with balances above the aggregate loan limit for independent undergraduate students. My interest rate is 6.875% and not one dime of my monthly payment touches principal. I know I was counting on the PSLF (of course, I am trying to save just in case). If you are as well, you may be interested in signing this petition: https://petitions.whitehouse.gov/petition/retain-public-interest-loan-forgiveness-program-its-current-form-forgiving-all-qualifying-student/wkqnqBCH

    My guess is that someone at DOE realized that there are a lot more people planning to utilize this program than they anticipated. If there is reform, those of us who are already making IBR payments towards the 120 required by PSLF should be grandfathered in. Or alternatively, the Dept. of ED should reduce our interest rates so we can actually have a chance to pay down our balances with our government/non-profit salaries. I know that I’ll personally pay back all that I borrowed but the interest is the killer.

    By the way, an earlier poster commented that there will be federal taxes due on any forgiveness and the IRS issued a Letter back in 2008 or 2009 stating that loan balances forgiven under PSLF are not taxable. State income tax may be an issue.