Student Loan Forgiveness

What is Public Service Loan Forgiveness (PSLF)?

The Public Service Loan Forgiveness (PSLF) program is a United States federal education program that forgives the remaining federal Direct Loan debt for borrowers who have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a government or not-for-profit organization.

Key Features of PSLF:

• Eligibility: Borrowers must have federal Direct Loans, not Federal Family Education Loan (FFEL) Program loans or Perkins Loans (unless consolidated into a Direct Consolidation Loan).
• Employment: Continuous full-time employment with a qualifying employer is required. This includes federal, state, local, or tribal government organizations, as well as not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code.
• Payments: 120 qualifying monthly payments are necessary. Payments made before October 1, 2007, do not count. Payments must be made under a qualifying repayment plan, such as an income-driven repayment (IDR) plan.
• Forgiveness: After 120 qualifying payments, the remaining balance on the Direct Loan is forgiven. The forgiven amount is generally not considered taxable income by the federal government.

History of PSLF:

The PSLF program was established by the College Cost Reduction and Access Act of 2007. It aimed to encourage individuals to pursue careers in public service by offering a pathway to student loan debt relief.

How to Qualify and Apply:

1. Verify Loan Type: Ensure you have Direct Loans. If you have other federal loan types, you may need to consolidate them into a Direct Consolidation Loan.
2. Verify Employer: Confirm that your employer is a qualifying public service organization.
3. Track Payments: Make sure your payments are qualifying payments made under a qualifying repayment plan. It is highly recommended to submit an annual PSLF Employment Certification Form (ECF) to track your progress and ensure your employment and payments are on track.
4. Apply for Forgiveness: Once you have made 120 qualifying payments, you can submit the PSLF application, which includes the final ECF, to the U.S. Department of Education.

Recent Changes and Waivers:

Over the years, the PSLF program has faced criticism for its complexity and low approval rates. In response, the U.S. Department of Education has implemented temporary waivers, such as the Limited PSLF Waiver (which ended on October 31, 2022), allowing more past payments and loan types to count toward forgiveness. It is important to stay updated on any ongoing program adjustments or waivers.

Impact of PSLF:

PSLF can significantly reduce the financial burden for individuals working in public service, allowing them to focus on their careers and community contributions without the overwhelming weight of student loan debt. It aims to bolster the public service workforce by making these often lower-paying, yet crucial, jobs more financially accessible.

Sources:

• U.S. Department of Education – Federal Student Aid
• Consumer Financial Protection Bureau (CFPB)