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

The Public Service Loan Forgiveness (PSLF) Program provides a path to federal loan forgiveness for students committed to public service careers, from teaching to firefighting.

With big changes linked to COVID, the program is providing unparalleled debt relief.

The U.S. Department of Education and MOHELA, a loan servicer they hired to run the program, is actively processing PSLF applications, offering backdated credit for past payments, forbearance, and deferment periods.

You may also like:

• When Did PSLF Start?

• PSLF Eligible Employers

• Do I Need to Consolidate My Student Loans for PSLF?

• When Will IDR Adjustments Be Made?

Let’s cut through the jargon: Public Service Loan Forgiveness is a federal program designed to lighten the financial load for those in essential, yet often less lucrative, careers. If you commit to a job like teaching, nursing, or public interest law, you could wipe out your remaining balance after making just 120 monthly payments. That’s 10 years, and here’s the kicker: it’s all tax-exempt.

Here are the essentials of how PSLF works:

• 120 Payments: That’s 10 years of monthly contributions, and then you’re free from federal student loans.

• Qualifying Employers: You must work full-time for a government organization or certain not-for-profit-organizations.

• Right Repayment Plan: Payments must be made under a specific repayment plan that qualifies for PSLF.

Related: Latest PSLF Program Updates

PSLF isn’t just about wiping out your debt—it’s about building stronger communities. This program tackles two major challenges head-on:

• Alleviates Financial Stress: For those already in public service roles, PSLF eases the weight of student loans, allowing you to focus on what you do best: serve your community.

• Attracts New Talent: By offering loan forgiveness, PSLF serves as a powerful lure for fresh faces to join crucial fields like education and healthcare.

In short, PSLF creates a win-win scenario. Communities gain dedicated professionals, and those professionals get the financial freedom to stick around for the long haul.

If you’ve worked in public service for 10 years or more, even non-consecutively, and you started after the PSLF Program began, you could qualify to have all your student debt erased.

Here’s what you need to know:

You Need the Right Job

You have to work for a qualifying employer. This could be:

1. Any government organization at the federal, state, local, or tribal level.

2. A 501(c)(3) nonprofit.

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

4. AmeriCorps or the Peace Corps.

5. Religious organizations.

Note that foreign governments and international NGOs usually don’t count.

Related: Do All Nonprofits Qualify for Student Loan Forgiveness?

You Need to Work Full-time

Full-time means at least 30 hours a week. Part-time work can qualify for PSLF under certain conditions. If you have at least two part-time positions with qualifying PSLF employers, and your combined working hours are at least 30 hours per week, you can qualify for PSL

You Need to Pay Under a Qualifying Repayment Plan

To be eligible for PSLF, you’ll generally need to make payments under an Income-Driven Repayment (IDR) Plan. These plans tailor your monthly payments based on your income and household size. The following IDR plans are compatible with PSLF:

• Income-Based Repayment

• Income-Contingent Repayment

• Pay As You Earn

• Revised Pay As You Earn (now replaced by SAVE)

While you could make payments under a 10-Year Standard Repayment Plan, doing so usually leaves no balance to forgive after 120 payments. So it’s often better to switch to an IDR plan. Be cautious, though—some repayment plans don’t qualify for PSLF, like:

• Standard Repayment for Direct Consolidation Loans

• Graduated Repayment Plan

• Extended Repayment Plan.

Not All Loans Qualify

If you’re eyeing PSLF, know that not all loans are in the game. Here’s the breakdown:

• Direct Loans Are Your Best Bet: These are the only loans that naturally qualify for PSLF.

• FFEL and Perkins Loans Need a Makeover: Got Federal Family Education Loans (FFEL) or Federal Perkins Loans? You’ll need to consolidate them into a Direct Consolidation Loan to be eligible.

• Parent PLUS Loans? Consolidate Them Too: If you’re holding Parent PLUS Loans, the same rule applies—consolidate to qualify.

