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Public Service Loan Forgiveness

By Joshua Z | May 7 2020

The first cohort of those eligible for PSLF began applying in October 2017. However, as of June 2019, only around 1.1% of those who applied received forgiveness under the program. Your Public Service Loan Forgiveness application can be rejected if you don’t adhere to the strict guidelines.

How to Qualify for Public Service Loan Forgiveness

To qualify, you must have federal student loans—private student loans aren’t part of the program. Your loans must also be from the Direct program. Previous loans, such as those made under the Federal Family Education Loan (FFEL) program, aren’t eligible for PSLF.

If you have older loans that don’t qualify, you can consolidate them with a Direct Consolidation loan. However, realize that the 10-year clock resets from your student loan consolidation date. You won’t get credit for previous payments.

Finally, if you have Perkins loans, and hope for cancellation of those, keep them separate from your other federal loan consolidation. Perkins loans are eligible for 100% cancellation after at least five years of public service, so you can have those taken care of sooner.

Public Service Loan Forgiveness

Work That Qualifies You for Public Service Loan Forgiveness

To receive Public Service Loan Forgiveness, you need to have a certain type of employer and work full-time for them. Employers that are generally eligible include:

  • Nonprofit organizations with 501(c)(3) status
  • Government organizations: federal, state, local, or tribal
  • The Peace Corps or AmeriCorps
  • Other nonprofits that have a primary purpose related to qualifying public service 

Full-time work equates to at least 30 hours a week for a qualifying employer. In some cases, you might still be eligible, even if you work two jobs—as long as both are for eligible employers and your hours add up to 30.

To create a record for the U.S. Department of Education (and yourself), fill out an employment certification form each year and send it to FedLoan Servicing. This creates a paper trail of your work history, which can make it easier to verify your work, and get your Public Service Loan Forgiveness approved faster.

Make 120 Qualifying Payments 

Finally, to receive PSLF, you need to make 120 qualifying payments. Qualifying payments are those that are:

  • No later than 15 days past your due date
  • For the full amount due
  • Made on or after Oct. 1, 2007
  • Made while working for a qualified employer
  • Made while on a qualifying repayment plan

You don’t have to make your payments consecutively, however. Maybe you make 50 payments with a qualifying job, quit, work someplace else for a couple of years, and then start a new job that qualifies. The original payments still count for your total, and now you pick up where you left off. As a result, you might take longer than 10 years to receive forgiveness. But once you make those 120 payments, you can fill out the application form. This article is brought to you by Car Title Loans California – your #1 auto title loan lender!

loan forgiveness

It’s worth noting, however, that the best results for Public Service Loan Forgiveness come if you’re on an income-driven repayment plan. If you keep up with the Standard repayment plan, you’ll be finished in 10 years anyway—and won’t need the forgiveness. An income-driven repayment plan comes with lower payments that are considered qualifying, and you’ll likely end up paying for more than 10 years.

How to Apply for Public Service Loan Forgiveness

Applying for PSLF is fairly straightforward. Fill out and submit the Public Service Loan Forgiveness application provided by the U.S. Department of Education. As part of the application, you’ll need to verify that your employers qualify. Keeping up with the paperwork makes the whole process much easier.

You can review your qualifying payments each year using the National Student Loan Data System. You’ll see which loans you have, whether you’ve made your payments as agreed and can verify where you stand. Once everything’s been submitted to FedLoan Servicing, you’ll need to wait for the application to be processed before the final decision.

Alternatives to Public Service Loan Forgiveness

If you don’t qualify for PSLF, you do have other options. Carefully consider them as you move forward, and see if there’s a way for you to reduce your student loan burden in other ways.

Participate in Other Loan Forgiveness Programs

Even if it’s not PSLF, you might be able to get a portion of your student loans forgiven with other programs. Check with state governments for separate programs, as well as military programs. Some organizations, like AmeriCorps, will pay off a portion of your student loans independent of PSLF. If you’re in health services or teaching profession, there are numerous forgiveness programs available. You might not have your entire remaining balance wiped out, but some forgiveness can go a long way toward helping you get rid of your student loan debt.

Stick With Income-Driven Repayment

Maybe you have a low-paying job that doesn’t quite meet the requirements of PSLF. You can still qualify for forgiveness on an income-driven plan. However, you need to be careful. With PSLF, you won’t be taxed on your canceled debt.

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Refinance Your Student Loans

You might be able to get a lower interest rate and pay off your loans faster. Realize, though, that if you refinance federal loans, you’re replacing them with a private loan. You’ll no longer be eligible for income-driven repayment or loan forgiveness. Plus, you’ll have to meet credit requirements. Learn more at https://en.wikipedia.org/wiki/Public_Service_Loan_Forgiveness