Public Service Loan Forgiveness

By Bruce McClary
The Public Service Loan Forgiveness program, or PSLF, rewards individuals who go into public service jobs. If those individuals make 120 monthly loan payments towards their student loan debt, the remaining balance is forgiven.
This plan was created in 2007 under the College Cost Reduction and Access Act. In a speech, Richard Cordray, the director of the Consumer Financial Protection Bureau, said that the program was being under-utilized. That means there are people working in public service who qualify for this student debt relief but aren’t taking advantage of it. We’d like to offer some more information to help everyone who can benefit from this plan get the debt forgiveness they’ve earned.
Loans that qualify
Federal Direct Loans qualify for the Public Service Loan Forgiveness Program. Perkins loans, FFEL (Federal Family Education Loans), or private loans do not qualify. However, if those other kinds of loans are consolidated into a Direct Consolidation Loan, the new consolidated loan does qualify for PSLF.
Qualifying Repayment Plans
To be eligible for PSLF, payments must be made under a qualifying repayment plan. These include the Income-Base Repayment (IBR) and Income-Contingent Repayment (ICR) plans and the Pay as You Earn Repayment Plan. Payments must be on time and in full each month for 120 consecutive months (10 years).
Jobs that count as public service
Any job with a government agency, any job with a 501(c)(3) nonprofit organization, and certain other jobs qualify as “public service” and would make the borrower eligible for PSLF. These jobs involve nonprofits that aren’t designated 501(c)(3) by the IRS, but provide public benefits like education, library, law enforcement, military, or emergency services. Political organizations, and labor unions do not qualify.
This work must be full-time
Qualifying borrowers must work at least 30 hours per week for a nonprofit organization during the entire 120-month repayment period. (Schoolteachers who don’t work during the summer months must average 30 hours per week during their contracted teaching period.) Anyone who works for a religious organization must spend the time performing public service work; time spent providing religious instruction or conducting worship services doesn’t qualify for PSLF. One can work multiple nonprofit jobs that qualify and add the hours together to get to the 30 hour requirement.
For more information about the Public Service Loan Forgiveness Program, check out the government’s .pdf PSLF fact sheet. You can also talk to your federal loan servicer to get more information and find out if you qualify.
Bruce McClary is Vice President of Public Relations & External Affairs with the National Foundation for Credit Counseling.
Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.