Public Service Loan Forgiveness Program (PSLFP)
Through the College Cost Reduction and Access Act of 2007, Congress created the Public Service Loan Forgiveness Program (PSLFP) to encourage individuals to enter and continue in certain public service professions.
Under the PSLFP, borrowers may qualify for forgiveness of the remaining balance due on their eligible Federal Direct Loan Program (FDLP) loans after they have made 120 monthly payments on their loans under an eligible repayment plan while employed full time in an eligible public service occupation.
To be eligible for public service loan forgiveness, a borrower:
- must not be in default on the loans for which forgiveness is requested.
- must have made 120 separate, full monthly payments beginning after October 1, 2007, on the FDLP loans for which forgiveness is requested. Payments made on or before this date do not count toward meeting this requirement. Each of the 120 monthly payments must be made for the full scheduled monthly amount within 15 days of the due date.
- must be employed full time by a public service organization:
- While making the 120 required monthly loan payments
- At the time the borrower applies for loan forgiveness, and
- At the time the remaining balance on the borrower’s eligible loans is forgiven.
Note that the borrower doesn’t have to be employed for 120 consecutive months by a public service organization, and the borrower isn’t required to work for the same organization for all 120 months of qualifying service.
Frequently Asked Questions
Any non-defaulted loan made under the Federal Direct Loan Program (FDLP) is eligible for public service loan forgiveness, including Direct Subsidized and Unsubsidized, Direct PLUS, and Direct Consolidation loans.
Although public service loan forgiveness is available only for loans made under the FDLP, loans made under the Federal Family Education Loan Program (FFELP), Federal Perkins Loan Program, and certain health professions and nursing loan programs may qualify for forgiveness if they are consolidated into a Direct Consolidation loan. However, only payments made on the Direct Consolidation loan will count toward the 120 monthly payments required for forgiveness.
The 120 required payments must be made under one or more of the following FDLP repayment plans:
- Standard Repayment Plan
- Income-Based Repayment (IBR) Plan
- Income-Contingent Repayment (ICR) Plan
- Pay As You Earn (PAYE) Repayment Plan
- Revised Pay As You Earn (REPAYE) Repayment Plan
- Any other repayment plan if monthly payments equal at least the amount required under the 10-year standard repayment plan
Under current IRS rules, student loan amounts forgiven under the PSLFP are not considered income for tax purposes. For more information, check with the IRS or your tax advisor.
The borrower must be employed full time (in any position) by a public service organization, or must be serving in a full-time AmeriCorps or Peace Corps position. For purposes of the PSLFP, the term “public service organization” means:
- A federal, state, local, or tribal government organization, agency, or entity (this includes most public schools, colleges, and universities)
- A public child or family service agency
- A nonprofit organization under section 501(c)(3) of the Internal Revenue Code that is exempt from taxation under section 501(a) of the Internal Revenue Code (this includes most nonprofit private schools, colleges, and universities)
- A tribal college or university, or
- A private organization that is not a for-profit business, a labor union, a partisan political organization, or an organization engaged in religious activities (unless the qualifying activities are unrelated to religious instruction, worship services, or any form of proselytizing) and that provides the following public services:
- Emergency management
- Military service
- Public safety
- Law enforcement
- Public interest law services
- Early childhood education (including licensed or regulated healthcare, Head Start, and state-funded pre-kindergarten)
- Public service for individuals with disabilities and the elderly
- Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in healthcare practitioner occupations and healthcare support occupations)
- Public education
- Public library services, or
- School library or other school-based services
For further questions and answers, visit the Department of Education’s (ED) Public Service Loan Forgiveness website and ED’s own Q&As for borrowers.
At this time, ED has not developed an application process for the PSLFP. Since qualifying borrowers must make 120 monthly payments on their eligible federal student loans beginning after October 1, 2007, the first forgiveness of loan balances will not be granted until October 2017. Until an application is available, borrowers planning to seek loan forgiveness under the PSLFP should document their qualifying full-time employment by public service organizations, as those records will be required as part of the application process. Although not required, borrowers are encouraged to submit the Employment Certification for Public Service Loan Forgiveness form to FedLoan Servicing, the PSLFP servicer, each year to help them keep track of their progress toward loan forgiveness. Instructions for completing the form and a fact sheet on the loan forgiveness program are also available.
If you are interested in pursuing a public service career, or are currently serving in such a career and are seeking loan forgiveness under this program, you can contact the Trellis Program Analysis team at (800) 845-6267 or firstname.lastname@example.org for more information.