Public Service Loan Forgiveness (PSLF) Program
Article Summary
- The Public Service Loan Forgiveness (PSLF) program was established by the federal government to allow professionals to have their student loan debt forgiven.
- Participating in the PSLF program requires you to work for a qualified employer as specified by the US Department of Eduction. Qualified employers include government and non-profit organizations.
- Only Direct Loans (made directly from the US Department of Education) are eligible for the program
- After making 120 qualifying monthly payments, spanning a 10-year time period, the balance of your federal Direct Loan student loan is forgiven. There is no maximum loan amount that can be forgiven.
- Other types of federal students loans can be consolidated into a Direct Consolidation Loan, making them eligible for the PSLF program, but private student loans are not eligible for the program.
America has a major debt problem. Everyone knows that. Student loans comprise a major component of that debt problem, with student loan debt being second only to mortgage debt in the United States.
College has become too expensive for the majority of people who can’t pay for it as they go, and who have to take on student loans to get them through the four to eight years it takes to get into a position to start out on a financially rewarding career. As of 2020, there are over 45 million student loan borrowers owing collectively about $1.6 trillion to their creditors.
The majority of advanced degree holders I know, including a surprising number of doctors, lawyers, and other occupations that require graduate schooling fret about there being to small a margin between what they take home in pay and what they owe in student loans. So many of these are intent on paying down their student loan debt, paying extra each month to do away with that burden early. Many I know would love to have their debt forgiven, but even in the case of bankruptcy (which is certainly not the objective of most doctors and lawyers), only under particular circumstances (when they pose an “undo hardship” on the borrower and his dependents) can student loans
Introducing the Public Service Loan Forgiveness Program
But there is a program available from the federal government that can make student loan The program is called Public Service Loan Forgiveness, or PSLF. This program was created by Congress in 2007 to make college more affordable and accessible to students. Essentially, the PSLF program is a way of the federal government saying, “If you work long enough for us, or in underserved areas where we’d like to direct your labor, we’ll forgive the school debt you owe us.”
In this article, I’ll explain how the PSLF program works and describe how you can access the program. Hopefully you can get enough of an idea of the program’s benefits and limitations to see whether it’s something that can help you get rid of your student loan debt through the forgiveness route versus having to pay it all off otherwise.
Qualifying for the PSLF
As described on the StudentAid.gov PSLF web page, qualifying for federal Direct Loan forgiveness through PSLF involves meeting these requirements.
- Be employed full-time by a federal, state, local, or tribal government entity or a qualified non-profit organization
- Your student loans are part of the federal Direct Loan program
- Repay some portion of your loans through an income-driven monthly schedule for 120 total months
PSLF Qualifying Loans
Because the PSLF program was created and is administered by the US Federal Government, it only applies to loans that it has made directly through its Direct Loan program.
- Direct Subsidized Loans: These loans are given to students who use the FAFSA (Free Application for Student Aid) application and demonstrate financial need.
- Direct Unsubsidized Loans: These are loans given to students who apply using the FAFSA and don’t demonstrate financial need.
- Direct PLUS Loans: These are unsubsidized loans given to graduate students or the parents of undergraduates who are dependents of the PLUS loan holder.
- Direct Consolidated Loans: These are loans given by the federal government to consolidate other federal student loans.
You should already know whether your existing student loan falls under this criteria for qualification. If you’re not sure whether your loan qualifies for the PSLF program, you can contact the Federal Student Aid help center by chat, by phone at 800-433-3243, or by email at studentaid@ed.gov.
The PSLF program does not apply to private loans, since the ultimate forgiveness of those loans comes from the lenders themselves, not the federal government. So, if you got a private loan through Sallie Mae (issued by SLM Corporation), Wells Fargo or another bank, or any other private student loan provider, that loan does not qualify for forgiveness.
There are no loan forgiveness programs for private loans. Private lenders have a very different reason for lending to students (a return on their financial investment) than the federal government, which funds loans from income received from taxpayer and is much less vigilant about having its loan money returned than private investors are.