• Private Student Loans and Refinanced Debt Are Out: Loans from private lenders like SoFi or Sallie Mae, or any federal loans you’ve refinanced, are not PSLF-eligible.

Related: Do FFEL Loans Qualify for PSLF?

Policy Changes

Some rules have changed temporarily due to the Biden administration’s policy shifts. For example, payments under the Graduated or Extended repayment plans now count towards PSLF — but this is a temporary change. We’ll dive deeper into these changes later in the article.

So, you’re considering applying for Public Service Loan Forgiveness? Great choice! Here’s a straightforward guide on how to get the ball rolling.

1. Check if You Qualify: Before anything else, make sure you meet all the eligibility boxes. That means having a Direct Loan, working full-time for a qualifying employer, and making 120 payments under the right repayment plan.

2. Keep Records with PSLF Forms: Submit the PSLF & Temporary Expanded PSLF (TEPSLF) Employment Certification Form yearly or when you switch jobs. This keeps tabs on your qualifying work and payments.

3. Fill Out the Form: Complete the required parts of the PSLF form. For the employer certification section, you’ll need help from your employer.

4. Send the Form: You’ve got two options here. Mail or fax the form to MOHELA, the U.S. Department of Education’s designated student loan servicer. If MOHELA is already your servicer, just upload it to their website.

   • Mail: Send it to MOHELA at 633 Spirit Drive, Chesterfield, MO 63005-1243.

   • Fax: Dial 866-222-7060.

5. Track Your Journey: After you’ve sent the form, MOHELA will let you know how many qualifying payments you’ve made. Keep an eye on this.

6. Claim Your Prize: Once you hit 120 payments, submit the PSLF & TEPSLF form again to apply for loan forgiveness.

When should you apply for Public Service Loan Forgiveness? The answer is simple. Apply after making 120 qualifying monthly payments—that’s 10 years—while working full-time for an eligible employer. To keep track of your qualifying employment and payments:

• Submit Annually: It’s a good idea to submit the PSLF & Temporary Expanded PSLF (TEPSLF) Certification & Application form every year.

• Switching Jobs?: If you change employers, submit the form again to update your records.

• Reached 120 Payments?: Once you’ve hit the magic number of 120 payments, fill out and submit the PSLF & TEPSLF form once more to claim your loan forgiveness.

If you’re on the path to PSLF, whether you’ve been in it for the long haul or you’re just getting your feet wet, you need to know about MOHELA. They’re now the official servicer for the PSLF program.

Here’s what you should know:

• For Long-Term Participants: If your PSLF journey started with FedLoan, your go-to for all things PSLF is now MOHELA. They’ve taken over as the program’s sole servicer.

• For New Entrants: Just beginning your journey toward loan forgiveness? MOHELA is your primary contact for everything from applications to finally getting that loan balance to zero.

• Why MOHELA?: They were a natural fit to take the reins from FedLoan Servicing due to their existing partnership and shared technology.

You can contact MOHELA at 1-888-866-4352 if you have any questions about your PSLF application.

If you’re on the path to PSLF, you’ve probably enjoyed a payment pause since March 2020 due to COVID-19 relief measures. But as we approach the resumption of payments and interest, here’s what you need to focus on:

• Credit for Past Payments: Good news! The months you didn’t make payments since March 2020 still count toward your 120 qualifying payments.

• Interest Resumption: Mark September 1, 2023, on your calendar—that’s when interest starts accruing again.

• Payments Resume: Get ready for monthly payments to resume in October 2023. Make sure you’re enrolled in an income-driven repayment plan to continue accruing PSLF credit. Check StudentAid.gov or contact your student loan servicer to see which plan you’re enrolled in.

Qualifying for PSLF got a bit easier during the pandemic thanks to two temporary programs introduced by the Biden administration: the Limited PSLF Waiver and the One-Time Payment Count Adjustment.

Both programs aim to give retroactive PSLF credit your time in repayment, forbearance, and some deferment periods.

