Do you have student loans and work for a non-profit employer? You may be eligible for the Public Service Loan Forgiveness program. Tai Kraft, our Financial Counselor, covers key information about the program below.
What is the Public Service Loan Forgiveness Program (PSLF)?
In the simplest terms, it is a way to have part of your student loans forgiven by the federal government. This program is designed to encourage and retain high-quality, skilled workers in the public sector by forgiving some of their student loan balance after specific requirements are met.
How does the program work?
After making 120 qualifying payments while working full-time for an eligible employer your student loan balance is eligible for forgiveness.
You must have the right type of employer, the right type of loan, and be on an appropriate repayment plan to qualify.
How do I know if I qualify?
Generally speaking, qualifying employers are non-profit agencies, the Federal Government, and other public sector employers. The only way to determine if you work for a qualifying employer is to complete the PSLF Employment Certification Form and submit it to the US Department of Education. Check with your employer’s human resources department as they may assist with completing the form.
Only federal loans are eligible, but not all federal loans will qualify. Verify your loan type by logging into StudentAid.gov, the same website where you completed your Federal Student Aid application.
Not every repayment plan offered by the federal government qualifies for the Public Service Loan Forgiveness. Generally speaking, borrowers who intend to make the PSLF part of their repayment strategy will want to enroll in an income-based repayment plan.
Finally, remember only on-time payments count. A late payment or partial payment will not count towards the 120 on-time payments requirement. To receive an updated count of your qualifying payments, submit an Employment Certification Form to the Department of Education.
When is the best time to enroll?
The best time to sign up is any time after you start working for an eligible employer. That said, you can sign up even if you are not a new employee.
For example, if you have worked at an eligible employer for two years and are just now learning about the PSLF program, you can enroll now. All payments made to your student loan during the past two years may count towards your 120 on-time payments if all the PSLF requirements were met during that time.
What are some misconceptions about PSLF?
Working towards the PSLF is not a “set it and forget it” process. Borrowers must remain vigilant with making on-time payments, submitting paperwork promptly and recertifying their repayment plan each year.
As stated above, all requirements must be met. A lot of life can happen in 10 years! If you leave the public sector, reduce your work hours or federal legislation changes, your eligibility can be impacted.
Any advice you would give for someone interested in attaining PSLF?
Have the mentality that you will be the one to pay off your loans. That said if the PSLF Program is part of your repayment strategy; complete the necessary paperwork to make sure you are on the right track. While this program can help relieve the burden of debt, it can also mean paying more in interest if you do not finish the program. Overall, it can offer support to those with fewer financial resources but it is a long term commitment.
A few other tips:
- Contact the Department of Education if you have questions on the program or your payments.
- Recertify your income-based repayment plan each year.
- Submit the Employment Certification Form annually.
We have repayment resources, budgeting resources, and financial guidance that can help you navigate this program. Email Tai Kraft, our Financial Counselor, to get more advice on this program or to set up a complimentary appointment to go over your payment strategy.
For more information on Public Service Loan Forgiveness, visit the Department of Education's website.