PSLF Qualifying Employers
Another requirement of the PSLF program is to be employed by an organization that qualifies under its program guidelines. The following specific kinds of organizations are listed as qualifying employers:
- US federal government entities
- US state government entities
- Local government (city, county, etc.) entities
- 501(c)(3) classified non-profit organizations
- AmeriCorps volunteers (full-time)
- Peace Corps volunteers (full-time)
The Department of Education clearly points out that working for government contractors, labor unions, or similar organizations doesn’t count.
Outside of 501(c)(3) non-profit organizations, there are other non-profits in unique cases that may qualify. In this situation, the non-profit must have as its primary purpose providing certain qualifying public services.
Most people who are pursuing the PSLF program in their plan to be free from student loans verify before accepting a job with an employer that that employer qualifies for the PSLF plan. It’s highly advisable to find out whether the entity you’re intending to work for qualifies before committing to them and finding out later that you don’t qualify and have possibly wasted that time and opportunity.
If there is some question about whether an organization you have worked for or do work for meets the eligibility requirements as a PSLF employer, you can always reach out to the Federal Student Aid help center through their contact page to find out for certain whether a particular organization qualifies as a PSLF employer.
To ensure that your employer is a qualified organization, the Department of Education requires you to fill out the Public Service Loan Forgiveness (PSLF): Employment Certification Form each year or whenever you change employment to ensure that their eligibility is recognized as part of your specific PSLF program. If you don’t fill out and submit this form along the way during the 10 years of making qualifying payments, you’ll need to fill one out at the time you apply
Your employment at one of these qualifying organizations must be full-time, which normally equates to at least 30 hours per week.
PSLF Qualifying Payments
To qualify for debt forgiveness under the PSLF, you must make 120 payments on your federal student loan while working for one of the qualifying organizations, as discussed above. These payments must be made through a qualifying plan as determined by the PSLF. The most common repayment plan is the Income-Driven Repayment (IDR) Plan, which you can apply for through the StudentAid.gov IDR Plan Request page. If you are currently repaying your federal student loan through a different repayment plan (including the 10-year Standard Repayment Plan, which is intended to pay off the full balance of your loan over that period), you can switch to the IDR plan by submitting an application.
Receiving Student Loan Forgiveness
After you’ve met the requirements discussed above, including working full-time for a qualified employer and making monthly payments through a qualified repayment plan, at the end of the 120 month period, you will then need to fill out the PSLF Application for Forgiveness, which is downloadable from the StudentAid.gov website. This application for forgiveness allows you to certify that you’ve completed the requirements and are eligible to have your loans forgiven.
After you’ve submitted the application for forgiveness, you’ll receive a response in
Alternatives to Using PSLF
If all of this work seems going through the PSLF program like a lot of effort and involves a lot of overhead, you’re right. Government programs are almost always less efficient than private alternatives. This same idea applies to getting student loan forgiveness through the PSLF. In the first year and a half (from October 1, 2017 to March 31, 2019) of the period when the programs first enrollees started becoming eligible for forgiveness after having completed the required 10 years’ worth of payments, only 864 people had had their debts forgiven.
Instead of using PSLF, many people choose the more assertive option of simply working their tails off to pay down their student debts. Programs like Dave Ramsey’s Baby Steps walk you through paying off your debts and are much more empowering than being coupled with a federal government forgiveness program that tends to be bloated and wasteful. The program itself ultimately redistributes taxpayer dollars from one group of people to another, and represents a socialist government ideology.
Also, for the assertive, difference-maker type of person, working for a government entity for ten years may very well drive you crazy.
In the event that you’ve accumulated significant student debt that you’re struggling to pay back, now is the best time to consider your earning and spending habits, and start working on an aggressive path to self-reliance that is empowering and liberating rather than the demotivating form of bondage that many people see represented by the PSLF program.
A Few Words About Student Debt
Prosperopedia.com is all about finding happiness, success, and prosperity by making good choices relative to skill development, career choice, and financial management.
If you’re in the phase of your life in which you have not yet decided whether to go to college to prepare for a career, I’d highly recommend that you make a commitment to avoid student debt if at all possible. I’ve written about alternatives to college that you might consider. In the modern technology-driven age, there are so many ways to create an income than to go spend four or more years in school, or by following like a sheep the status quo that has been created in the contemporary education system.
