5 things you need in order to qualify for Public Service Loan Forgiveness

In October, the U.S. Department of Education announced a series of changes to the Public Service Loan Forgiveness Program, which is designed to give student debt relief to borrowers who work in public service. In the past, the PSLF has been criticized for failing to live up to its name and purpose. In 2018, it was revealed that 99% of applicants were denied forgiveness. 

Perhaps the biggest change announced is that the Department of Education will offer a limited waiver so that borrowers can have their payments counted, "regardless of loan type or repayment plan." The Department estimates the waiver will bring over 550,000 borrowers an average of 23 payments closer to loan forgiveness and make 22,000 borrowers immediately entitled to the cancellation. This temporary waiver must be completed by October 31, 2022.

Jason DiLorenzo, founder and CEO of PSLFJobs, an employer consultant and jobs platform, estimates that closer to "1 million borrowers are affected by the recent overhaul; they are either eligible for forgiveness now, or they are closer to it as a result."

Here are the five characteristics borrowers must fulfill in order to qualify for PSLF, according to the Department of Education's Office of Federal Student Aid website: 

  1. Borrowers must be employed by a U.S. federal, state, local, or tribal government or not-for-profit organization. Federal service includes U.S. military service.
  2. Borrowers must work full-time for that agency or organization.
  3. Borrowers must have Direct Loans (or consolidate other federal student loans into a Direct Loan).
  4. Borrowers must repay their loans under an income-driven repayment plan. (This provision has been temporarily waived through October 31, 2022 as part of the limited PSLF waiver.)
  5. Borrowers must make 120 qualifying payments.

Fortunately, there are many jobs that fit these qualifications says DiLorenzo. 

"There are roughly 35 million PSLF-qualified jobs in the U.S. — 22 million federal, state and local government jobs and 13 million 501(c)(3) jobs. The 'public service' sector is much larger than people think," he says, adding that "the PSLF help tool has been greatly improved recently. Borrowers who believe they qualify should start here to certify current or prior employment and learn if they need to consolidate any loans."

"The best thing that you can do is assume that you have the right to loan forgiveness if you work in public service," adds Mike Pierce, executive director at the Student Borrower Protection Center. "Ask questions and make sure that you take advantage of these opportunities to get on track right now." 

Pierce stresses that borrowers who work for a qualifying employer should make sure their loans are direct loans. Borrowers can refer to their FSA profile to confirm if their loans are direct loans and if they are not, can consolidate them into a direct loan if they want to receive public service loan forgiveness. He also says they should take advantage of, and complete, the temporary PSLF waiver if it applies to them.

"In the very beginning of the PSLF program, the education department and the companies that people relied on, didn't know what they were doing and told people the wrong thing. I think we all feel really good about what the next generation of public service workers are going to experience here because people have loans that qualify right out of the gate, people know to enroll in income-driven repayment earlier in their careers, and there's a lot of really good actionable information on the internet and elsewhere to help people get on track," he says.

"I would much rather be a teacher starting out in my career in 2021, than in 2007, when this program first became available."

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