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Qualifying for Public Service Loan Forgiveness

February 15, 2021

For many working to budget effectively and save for their future, student loan debt is one of the biggest obstacles they face. Because of high interest rates and low payment requirements, this is not just a problem that impacts people after graduation—it can be an issue well into middle age for those who carry large loan balances.

Public Service Loan Forgiveness (PSLF) is a fantastic resource for student loan holders who plan to go into or are currently in a public service role and carry a high amount of student loan debt, as it provides full loan forgiveness for those who qualify. Below, we will look at the details of this program and delve into who qualifies for it so you can see if this is a program that can benefit you.

What is Public Service Loan Forgiveness?

Public Service Loan Forgiveness (PSLF) is a program set up by the federal government to forgive student loan holders who work in certain public service and nonprofit roles for a designated period of time. After working for a qualifying organization for 120 payments (around 10 years, for most), the remainder of the student loan balance will be forgiven.

While 120 payments may reduce your loan balance by quite a bit, for those who carry high loan balances (such as doctors and other medical professionals), having the remainder of the balance forgiven can be a major financial relief and allow you to focus on putting your money towards savings and retirement planning instead of paying off interest.

Who Qualifies for Public Service Loan Forgiveness?

The only caveat associated with PSLF is that a small number of people actually qualify for the program, and it has more to do with who your employer is than what job you hold. Some examples of employers who (usually) allow their employees to qualify for PSLF include:

  • Government organizations at the federal, state, local, or tribal level
  • A designated 501(c)(3) nonprofit organization
  • Nonprofits that are not designated 501(c)(3) nonprofits but meet other requirements
  • AmeriCorps or Peace Corps

While determining eligibility may seem confusing, the Federal Student Aid Department has a Help Tool for people to determine if they are eligible to apply for PSLF.

What Student Loans are Eligible for Public Service Loan Forgiveness?

Not all student loans are qualified for PSLF, which is another caveat with the program. The only loans currently eligible for PSLF are those that originate from or are consolidated through the William D. Ford Federal Direct Loan program. This means that private loans will not be eligible for forgiveness under PSLF. However, if you have loans through other federal programs such as a Perkins loan or a Federal Family Education Loan, it is possible to consolidate these so that they become PSLF eligible. If you have questions about the eligibility of the loans you currently hold, a qualified financial advisor will be a fantastic resource.

If you’d like to learn more about student loan repayment, loan consolidation, or loan forgiveness, we would love to be a resource for you. Set up a consultation today to learn more about how we can help.