5 Tips for Public Service Loan Forgiveness Success
Some misleading reports suggest that very few borrowers have gotten Public Service Loan Forgiveness (PSLF). In fact, $9,505,913,331 of federal student loan debt has been forgiven under PSLF and Temporary Expanded Public Service Loan Forgiveness (as of May 2022). Don’t let misinformation stop you from pursuing PSLF. Use these five tips to protect yourself from surprises and set realistic expectations about how PSLF can work for you.
1
Understand loan, employer, and qualifying payment requirements.
There are several requirements you must meet to move toward your goal of receiving forgiveness. Before you plan on receiving PSLF, check all the requirements carefully to make sure you’re eligible under each category (loan type, employer, repayment plan, and qualifying payments).
Don’t forget! Under the limited PSLF waiver, you may be able to get credit for payments that wouldn’t normally qualify.
On Oct. 6, 2021, the U.S. Department of Education (ED) announced a change to PSLF program rules for a limited time. If you apply for the limited PSLF waiver before Oct. 31, 2022, you can receive credit for past periods of repayment that wouldn’t normally qualify for PSLF.
Loan Type Requirements
Only nondefaulted federal Direct Loans are eligible for PSLF. Federal Family Education Loan (FFEL) Program loans and Federal Perkins Loans don’t qualify for PSLF unless they are consolidated into a Direct Loan.
If you borrowed before 2011, there’s a chance that some or all of your federal student loans are not Direct Loans. If so, you would need to consolidate those loans to qualify. If you have both Direct Loans and other loans, do not include your Direct Loans when you consolidate your FFEL Program loans and/or Perkins Loans. View your Aid Summary to see what kinds of loans you have.
Employer Requirements
This requirement is about your employer, not your job title. You must work full-time, or at least 30 hours a week, for a qualifying employer to be eligible for PSLF.
Use the employer search tool to see if your employer qualifies.
Requirements for Qualifying Payments
For a payment to qualify for PSLF, it must be made
- after Oct. 1, 2007,
- under a qualifying repayment plan,
- for the full amount billed,
- no later than 15 days after your due date,
- while working for a qualifying employer, and
- when your loan is in an “in repayment” status.
Payments won’t count if you
- are in school status, in a grace period, or in deferment or forbearance (except for the COVID-19 payment pause);
- pay late; or
- are not working full-time for a qualifying employer.
The good news is that your payments don’t have to be consecutive. If there’s a period when you’re working for a nonqualifying employer or you leave work to go back to school, you won’t lose credit for the qualifying payments you made in the past.
As long as you meet the qualifying payment criteria, prepayments will count for up to 12 months or the next time you’re due to recertify your IDR plan, whichever is sooner. Plan your prepayments carefully!
For example, say you recertified your IDR plan, and your monthly payment was $100, but you paid $1200 the first month. That payment would count as 12 separate qualifying payments for that year. You would not be able to make another qualifying payment until the next 12-month cycle.
2
Confirm PSLF works for your situation.
PSLF only works if you have a remaining loan balance after 120 qualifying payments. That’s why you can’t remain on the Standard Plan the entire time you’re in repayment—there would be nothing to forgive at the end! To benefit from PSLF, you must repay your federal student loans on an income-driven repayment (IDR) plan.
But even on an IDR plan, it’s possible to pay off your debt before you make 120 qualifying payments. Your remaining balance after you make 120 qualifying payments and apply for PSLF is the amount you’ll have forgiven. Ultimately, the amount forgiven depends on your income, family size, and loan balance.
While you’re enrolled in one of our IDR plans, the amount you pay each month is determined by your income. If your income increases over the course of your public service career, your monthly payment may also increase. This increase means you’ll pay off your loan faster. In some plans, your monthly payment can exceed the amount you would pay in the Standard Plan, which can lead you to pay off your loan in under 10 years. That’s a great outcome, but it means that you wouldn’t benefit from PSLF!
The chart below estimates forgiveness amounts based on adjusted gross income and overall federal student loan balance. Our calculations assume a 5% increase in income every year.
Total Amount Repaid on the 10-Year Standard Plan With a 5.9% Interest Rate
Maximum Estimated Loan Forgiveness Amount After 120 Qualifying Payments
Disclaimer: These estimates are calculated assuming that all payments you make would meet all PSLF requirements and used the income-driven repayment plan that would provide you with the lowest monthly payment amount for the month of your first payment. Estimates were created using Federal Student Aid’s Repayment Estimator assuming that you are single, have no dependents, and reside in the 48 contiguous states or DC. These estimates also assume that you will experience a 5% annual increase in income. The estimate uses loan amounts with a 5.9 % interest rate. Any estimated forgiveness amount which is lower than $1000 is not included.
Keep in mind that these estimates are not based on your specific loan interest rate. To ensure the program is the right fit for you, we recommend you use Loan Simulator to get your personalized PSLF projection.
3
Submit your PSLF form.
The best way to check if you’re on track for PSLF is by submitting a PSLF form.
The information you provide on the PSLF form will confirm if your employer qualifies for the program, if your repayment plan is eligible for PSLF, and if previous loan payments count toward PSLF.
If you’re not fulfilling a qualification for PSLF, further details will be provided in a response letter.
PSLF Form Tips
- You’ll need your employer’s address and Employer Identification Number (EIN). You can find your employer’s EIN on your Wage and Tax Statement (W-2).
- Submit a PSLF form each year. Information on the PSLF form needs to be consistent with previous PSLF forms you’ve submitted, including employment start dates.
- Make sure the signatures on your PSLF form follow one of the approved signature formats (especially for digital signatures!).
You can use the PSLF Help Tool to autofill your PSLF form. This online tool will help you answer questions on the form and provide info about whether your employer is eligible for PSLF. If you don’t want to use the PSLF Help Tool, you can download the PSLF form as a PDF file and complete it manually.
When you’ve completed the form, you will need to have an “authorized official” from your employer sign it. This is typically someone in your human resources office. Ask your employer who in your organization is authorized to certify employment if you’re uncertain.
4
Get familiar with the PSLF process.
We recommend you certify your employment every year in order to keep track of your progress toward 120 qualifying payments.
After you make your 120th qualifying payment, you’ll need to submit the PSLF form one last time to receive loan forgiveness. You will not automatically receive PSLF after you’ve made 120 qualifying monthly payments, so it’s important you take this step. You also must stay employed with a qualifying employer until your application for forgiveness is processed.
When it is time to apply for forgiveness, you’ll submit the PSLF form like usual—except this time, you’ll check the box that says, “I believe I qualify for forgiveness under PSLF or TEPSLF right now.” You can choose to enroll in a forbearance so you won’t have to continue making payments while your PSLF form is being processed.
Once you have been approved, you’ll receive a notification from your loan servicer. If your application isn’t approved, you’ll receive a notification explaining why.
You do not have to pay federal income tax on the amount that you get forgiven through PSLF.
5
Save and archive your documentation.
In case you face any discrepancies in your payment count during the PSLF process, you’ll want to save all of your paperwork and communication related to your PSLF journey. Keep copies of your
- PSLF forms,
- response letters from your servicer, and
- employment documentation.
Store your copies in a safe place. This way, you can provide these copies as documentation, if needed.
Looking for a hands-on way to review what we just covered? The PSLF worksheet below can help you go over the steps you need to take to confirm if you qualify. Select the image to open the fillable PDF file.
If you have more questions, we recommend you review the PSLF Questions and Answers page. If your questions aren’t covered on that page, you can contact MOHELA at 1-855-265-4038.
