Public Service Loan Forgiveness: What It Is, How It Works

Public Service Loan Forgiveness is a federal program designed to encourage students to enter potentially low-paying careers like firefighting, teaching, government, nursing, public interest law, the military and religious work.

You must make 10 years’ worth of payments, for a total of 120 payments, while working for the government or a nonprofit before qualifying for tax-free forgiveness.

You can use the PSLF Help Tool on the federal student aid website to find out your eligibility based on the types of loans you have and your employer.

Public Service Loan Forgiveness has undergone temporary changes in the face of the COVID-19 pandemic.

• First, all federal student loans were put into forbearance with no payments due through perhaps as long as summer 2023.

• Second, the Education Department issued a limited waiver of sometimes-onerous provisions for counting payments. While a one-year waiver for PSLF expired on Oct. 31, 2022, a very similar income-driven repayment waiver extends most of the provisions into summer 2023.

» MORE: Q&A on the new IDR waiver

For PSLF seekers, the waiver means a broader range of past payments will count toward forgiveness, as long as you were working for a qualified employer at the time of repayment. If you want to apply for PSLF under these relaxed rules, you'll need to do so by May 1, 2023.

You’ll find details on these programs below.

» MORE: Student debt cancellation is here

Federal student loan borrowers seeking PSLF don't need to make payments until the extended automatic forbearance expires sometime in 2023, depending on the outcome of legal challenges to debt relief. As long as you're still working full-time for an eligible employer, those months of nonpayments will count toward the 120 payments needed to qualify for PSLF.

In other words, if you have not made payments since March 2020 and won't make another until, say, August 2023, you are more than three years closer to forgiveness.

Under the limited waiver, any payments made toward your federal loans, regardless of the payment plan you’ve been on, will count toward PSLF. Previously, only payments made on certain repayment plans would qualify.

If you made payments in the past that were rejected because they weren’t considered on time, those will now count toward PSLF.

Any payments made on Federal Family Education Loan (FFEL) or Perkins loans after 2007 will retroactively count toward PSLF. Previously, payments on these loans were not counted toward PSLF.

If you have consolidated your non-Direct Loans prior to the limited waiver period, the payments made prior to consolidation will also count toward PSLF.

For members of the military, any time spent in active duty will count toward PSLF, regardless of whether loan payments were paused or not during that time.

If you have applied to PSLF in the past and been denied, the Education Department said it will be reviewing rejected applications. The Department will also be reaching out to borrowers who can now receive forgiveness under PSLF but haven’t applied to make sure they’re aware of the temporary rule changes.

If you're seeking relief via the waiver and are not receiving the help you need from your servicer, the Consumer Financial Protection Bureau instructs borrowers to make a complaint.

The limited waiver applies to borrowers with Direct Loans, those who have already consolidated into a Direct Loan, and those who consolidate into a Direct Loan by May 1, 2023.

Grad PLUS loans are included under the limited waiver.

Parent PLUS loans are also now included, according to updated guidance released by the Education Department. Consolidation does not affect the eligibility of these parent PLUS loans. To qualify, the parent who originally took out the parent PLUS loan must work in a public service job — it doesn't matter if the student or other parent has a qualifying job.

"If you believe you might benefit, you should update your employment certification history to reflect all periods of public service employment," the Education Department wrote.

Some federal loans are not Direct Loans. If you have FFEL or Perkins loans, for instance, you will need to consolidate your loans into a Direct consolidation loan before May 1, 2023. You will then need to verify that you work for an eligible employer and submit a PSLF form — also before May 1, 2023. You can technically submit a combined PSLF/Employer Certification Form prior to consolidating, but you must consolidate in order to get forgiveness.

If you already hold Direct Loans, there is no need to consolidate. Rather, you just need to verify you work for an employer eligible for the program and then submit a PSLF form through your loan servicer before May 1, 2023.

While the limited waiver applies only to past payments, the education department has made some changes to payments that will count moving forward. These changes won’t go into effect until July 1, 2023. So long as borrowers still meet public service employment requirements, they can get credit for:

• Late partial and lump sum payments.

• Months borrowers spent in specific types of deferment or forbearance, including military service, economic hardship or cancer treatment.

The changes would also allow qualifying public service employers to certify employment for contractors.

Beginning April 2022, borrowers whose applications were rejected for PSLF and Temporary Expanded PSLF can request a reconsideration online at studentaid.gov. Anyone who thinks their application should be reconsidered can submit a request.

You'll be able to submit one or more reconsideration requests of your application to certify employment or payment determinations. You won't need to provide more documentation with your request, but you might have to provide more information following its review. There was no deadline provided.

You still must meet payment and employment requirements under the law, which includes the current waiver that would count previously ineligible payments.

To figure out if you need a reconsideration of your employer, you can use the PSLF Help Tool. If your employer isn’t eligible, consider supplying documentation as to why the not-for-profit organization you work for should qualify.