• Limited PSLF Waiver: This was your go-to if you made payments that didn’t initially qualify for PSLF. It even helped those who’ve left public service. The catch? The deadline to apply was October 31, 2022. If you met the criteria and applied on time, MOHELA is still processing these applications.

• One-Time Payment Count Adjustment: This is an ongoing program, and here’s the big news: It’s not too late to benefit! The Education Department and MOHELA are still in the process of applying this credit to borrower accounts. This adjustment is automatic and applies to all eligible Direct Loan Program loans. To benefit, you need to be currently employed in a public service job.

Key Differences:

• Who Benefits: The Waiver helped even retirees, while the One-Time Adjustment benefits current public servants.

• Automatic or Manual: The One-Time Adjustment is automatic, whereas the PSLF Waiver required a manual application by the deadline.

Both programs simplify the journey to loan forgiveness. They’re designed to help you cut through the complexities and secure the financial relief you’ve earned through your public service.

So if you’re currently working in a qualifying role, take note: It’s not too late to benefit from the One-Time Payment Count Adjustment.

In July, the rules around PSLF got a facelift, offering even more ways to get your debt wiped out.

Here’s what changed:

• Buy Back Time After Consolidation: Now you can “buy back” periods of deferment and forbearance, making them count towards your loan forgiveness.

• Late and Partial Payments: No sweat if you’re late or need to pay in chunks. These payments now count toward your PSLF credit.

• Lump-Sum Payments: Got a bonus or tax refund? You can make a one-time, lump-sum payment. This payment will first cover any missed months, and then it will count toward future payments for up to 12 months or until your next IDR plan certification.

• Credit for Special Deferments: Get PSLF credit for months you took a break from payments due to military service, economic hardship, or cancer treatment, as long as you also have qualifying employment.

Related: Does Forbearance Count Toward PSLF?

Let’s be real: The PSLF program has its complexities, and many have stumbled on the path to loan forgiveness. But, you can sidestep these common roadblocks. Here’s how:

1. Annual PSLF Form Submission: One of the best ways to keep your PSLF journey on track is by filling out the PSLF and Temporary Expanded PSLF Certification & Application Form yearly, and whenever you change jobs. This keeps tabs on your qualifying payments and employment.

2. Complete Employer Info: Don’t skimp on details. Include all required employer information, like the Employer Identification Number (EIN), to avoid any hiccups in your application.

3. Consistency is Key: Make sure your application info and employment dates match from year to year. Consistency helps prevent any red flags that could delay or jeopardize your application.

4. Track Your Payments: Keep a record of all your on-time payments made through an eligible payment plan. This documentation can be your best friend if any discrepancies arise.

Feeling overwhelmed by the PSLF application process? You’re not alone, and help is closer than you think. Here are your best resources:

• Use Official Tools First: Start with the PSLF Help Tool on the Federal Student Aid (FSA) website to streamline your application. This tool guides you step-by-step, ensuring you don’t miss any critical information.

• Talk to MOHELA: Confused about eligibility? Ring MOHELA, the official PSLF servicer, at 1-855-265-4038. They can clarify any doubts about your loans, employment, or payments. If you disagree with their assessment, you can present additional proof to make your case.

• Crowdsourced Wisdom on Reddit: Check out the PSLF Reddit thread monitored by Betsy Mayotte from The Institute of Student Loan Advocates. It’s a goldmine for crowdsourced advice and real-world experiences.

• Book a Consultation with Us: Still stuck? Schedule a call with my team and me. We’ve erased millions in loans for public service workers just like you.

Each of these options offers a unique approach to solving your PSLF puzzles. Choose the one that best fits your needs.

Navigating the PSLF program can feel like a maze, especially with rules and policies that seem to shift like sand under your feet.

But remember, you’re not alone on this journey.

To cut through the noise and get straight to what matters—how to wipe out your student loan debt and build a financially secure future—book a strategy call with my team and me.

We’re here to offer personalized guidance, updated information, and actionable steps to ensure you’re on the fastest path to loan forgiveness. Don’t leave your financial future to chance; take the first step today.