The Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.
What is a qualifying employer?
Qualifying employment for the PSLF Program is not about the specific job that you do for your employer. Rather, it is about who your employer is. Employment with the following types of organizations qualifies for PSLF:
- Government organizations at any level (federal, state, local, or tribal)
- Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
- Other types of not-for-profit organizations that are not tax-exempt under Section 501(c)(3) of the Internal Revenue Code, if their primary purpose is to provide certain types of qualifying public services
What types of federal student loans qualify?
Only Direct Loans are eligible for PSLF. If you borrowed before July 1, 2010, some or all of your loans may have been made under an older federal student loan program called the Federal Family Education Loan (FFEL) Program. Read more below about actions you can take to make your FFEL Program loans eligible for PSLF.
You may have received loans under other federal student loan programs, such as the Federal Family Education Loan (FFEL) Program or the Federal Perkins Loan (Perkins Loan) Program. Loans from these programs do not qualify for PSLF, but they may become eligible if you consolidate them into a Direct Consolidation Loan. However, only qualifying payments that you make on the new Direct Consolidation Loan can be counted toward the 120 payments required for PSLF. Any payments you made on the FFEL Program loans or Perkins Loans before you consolidated them don’t count. Transferring of loan(s) to a Direct Consolidation Loan may take 30-60 days to complete. During this time frame you are expected to make regular payments with your prior servicer until the loan(s) is transferred. After the transfer is complete, you will receive a new account for the loan.
If you have both Direct Loans and other types of federal student loans that you want to consolidate to take advantage of PSLF, it’s important to understand that if you consolidate your existing Direct Loans with the other loans, you will lose credit for any qualifying PSLF payments you made on your Direct Loans before they were consolidated. In this situation, you may want to leave your existing Direct Loans out of the consolidation and consolidate only your other federal student loans.
What is a qualifying monthly payment?
A qualifying monthly payment is a payment that you make
- after Oct. 1, 2007;
- under a qualifying repayment plan such as 10 year standard or income based;
- payments don’t have to be consecutive;
- for the full amount due as shown on your bill;
- no later than 15 days after your due date; and
- while you are employed full-time by a qualifying employer.
You can make qualifying monthly payments only during periods when you are required to make a payment. Therefore, you cannot make a qualifying monthly payment while your loans are in
- an in-school status
- the grace period
- a deferment
- a forbearance
How do I apply for Public Service Loan Forgiveness?
Because you have to make 120 qualifying monthly payments, it will be at least 10 years after you make your first qualifying payment before you can apply for PSLF. Since only payments made after Oct. 1, 2007 can be counted toward PSLF, the earliest that any borrower will be eligible to apply for PSLF is fall of 2017. If you are working toward PSLF, you should complete and submit the Employment Certification for Public Service Loan Forgiveness form (Employment Certification form page 1 and 2) annually or when you change employers. We will use the information you provide on the form to let you know if you are making qualifying PSLF payments. This will help you determine if you are on the right track as early as possible.
If you do not periodically submit the Employment Certification form, then at the time you apply for forgiveness you will be required to submit an Employment Certification form for each employer where you worked while making the required 120 qualifying monthly payments.
We will take the following actions after we receive you Employment Certification form:
- We will review your Employment Certification form to ensure that it is complete and to determine whether your loans and employment qualify for the PSLF Program.
- We will notify you if the form you submitted is incomplete or if we cannot determine, based on the information provided on the form, whether your employment qualifies. We may ask you to provide additional information or documentation to help us determine whether your were employed by a qualifying employer.
- If we determine that you do not have eligible loan types, we will notify you that your loans do not qualify.
- If we determine that your loans and employment qualify, we will notify you.
- If we determine that your employment qualifies, and if some or all of your federal student loans that are owned by the U.S. Department of Education are not already serviced by FedLoan Servicing, those loans will be transferred to FedLoan Servicing. You will receive a notice if your loans are transferred.
- If we determine that your employment qualifies, we will then review your payment history (including any payments you made to another federal loan servicer before your loans were transferred) to determine how many payments made during the period of employment certified on the Employment Certification form are qualifying payments for PSLF. We will then notify you of the total number of qualifying payments you have made, and how many payments you must still make before you can qualify for PSLF.
Where do I send my Employment Certification form?
Send the completed form, with your employer’s certification, to FedLoan Servicing, the U.S. Department of Education’s federal loan servicer for the PSLF Program. You may mail the application to this address:
U.S. Department of Educaiton
P.O. Box 69184
Harrisburg, PA 17106-9184
You may also fax your Employment Certification form to 717-720-1628.
If FedLoan Servicing is already your servicer, you may upload your Employment Certification form on their website. It may take 10-14 days after submission of certification for FedLoan Servicing to confirm that your employer is a qualified employer.
Who at my employer can certify my employment?
Your employment can be certified by an official who has access to your employment or service records and is authorized by your employer to certify your employment or your service as an AmeriCorps or Peace Corps volunteer. This will often be someone in the human resources department, though in some cases your direct supervisor or another individual may be authorized to certify your employment. Check with your organization to see who is allowed to certify your Employment Certification form.
Will I automatically receive PSLF after I’ve made 120 qualifying monthly payments?
No. After you make your 120th qualifying monthly payment, you will need to submit the PSLF application to receive loan forgiveness. You must be working for a qualifying employer at the time you submit the application for forgiveness and at the time the remaining balance on your loan is forgiven.
Note that loan amounts forgiven under the PSLF Program are not considered income by the Internal Revenue Service. Therefore, you will not have to pay federal income tax on the amount of your Direct Loans that is forgiven after you have made the 120 qualifying payments.