Federal Student Aid did not indicate how long it would take to review each submission. Make sure your studentaid.gov account has the most up-to-date contact information so you can receive correspondence. More information about reconsideration of payment counts and employer qualifications are available on the student aid site.

In August 2022, President Biden announced a plan to cancel up to $20,000 in federal student loan debt per borrower. However, the program is on hold until the Supreme Court weighs in on two major student loan lawsuits that have frozen its rollout. A final decision could come as late as the summer of 2023.

PSLF-eligible borrowers with qualifying loans will also be eligible for cancellation if it survives the legal challenges.

PSLF borrowers who are already enrolled in an income-driven repayment plan would likely be among those who receive cancellation automatically since the Department of Education already has their income information.

Borrowers who would likely receive Biden’s cancellation automatically may also choose to opt out if they're concerned about, for example, state tax implications. Any borrowers who are pursuing PSLF and won’t receive cancellation automatically would need to apply for the relief.

According to November 2022 data from the Department of Education, 359,790 borrowers qualified for forgiveness through the year-long waiver of payment rules that expired on Oct. 31. Most have seen their balances discharged already.

The average balance of borrowers whose loans were discharged or are expected to be discharged is about $67,000.

Only about 12,527 borrowers had seen their discharges processed through the traditional PSLF process as of Oct. 31, according to education department data.

The Education Department said it intends to make many provisions of the waiver for PSLF permanent. Regardless, many of the current requirements will remain in place.

Parent PLUS borrowers looking to qualify for forgiveness under PSLF need to follow the current qualifications.

Have the correct type of loans, or consolidate

Only loans that are part of the federal direct loan program are eligible for PSLF. Private student loans aren’t eligible.

You can consolidate other types of federal student loans — Federal Family Education Loan loans or Perkins loans — to make them PSLF-eligible.

If you qualify for Perkins loan cancellation, which offers forgiveness after five years of public service, pursue that option and don’t consolidate your Perkins loans. You can still participate in PSLF with your other federal student loans.

Work full time for a qualifying employer

Eligibility in the program depends less on the type of work you do and more on who your employer is. Qualifying employers can include:

• Government organizations at any level.

• 501(c)(3) nonprofits.

• AmeriCorps or the Peace Corps.

• Nonprofit organizations that don’t have 501(c)(3) status but provide a qualifying public service as their primary purpose.

• Religious organizations.

Complete an employment certification form to confirm that your employer qualifies. Send the form to MOHELA Servicing, the contractor that currently oversees PSLF for the department. When the form is processed, your loans will be transferred to MOHELA to be serviced going forward.

Submit a new form annually, or whenever you change jobs, to make sure you’re on track for forgiveness. You’re not required to submit the form every year, but it’s a good idea to do so for your records. You can also apply for forgiveness once you’re eligible and certify your employment retroactively.

You must work for your qualifying employer full time, which amounts to at least 30 hours per week. If you work part time for two qualifying employers and your time averages at least 30 hours per week, you might still be eligible.

Switch to income-driven repayment

For borrowers who can’t qualify for the temporary waiver, your payments must be made on the standard 10-year plan or on one of the four income-driven repayment plans.

You’ll save the most money if you make all qualifying payments on an income-driven plan. If you make all payments on the standard plan, you’ll pay off the debt by the time you’ve made enough payments to qualify for PSLF.

Payments made on the graduated or extended federal repayment plans don’t typically count toward PSLF. But under the Temporary Expanded Public Service Loan Forgiveness program, which the Trump administration rolled out in March 2018, payments made on those plans may still qualify.

Make 10 years' worth of payments

You must make 120 monthly loan payments. These payments must be made:

• For the full amount due.

• On time, meaning within 15 days of your due date.

• On or after Oct. 1, 2007.

• While you’re working full time for a qualifying employer and on a qualifying repayment plan.

Payments don’t count if they’re made while you’re in school, in deferment or forbearance, during a grace period, or if your loans are delinquent or in default.

The payments do not need to be consecutive. For example, you could make some qualifying payments, pause payments through forbearance and then resume repayment, picking up where you left off.

You can also change jobs, switching between qualifying employers and nonqualifying employers. However, payments only count toward PSLF when you’re working for a qualifying employer.

As of August 2020, lump-sum or early payments also count toward the 120 needed for forgiveness. You can do this multiple times each year up until your annual recertification deadline. For example, if your monthly bill was $100 and you paid $500, that would count for your next five payments.

Apply to forgiveness

Once you’ve met all of the above requirements, submit the Public Service Loan Forgiveness application. You must be working full time for a qualifying employer when you apply.

Along with the application, you’ll need to submit an employment certification form for your current employer and each employer you had while making the 120 payments. If you’ve been completing these forms regularly, you’ll need to submit only one for your current employer.

MOHELA Servicing will notify you when it receives your paperwork. You aren’t required to make loan payments while it processes your application.

You're not alone if you don't meet PSLF's strict requirements. You also have other options: