Employees of the government and non-profit organizations are eligible for a Public Service Loan Forgiveness plan (PSLF).
PSLF is a loan forgiveness program that allows outstanding balance of Direct Loans to be “forgiven” after the payment of 120 monthly payments. PSLF is only available to borrowers working full-time (more than 30 hrs a week).
To apply for PSLF you’ll need to fill out and submit an Employment Certification form. It’s best to complete the form as early as possible to ensure you’ve been making qualifying payments and can avail the benefits of PSLF.
Qualifying Employment
Not everyone can apply for PSLF, you’ll need to be employed by the government or a non-profit organization. Employment with government agencies working at the state, local, federal and even tribal level, will make the borrower eligible for PSLF.
Qualifying Monthly Payment
These payments need to be made:
- For the complete amount stated on the bill
- Under an eligible repayment plan
- While working full-time
- Within 15 days after the due date
Note that these payments can only be made when the borrower is obliged to make them. This means that monthly payments cannot be made when the borrower is in school, in their grace period, deferment or forbearance.
The borrower should consult a federal student loan servicer to waive the forbearance or deferment when it applies.
The 120 payments needed for the borrower to qualify for forgiveness, do not have to be consecutive; if there’s a period where you’re working with a non-qualified employer for a while, you won’t lose credit for any payments you’ve made earlier.
You will only receive credit for paying the required amount. Don’t expect to qualify for PSLF faster by making larger monthly payments.
Qualifying Repayment Plans
A borrower cannot qualify for PSLF unless they are in an income-driven repayment plan. The reason for this is simple: the Standard Repayment Plan only last 10 years, therefore there’s no outstanding balance to forgive.
People that want to get loan forgiveness but aren’t on an income-driven repayment plan should switch immediately to start making qualifying monthly payments. Make sure you assess whether switching to the new repayment plan is best for you before you make the switch.
Applying for PSLF
To apply for PSLF, you need to have made at least 120 monthly payments. This means you have to wait at least 10 years after graduation before you can actually apply for forgiveness.
Because PSLF is tied to income-driven repayment plans, you’ll need to submit an Employment Certification form every year to accommodate for changes in your income. The information on the form will be used to ensure you’re making qualifying payments.
Since the process is long and tedious, it helps to have a loan specialist to guide you. At American Student Services, we have a team of loan specialists that assist student loan borrowers in picking the right repayment plans and loan forgiveness programs for them. We also help them with student loan consolidation and refinancing.
Get in touch with us for more information on our services.