How to Qualify for Public Service Loan Forgiveness

Even as broader breaks on student debt are rolled out, the Public Service Loan Forgiveness program offers much more substantial help to those who qualify. But an important deadline is coming up.

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(Image credit: Getty Images)

Amid the publicity surrounding student loan forgiveness, the federal government is continuing to push existing debt relief programs. One is the Public Service Loan Forgiveness (PSLF) program, which was started under the Bush administration in 2007. The program is designed to reduce student debt for graduates who go on to work in a range of government, nonprofit and healthcare jobs; see below for a list and more details.

Announced last October, the new rules include a limited requirement-waiver that allows eligible borrowers to have payments that were previously excluded counted toward loan forgiveness. The waiver ended October 31 of 2022.  

However, the Education Department has announced reforms that will continue to make the process easier for people who apply for PSLF even after the deadline. To see if you qualify, go to studentaid.gov/pslf/ (opens in new tab) to use the PSLF Help Tool, which will generate the form you need. And make sure to have your old W-2 forms on hand. To see if your employers—past and present—qualify as an eligible or ineligible employer you will have to enter the employer’s tax identification number which is in box b of your W-2. For more information on the tool and how to use it, go to studentaid.gov/articles/become-a-pslf-help-tool-ninja/ (opens in new tab).

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New proposals announced in July (opens in new tab) include applying partial, lump-sum and late payments toward loan forgiveness thresholds and extending certain deferments and forbearances to AmeriCorps workers, Peace Corps workers, National Guard servicemembers and other military members. The public can comment on the proposals for the next 30 days, with the final ruling coming in November. The rules are scheduled to go into effect no later than July 1, 2023.

The waiver seems to have worked as it's supposed to for at least one now-former debtor. Ricardo Maldonado of New York City tweeted (opens in new tab) how roughly $139,000 worth of his federal student loans (connected to a graduate degree) was forgiven thanks to the PSLF waiver. Maldonado applied for forgiveness back in November 2021. After applying he got letters updating him about the process and received official notice of forgiveness on May 31, 2022.

Maldonado says that the PSLF form was easy to manage for himself thanks to having one employer for the past 15 years, but more importantly “[It] was useful seeing folks say that [forgiveness] was possible,” he said via a direct message on Twitter.

 Moreover, the Department of Education says more than 236,000 borrowers have been approved for over $14 billion in forgiveness since the waiver was enacted.

What Went Wrong with Public Service Loan Forgiveness?

People with student loans who work in qualifying non-profit or government jobs may have their loans forgiven after ten years of qualifying payments to a qualifying loan program. These payments may be adjusted in consideration of the borrowers’ income level.

The first borrowers would have been eligible for forgiveness in October 2017 (remember, the program was launched in 2007). But four months before that, the Consumer Financial Protection Bureau reported problems: “Borrowers report that servicers delay or deny access to loan forgiveness through wrong information about their loans, flawed payment processing, and bungled job certifications.”

One major complication involves how federal student loans originated. Prior to 2010, federally backed student loans were issued by financial institutions and not directly by the federal government. PSLF applies only to direct student loans, or those issued by the federal government. Earlier loans could be consolidated into direct loans, and payments made after that consolidation would apply toward PSLF.

Forbearance Steering Addressed

 Another issue with PSLF had to do with struggling borrowers who were improperly pushed to seek forbearance by loan servicers. During forbearance, a temporary suspension of payment requirements, interest on loans continues to accumulate and borrowers receive no credit toward repayment forgiveness. Authorities said loan servicers placed these borrowers in forbearance in violation of Education Department rules, rather than putting them into an Income-Driven Repayment plan, which could allow their payments to be adjusted to be as low as zero dollars. Being in an IDR plan also allows a borrower to remain in good standing and get credit toward forgiveness. A borrower in forbearance faces a much greater threat of default or delinquency.

To address this issue, the department will make a one-time account adjustment for borrowers who sought forbearance for 12 consecutive months, or 36 cumulative months. Borrowers steered to shorter-term forbearances can request a review of their accounts by filing a complaint at studentAid.gov/feedback

Moving forward, the Education Department said in April that it plans to restrict the ability of loan servicers to place borrowers in forbearance.

Who Qualifies for Public Service Loan Forgiveness?

The PSLF program covers a wide range of jobs, including virtually all direct government employment (whether federal, state, local or tribal). Many jobs at nonprofits as well as public health work also qualify. Some exceptions include Labor unions or partisan political organizations. Members of Congress are also specifically excluded. The program also has provisions that work must be full time (at least 30 hours a week), though this can be through multiple jobs with qualified employers.

Positions include:

  • Emergency management
  • Military service: service on behalf of the U.S. armed forces or the National Guard
  • Public safety
  • Law enforcement: crime prevention, control or reduction of crime, or the enforcement of criminal law
  • Public interest law services: legal services provided by an organization that is funded in whole or in part by a local, state, federal, or tribal government
  • Early childhood education including licensed or regulated child care, Head Start, and state-funded prekindergarten
  • Public service for individuals with disabilities and the elderly
  • Public health including:
  • Nurses
  • Nurse practitioners
  • Nurses in a clinical setting
  • Full-time professionals engaged in health care practitioner occupations, health support occupations, and counselors, social workers, and other community and social service specialist occupations as such terms are defined by the Bureau of Labor Statistics
  • Public library services
  • School library or other school-based services

Second Chance for Student Loan Borrowers

 Recently the department announced that borrowers will have another chance to have their payments qualify toward forgiveness. In July 2023, the department says, it will “automatically apply the same payment count treatment to all direct and department-managed Federal Family Education loans for borrowers who do not otherwise reach the number of months necessary for forgiveness.”

According to the department, borrowers who submit a PSLF form after Oct. 31 “will have their PSLF form assessed under normal PSLF rules. However, they may receive additional credit toward PSLF for any periods of certified employment when the one-time account adjustment occurs in July 2023. At that point, borrowers who reach 120 qualifying payments, may need to provide additional certification that they remain employed by a qualifying employer.”

Next July, new regulations could further reduce barriers for borrowers seeking forgiveness, including additional credits for various types of loan payments and a simpler process for verifying qualifying employment. 

Borrowers Who Didn't Apply For Waiver  

 

Even with the permanent reforms, administration officials encouraged borrowers to apply for the waiver before the Oct. 31 deadline, especially if they benefitted from Teacher Loan Forgiveness or no longer work at a qualifying employer. 

According to the Education Department, here is the difference between what  would happen for people who applied for the waiver by Oct. 31 and those who did not:

• A borrower who submitted a PSLF form by Oct. 31 will have their time in repayment

credited under the limited PSLF waiver. They will also have time in deferment and forbearance credited to them for both IDR and PSLF under the one-time account adjustment next July. 

• A borrower who first submits a PSLF form after Oct. 31 will have their form assessed under normal program rules. However, they may receive additional credit toward PSLF for any periods of certified employment when the one-time account adjustment occurs in July. At that point, borrowers who reach 120 qualifying payments, may need to provide additional certification that they remain employed by a qualifying employer.

More detail is available at: https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service/questions 

Rivan V. Stinson
Staff Writer, Kiplinger's Personal Finance

Rivan joined Kiplinger on Leap Day 2016 as a reporter for Kiplinger's Personal Finance magazine. She's now a staff writer for the magazine and helps produce content for Kiplinger.com. A Michigan native, she graduated from the University of Michigan in 2014 and from there freelanced as a local copy editor and proofreader, and served as a research assistant to a local Detroit journalist. Her work has been featured in the Ann Arbor Observer and Sage Business Researcher.