How Do I Apply for Public Service Loan Forgiveness (PSLF)?

Steps to Put You on the Path for PSLF

If you have federal student loans, there’s probably a fair chance that you’ve heard of Public Service Loan Forgiveness, but you may not be sure if you’re eligible, or what steps you have to take to qualify. There are a number of steps involved, and you want to take them in order, otherwise there’s a good chance your application would be rejected, which is why PSLF has a shaky track record of success. But, if you’re reading this, you’ve already put yourself on the right path by asking “How?”

Only Federal Loans Qualify, and Only the Right Kinds

There are several kinds of student loans out there, but only one kind qualifies for PSLF: federal Direct loans. If you only have private loans, you may as well stop reading now, because you’re stuck with them until they’re paid off. If you have a mix of federal and private loans, only your federal loans could qualify for PSLF. Among the different kinds of federal loans, only Direct loans are eligible for forgiveness. Older types of loans such as FFEL loans do not, but they can be consolidated into a Direct Consolidation Loan, which would be eligible. All types of federal Direct loans can qualify for PSLF, including undergraduate loans, graduate PLUS loans, and parent PLUS loans. In the latter case, however, the parent who took out the loan must work toward PSLF, not the student, and there are restrictions on what payment plans are available. 

The Right Path = the Right Repayment Plan

There are several repayment plans available for federal student loan borrowers, but only some qualify for PSLF. When borrowers enter repayment, they’re automatically placed on the Standard plan, which bases their monthly payment amount on what it would take to pay the principal and interest off in 10 years. Borrowers can also apply for Graduated or Extended plans. The former starts off with a smaller monthly payment amount, which steadily increases until the loan is paid off in 10 years. The latter stretches repayment out to 5 years, offering a lower monthly payment, but a longer repayment term. Of these, only the Standard plan is eligible for PSLF, but is basically redundant because your balance is paid off in 10 years, leaving nothing to be forgiven. Borrowers pursuing PSLF, instead, should use one of the Income-Driven Repayment (IDR) plans, all of which are eligible for PSLF, and base your monthly payments on your discretionary income. More on IDR plans to come!

Certified Your Eligibility by Certifying Your Employment

Public Service Loan Forgiveness is eligible to anyone working full-time in—you guessed it!—public service, but you must file paperwork to certify that your employer really does qualify. If you work 30 or more hours a week for any government agency (federal, state, local, tribal, etc.) or a 501(c)(3) non-profit, you’re eligible for PSLF. You simply have to submit a form electronically to your organization, usually through your HR or payroll department, to verify that you are an employee and that they are a qualifying organization. To make it easier, Federal Student Aid introduced the PSLF Help Tool, which will guide you through filling out the form and auto-generate it based on your answers. Somewhat confusingly, this is the same form that you submit after 10 years of payments to get your remaining balance forgiven, but you also want to submit it periodically throughout your PSLF journey to get your employment certified and your qualifying payments counted. 

PSLF could (and should) be a relatively simple process, but it often gets gummed up by bureaucracy along the way. Some borrowers assume they’ve done everything right and wait to submit all their paperwork only after they’ve been in repayment for 10 years, which usually returns a result they weren’t hoping for, finding out there was some detail they missed along the way. 

If you’re considering pursuing PSLF, give us a call and let us guide you through the process and give yourself the peace of mind. If you’ve already gotten started on your own, we’re always here to double-check your work and make sure you haven’t missed anything. Give us a call and let us reassure you that you’re on the right path.