What is PSLF? Who Qualifies and How?

When Congress created PSLF in 2007, it was intended to be a way to encourage employment in the public service sector by offering a way to eliminate college debt for those who stuck it out for at least 10 years. Public Service Loan Forgiveness is available to anyone working full-time in many important sectors: federal, state, local, and tribal governments; public education; health and medicine; and many more, including all 501(c)(3) non-profits. The qualifications were supposed to be simple: be a full-time employee in a recognized public service organization and stick to it for 10 years. At that point, your remaining loan balance would be forgiven. Simple, right? 

PSLF = Paperwork

As with all government programs, the big picture benefits of PSLF got blurred by the details, i.e. the paperwork and fine print that came through implementation. One problem is that, if you pay your federal loans on the standard payment plan, you’ll pay them off in 10 years; so how would there be a balance to be forgiven? Enter the Income-Driven Repayment (IDR) Plans. These were introduced at the same time as PSLF in 2007, and allow borrowers to apply for a payment plan based on their monthly income rather than a predetermined fixed amount. The caveat is that it can stretch your payment term out to 20 or 25 years unless you qualify for PSLF, which forgives the remaining balance after 10 years. Pretty sweet, right? Unfortunately, you have to certify your income every year so that your payment amount can be updated. If you fail to recertify in a timely manner, you can be automatically taken off your IDR plan. 

PSLF’s Improving Track Record

Besides recertifying income, PSLF has had some other tricky bits that have led to a poor rate of success until the last couple of years. Borrowers also have to make sure that they have the right types of loans in order to qualify for forgiveness. The program only applies to federal Direct loans. Private loans do not qualify, nor do other types of federal loans, which has led to significant confusion over the years. Older types of loans, such as Family Federal Education Loans (FFELs), were excluded from the program until the Biden Administration offered opportunities for borrowers to have them forgiven if consolidated into new Direct Consolidation Loans. Recent initiatives, however, such as the Limited Waiver Opportunity and IDR Account Adjustment, have been game-changers for PSLF. For the first time in history, hundreds of thousands of borrowers’ have seen their balances forgiven under PSLF.

If you’d like to join the thousands whose student loan slate has been wiped clean, give us a call and we can help you find your path to PSLF freedom!