What Is Public Service Loan Forgiveness?

Quick Answer

The Public Service Loan Forgiveness program allows eligible government and not-for-profit workers to get full forgiveness of their federal student loan debt if they meet certain requirements set by the Department of Education.

Rear view of teenage students raising hands in classroom

The Public Service Loan Forgiveness (PSLF) program offers a unique opportunity for eligible government and not-for-profit workers to get their federal student loans forgiven. That said, the program has some complexities, so it's important to know how it works to determine whether you qualify and to ensure you get credit for your efforts. Here's what you need to know.

How Does Public Service Loan Forgiveness Work?

The PSLF program was created by Congress in 2007 to encourage Americans to enter public service careers after college graduation. Eligible workers who have federal student loans may be able to get their balance forgiven after making 120 qualifying on-time payments and meeting other criteria.

In 2022, the federal government announced changes to the program to make it easier for eligible borrowers to get approved for discharge—those changes will go into effect on July 1, 2023. If approved, the forgiven amount will not be considered taxable income.

As of January 2023, more than 388,000 federal loan borrowers have received an average of $68,707 in forgiveness through the program, according to the Department of Education.

Who Is Eligible for Public Service Loan Forgiveness?

To qualify for the PSLF program, you'll need to meet a handful of requirements. Here's a quick summary of what to expect:

  • Be a public service employee: You must work for a federal (including the military), state, local or tribal government, or for an eligible not-for-profit organization.
  • Work full time: You must meet your employer's definition of full-time work or work at least 30 hours per week, whichever is greater. If you have more than one qualifying part-time job, you can combine your hours worked at both jobs.
  • Have eligible loans: Only federal direct loans are eligible for the program. However, if you have Perkins loans or Federal Family Education Loans, you can consolidate them with the direct loan consolidation program, making them eligible. Note, however, that only payments made on the new consolidated loan currently count toward the payment requirement.
  • Be on an income-driven repayment plan: Because the standard repayment plan is 10 years, you may end up paying off all of your debt before you can qualify for forgiveness. As a result, it's recommended that you switch to an income-driven repayment plan.
  • Make 120 qualifying monthly payments: You'll need to make 120 qualifying on-time monthly payments. Keep in mind that you can't speed up the process if you make larger payments—they must be 120 separate monthly obligations. However, if you're in the Peace Corps or AmeriCorps, you can use your Segal Education Award or Peace Corps transition payment to make a single lump-sum payment that can count for up to 12 qualifying payments.

Upcoming Changes to the PSLF Program

In 2022, the Department of Education announced permanent changes to the PSLF program that will go into effect on July 1, 2023.

More Payments Qualify

All payments made by eligible borrowers will count, even if they're late or in a lump sum. Currently, you need to make a payment within 15 days of the due date for it to qualify.

Certain Forbearances and Deferments Will Count

Additionally, the federal government will count certain periods of forbearance and deferment toward an eligible borrower's payment count, including:

  • Cancer treatment deferment
  • Military service deferment
  • Post active-duty student deferment
  • Economic hardship deferment, which includes service in the Peace Corps
  • AmeriCorps and National Guard service forbearances
  • U.S. Department of Defense Student Loan Repayment Program forbearance
  • Administrative or mandatory administrative forbearances

Other periods of deferment and forbearance may also count if the borrower makes payments equivalent to what they would've paid at the time.

Borrowers Get Some Credit for Payments Made Before Consolidating

If a borrower consolidates an ineligible loan with the direct loan consolidation program, they'll get a weighted average of existing qualifying payments. For example, if you consolidate a loan with 60 qualifying payments with other loans, your new payment count will be 30.

Number of Hours Worked Will Be Simplified

New rules stipulate that full-time work is considered to be 30 or more hours, regardless of what the employer deems to be full-time employment.

Adjunct faculty will also have an easier time counting credit hours toward their eligibility, and qualifying employers can certify employment for a contractor if that individual is providing services that, by state law, cannot be filled or provided by an employee of that organization.

How to Apply for Public Service Loan Forgiveness

If you believe that you qualify for the PSLF program, follow these steps to start the application process through the PSLF help tool:

  1. Check your eligibility. You can use the help tool to determine whether your employer qualifies as an agency or organization in the public service sector.
  2. Make sure your loans are eligible. Check with your loan servicer to ensure that you have direct loans. If you don't, you'll need to consolidate your loans into a direct consolidation loan to get started.
  3. Get on an income-driven repayment plan. If you aren't already on one, you'll want to switch to an income-driven repayment plan. You can consult with your loan servicer to determine which one is best for you.
  4. Generate a PSLF form. Once you've learned which actions you'll need to take to qualify, you'll generate a PSLF form.
  5. Certify your employment. You'll need to provide the email address of an authorized official at your employer to sign your form and certify your employment each year.

Note that you'll need your most recent W-2 form or your employer's federal employer identification number. The PSLF help tool process typically takes less than 30 minutes to complete.

Alternatives to Public Service Loan Forgiveness

While the PSLF program can wipe out tens of thousands of dollars in debt, it's not available to all student loan borrowers, including those with federal student loans. If you're looking for other forms of relief, here are some to consider:

  • Income-driven repayment forgiveness: Income-driven repayment plans last 20 or 25 years. If you still have a balance at the end of that term, it'll be forgiven. Currently, this type of forgiveness is also not taxable.
  • Teacher loan forgiveness: If you're an eligible teacher or work for an educational service agency, you may qualify for up to $17,500 in teacher loan forgiveness when you work full time for five complete and consecutive academic years.
  • Loan repayment assistance programs: Several federal agencies offer loan repayment assistance programs that can help you pay down tens of thousands of dollars in debt in exchange for service. You may qualify as a member of the military, a public defender, an attorney or a health care worker. Some states also offer repayment assistance programs for eligible residents.

The Bottom Line

Public service jobs often pay less than private-sector jobs, but if you've decided to work for a government agency or a not-for-profit organization, you could take advantage of significant relief on your student loan debt with the PSLF program.

If you believe you might be eligible, start the application process sooner than later, especially if you're unsure whether your loans are eligible for the program. While it takes 10 years of payments and qualifying employment to get approved, having your debt wiped out can be worth the effort.