Public Service Loan Forgiveness
Public Service Loan Forgiveness is not a repayment plan, but an option you can work toward while utilizing an Income-Driven Repayment Plan.
It was established to encourages individuals to enter and continue to work full-time in public service jobs. Under this program, federal student loan borrowers may qualify for forgiveness of the remaining balance of their Federal Direct Loans after making 120 payments on their student loans while employed full-time by certain public service employers. Borrowers must be working full time in public service upon application for loan forgiveness and up to the time the remaining balance on the loan is forgiven.
This means one payment a month for 10 years. Qualifying payments do not have to be consecutive but only payments made after October 1, 2007 qualify. You can take time off from your employment in public service, but any on time payments made may not count toward the 120 required payments. However, payments will begin to count again when you are back in eligible public service employment.
Only Federal Direct Loans not in default are eligible. This means you may need to consolidate your past loans into Direct Loans with the Department of Education, if you do not have Direct Loans already. The following types of loans may be consolidated into the Direct Loan Program: Federal Family Education Loan (FFEL) Program loans, which include Subsidized Stafford Loans, Unsubsidized Stafford Loans, Federal PLUS Loans - for *parents, and graduate or professional students, Federal Consolidation Loans (excluding joint spousal consolidation loans), and
Federal Perkins Loans**. IIT University Loans, Neuman Loans, BAR Loans, and private loans are not eligible.
*NOTE: To qualify for forgiveness of a Parent PLUS loan the parent borrower, not the student on whose behalf the loan was obtained, must be employed by a public service organization.
**NOTE: To consolidate just a Federal Perkins Loan into the Direct Loan Program, you must also consolidate at least one FFEL Program loan or Direct Loan.
Eligible Payment Plans
- Income Based Repayment (IBR)
- Income Contingent Repayment (ICR)
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
- Standard Repayment Plan with a 10-year repayment period (However, if a student makes 10 years worth of payments, there will be nothing to forgive, thus it is not a good choice for Public Service Loan Forgiveness.
- Any other Direct Loan Program repayment plan, but only payments that are at least equal to the monthly payment amount that would have been required under the Standard Repayment Plan with a 10-year repayment period may be counted toward the required 120 payments.
SPECIAL NOTE: Amount forgiven does not count as taxable income through Public Service Loan Forgiveness. However, if a borrower does not complete the commitment to public service, and is under the Income Based Repayment Plan, any amount forgiven after the programs 25 year repayment term, will be count as taxable income.
Loan Consolidation does not count as a qualifying loan repayment plan.
For more information about the repayment plans available in the Direct Loan program, please click here.
The borrower must be employed full time (in any position) by a public service organization, or must be serving in a full-time AmeriCorps (vista volunteer) or Peace Corps position. You may also hold two part time positions that equal at least 30 hours per week. Past service at a qualifying job does not count, due to the program being effective as of October 2007. For purposes of the Public Service Loan Forgiveness Program, the term "public service organization" means:
- 501(c)(3) Non-Profit
- A federal, state, local, or Tribal government organization, agency, or entity (includes most public schools, colleges and universities);
- Judicial clerkship (non-volunteer)
- A public child or family service agency; A non-profit 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 (includes most not-for-profit 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 health care, 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 health care practitioner occupations and health care support occupations);
- Public education;
- Public library services; and
- School library or other school-based services.
- Must be scheduled
- Must be on time
- Must be made on or after 10/1/2007
- Review your loans on the National Student Loan Database Service to make sure you have right type of loans to be eligible.
- Consolidate your loans into the Direct Loan Program, if needed.
- Make the right payment: sign up for one of the qualifying loan repayment plans with Direct Loans.
- Fill out the Employer Certification Form (ECF) annually and any time you change employers. This form is sent to the servicer who handles Public Service Loan Forgiveness, FedLoan Servicing. They will confirm if you are eligible. If so, your federal student loans will be transferred to them for servicing. See Employer Instructions.
- Be employed in the right job until forgiveness occurs.
- Renew your Income Driven Repayment Plan annually and promptly.