The Public Service Loan Forgiveness Program (PSLF) forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.  What does this mean for you?  We’ve answered the 5 questions that will help you determine if you qualify for this program.

  1. What is Qualifying Employment?

Employment with the following types of organizations qualifies for the PSLF

  • Government organizations at any level
  • Not-for-profit organizations tax exempt under section 501 (c)(3) of the Internal Revenue Code
  • Other types of not-for-profit organizations that are not tax-exempt under section 501(c)(3) if their primary purpose is to provide certain types of qualifying public services
  • Serving as a full-time AmeriCorps or Peach Corps volunteer

The following types of employers do not qualify for the PSLF

  • Labor Unions
  • Partisan political organizations
  • For-profit organizations, including government contractors

2.  What is considered full-time employment?

Generally, you are considered to work full time if you meet your employer’s definition of full time or you work at least 30 hours per week.  If you work at more than one qualifying job and you work at least a total of 30 hours per week then you meet the full-time employment qualification.

3.  Which types of federal student loans qualify?

Any nondefaulted loan received under the William D. Ford Federal Direct Loan Program will qualify.

4.  What is considered a qualifying monthly payment under the 120-payment rule?

  • Payments made after October 1, 2007
  • Under a qualifying repayment plan
  • For the full amount due as shown on your bill
  • No later than 15 days after your due date
  • Payment made while employed full-time by a qualifying employer
  • Only made during periods when you are required to make a payment
  • Do not need to be consecutive (example: period of employment with nonqualifying employer you will not lose credit for prior qualifying payments)
  • Can’t qualify faster by making larger monthly payments, only get credit for the amount that is required to be paid

5.  What is a qualifying repayment plan?

Qualifying repayment plans include all of the income-driven repayment plans that base your monthly payment on your income.

How to apply:

It will be at least 10 years after you make your first qualifying payment before you can apply for PSLF.  The PSLF program started on Oct 1, 2017, therefore the earliest any borrower will be eligible to apply is in the Fall of 2017.  If you are working towards your PSLF you should complete and submit the Employment Certification for Public Service Loan Forgiveness Form annually or with each change of employer, this will be required to be submitted with the application if it isn’t submitted annually, the forms must be certified by your employers.  The forms should be mailed or faxed to the U.S. Department of Education with the PSLF application form which is currently being created and should be available in September 2017.

You must be working for a qualifying employer at the time you submit the application and at the time the remaining balance on your loan is forgiven.  Amounts forgiven under the program are not considered income for income tax purposes.

If you have any questions or need help with your application, call us at 908-782-7900.