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Public Service Loan Forgiveness

**APRIL 18 WEBINAR - PUBLIC SERVICE LOAN FORGIVNESS: WHAT TEACHERS NEED TO KNOW**

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Public Service Loan Forgiveness was created to encourage borrowers to go into public service or the nonprofit sector by forgiving their eligible federal student loan balance after making 120 eligible payments in no less than 10 years while working full time with an eligible employer. But while it’s estimated that 4 million workers may be eligible for PSLF, only approximately 10 percent of that number have taken steps to appy to date. That’s why the Center for Consumer Advocacy at American Student Assistance is on a mission to spread the word about this great program! In fact, through our outreach and campaigns, we’ve told close to 4 million borrowers about both PSLF and income driven repayment.

Read on to find out if PSLF might be right for you.
 
The Basics

Here are the three basic things you will need to do to determine your eligibility for PSLF: 

  • Check to see if the federal loans you have are eligible for forgiveness.
  • Check to see if you have made the correct number of payments.
  • Check to see if your employment qualifies as a designated public service field.

If you meet all these criteria, you can apply to have your loans forgiven. The details of these requirements and information on applying can be found below. If you have additional questions about your own eligibility for this program, please contact us at consumeradvocacy@asa.org

Eligible Loans
Non-defaulted loans made in the Direct Loan (DL) program are eligible. These include:

Direct subsidized Stafford loans
Direct unsubsidized Stafford loans
Direct Grad PLUS loans
Direct Parent PLUS loans
Direct Consolidation loans 


Perkins loans, Federal Family Education Loan Program (FFELP), and some health professions and nursing loans are not eligible unless consolidated into the DL program. No payments made before the consolidation will count toward the 120 needed for forgiveness.

Defaulted loans can regain PSLF eligibility if they are consolidated out of default or rehabilitated.

Eligible Payments
You must make all payments while working full time at an eligible employer. Your 120 payments must be on time, in full, and separate, as well as made on or after October 1, 2007, under one of the following repayment programs. (Any combination of payments under these programs would be eligible, and the payments do not need to be consecutive.)

Income-based repayment (IBR)
Income-contingent repayment (ICR)
Pay As You Earn (PAYE) 
Revised Pay As You Earn (REPAYE) 
Payments equal to or greater than the Standard 10-year repayment plan

Keep in mind that the standard 10-year repayment schedule works by splitting your loan amount into 120 equal payments (or 12 payments per year for 10 years). You may not have a balance left to be forgiven if you make most of your 120 payments under the standard 10-year plan unless you make some reduced payments under IBR, ICR, PAYE, or REPAYE.


Exception: Peace Corps volunteers who receive a transition payment after completing their period of service and AmeriCorps volunteers who received a Segal Education Award after a year of service. If you used these payments or awards to make a lump sum payment on your eligible loans, those payments will count toward PSLF. The payment will be counted for up to 12 qualifying payments. The actual number will be determined by dividing your lump sum payment by your scheduled full monthly payment amount.

Eligible Employer
Forgiveness is employer specific, not job specific. So, anyone working for an eligible employer (no matter what you do for that organization) who meets all the other criteria is eligible. To qualify, the employer must be one of the following kinds of organizations:

  • Any tax-exempt nonprofits under 501(c)(3) of the IRS tax code
  • Any government, including federal, state, local, and tribal agencies, the military, and law enforcement
  • Tribal colleges or universities
  • Public child or family services agencies
  • AmeriCorps or the Peace Corps
  • A not-for-profit organization  that provides one of the following public services:
    • Public safety or emergency management
    • Public service law
    • Early childhood education
    • Public service for individuals with disabilities and the elderly
    • Public health
    • Public education, including school-based educational services
    • Public and school-based libraries

Exception: You can’t work for a labor union or partisan political organization, but being a member of a nonprofit union is allowed. You may work for an organization that provides religious instruction, worship services, or proselytizing if your job functions do not include these activities. For example, the priest, reverend, or pastor isn’t eligible, but the parish administrative staff is.
 
If you work for more than one eligible organization part time, you may be eligible as long as you work on average over 30 hours per week between the multiple organizations. Your service also does not need to be consecutive. It will just take longer than 10 years to achieve forgiveness if you work for non-eligible organizations.

How to Apply
You can only apply after making the 120 eligible payments in no less than 10 years. The earliest any borrower can apply is September 2017, or later, depending on when the forgiveness application becomes available.
 
To help you keep track of your eligible payments and months of service, you can complete this form annually with your employer. This is not a requirement, but will help to ensure that you receive credit for all eligible payments. It is ultimately up to you to prove that you worked full time in an eligible job for the full 10 years. Most employers will not keep employment records for more than a few years—so having your employer complete this form annually gives you a record of your full-time employment with an eligible employer.  We strongly recommend that borrowers submit this form annually.
 
After you and your employer complete this form, retain a copy and submit the original to your loan servicer. If you don’t know who that is, you can go to the National Student Loan Data System (NSLDS®) to find out.

Your servicer will likely change after you file this form, because the U.S. Department of Education has assigned FedLoan Servicing (PHEAA) to be the one servicer to work with all PSLF candidates.
 

As an Eligible Employer, Why Should I Care About PSLF?

Employee retention is an important and expensive issue for most employers.  Ensuring your employees are aware of their potential eligibility for the PSLF program by maintaining their tenure with your organization can be an effective way to impact retention.  Feel free to reference this page and/or contact the Center for Consumer Advocacy at consumeradvocacy@asa.org for help in sharing this information with your team.
 

What if I’m a Teacher?

In addition to PSLF, the federal student loan program also offers Teacher Loan Forgiveness. To qualify, you must be a full-time teacher for five consecutive years at an eligible low-income school or eligible education service agency in an eligible subject. So, if you’re ineligible for TLF based on these requirements, you may still qualify for PSLF. Also, it is possible to receive both PSLF and TLF, but your employment can only qualify for one of the forgiveness periods at a time. For example, if you were to apply for TLF after 5 years of teaching, you could then apply for PSLF after another 10 years of teaching (or 15 years total).  Borrowers who took out loans prior to October 1, 1998 are not eligible for TLF unless those loans were paid in full prior to taking out their current loans.

To learn more, register for our upcoming webinar on PSLF, just for teachers!

Will PSLF Still Be Around When I Apply?

While there have been isolated incidents of PSLF eligibility approval being issued in error, the majority of borrowers who have completed an Employer Certification Form and received approval don’t have to worry. To date, the PSLF rules have not changed for borrowers already pursuing this option.

Now with that said, there is always a possibility that policymakers in the future will discontinue PSLF, change eligibility requirements, or institute caps on the amount eligible for forgiveness. So you should always exercise caution in basing the amount you borrow or your career choice on the possibility of loan forgiveness. However, we can say it is highly unlikely that any future changes to the program will apply retroactively to existing student loans. 

Need More Information?

If you’re looking for more in depth information regarding PSLF, check out our recorded presentation about PSLF here.
 
If you have more questions, or are interested in having an in-person or webinar training regarding PSLF or another student loan repayment topic, please email us at consumeradvocacy@asa.org