Public Service Loan Forgiveness (PSLF) Guide

Student loan debt has reached astronomical heights, with Americans collectively owing more than $1.7 trillion. Public service loan forgiveness (PSLF) may offer a measure of relief to borrowers who pursue jobs in certain career fields. 

This federal program won’t help everyone, but it’s worth exploring if you work in public service or plan to do so. If you qualify, public service loan forgiveness could lighten your student debt load. 

Keep reading to find out how PSLF works, who is eligible, and how to apply.

What is Public Service Loan Forgiveness?

Public Service Loan Forgiveness is a federal initiative that allows eligible borrowers to have a portion of their Direct Loan debt forgiven. The Department of Education administers the program, aiming to help borrowers who work in public sector jobs. 

Borrowers who qualify can have the remaining balances on their loans forgiven after making 120 qualifying payments. Qualifying payments are on-time payments made while employed full-time by an eligible employer. Payments don’t need to be consecutive to qualify. 

Once your federal loans are forgiven through the PSLF program, you have no further obligation to pay them. Loan amounts forgiven through the program are not considered taxable. 

Who qualifies for public service loan forgiveness?

The PSLF program is open to borrowers who take out qualifying federal student loans and work for eligible employers. The program does not extend to private student loans. 

Under PSLF rules, eligible employers include:

• Federal, state, tribal, and local government organizations
• Nonprofit organizations that have 501(c)(3) status
• Not-for-profit entities that do not have tax-exempt status but operate for the purpose of providing a qualifying public service

The Department of Education also extends eligibility to borrowers who work full-time with the Peace Corps or AmeriCorps. 

Eligible employers include:

• Public elementary and secondary schools
• Family service agencies
• Public colleges and universities
• Public transportation authorities
• Government housing agencies
• Public works agencies
• The U.S. military

Under PSLF guidelines, full-time employment means working at least 30 hours per week on average. Those 30 hours can come from work for a single employer or a combination of hours across multiple part-time jobs. For part-time job hours to count toward the total, all your employers must be eligible under PSLF rules. 

The Department of Education further stipulates time spent on religious instruction, worship services, or any form of proselytizing should be included to determine whether you’re working full-time if those activities are part of your job duties. However, volunteer work or unpaid services you provide don’t count toward your working hours. 

You must also be enrolled in a qualifying repayment plan. According to the Department of Education, that includes:

• Saving on a Valuable Education (SAVE), formerly REPAYE
• Income-based repayment (IBR)
• Income-contingent repayment (ICR)
• Pay As You Earn (PAYE)

You can also qualify if you’re enrolled in a standard 10-year repayment plan or any other plan where your monthly payment amount equals or exceeds what you’d pay under the 10-year plan. 

Choosing one of the income-driven repayment options listed above can result in lower payments and help you to get more of your debt forgiven.

How likely are you to qualify for public service loan forgiveness?

Prior to 2021, the approval rate for public service loan forgiveness was a mere 1% of applications, according to the Government Accountability Office (GAO). The majority of denials were issued on the basis of borrowers being enrolled in the wrong loan program or repayment plan. 

Between October 2021 and May 2023, the Department of Education approved $42 billion in public service loan forgiveness for more than 615,000 borrowers. The surge in approvals was driven by a temporary change to PSLF guidelines implemented as part of federal COVID-19 relief efforts. 

Those numbers are encouraging, but it’s important to remember that PSLF is still relatively difficult to qualify for. You must check off all of the boxes with regard to employment, eligible loans, and qualifying payments to get part of your debt forgiven. 

---

Avoid these errors

Chloe Moore

CFP®

A common mistake is assuming because you work for an eligible employer and make payments, you’re automatically meeting the qualifications for PSLF. In addition to making sure you have the right loan type and repayment plan, it’s wise to certify your employment regularly and recertify your income annually. Certifying your employment annually is not required, but it’s an effective way to track your payment progress. You are required to recertify your income annually to remain in an income-driven repayment plan. 

---

What loans qualify for Public Service Loan Forgiveness?

The table below includes a link to a more comprehensive article on the specified type of loan. 

Type of federal loan	PSLF eligible?
Direct Subsidized Loan	✔️
Direct Unsubsidized Loan	✔️
Direct PLUS Loan	✔️
Direct Consolidation Loan	✔️
Family Federal Education Loan	❌
Federal Perkins Loan	❌

Keep reading for more about PSLF eligibility for each type of loan.

Direct Subsidized Loan

Direct Subsidized Loans alleviate borrowers from the responsibility of paying interest while in school, during the grace period, or during a deferment period. Instead, the government subsidizes the interest. 

• PSLF eligible? Yes, with no maximum limit
• Eligibility criteria: For loans to be eligible, they must not be in default
• Details to know: If you’ve defaulted on a Direct Subsidized Loan, you may be able to make it eligible for PSLF through rehabilitation or consolidation. 

Direct Unsubsidized Loan

Direct Unsubsidized Loans can help borrowers to cover the gap if they max out Subsidized Loan funding. However, borrowers are responsible for the interest on their loans at all times.

• PSLF eligible? Yes, with no maximum limit
• Eligibility criteria: For loans to be eligible, they must not be in default
• Details to know: If you’ve defaulted on a Direct Unsubsidized Loan, you may be able to make it eligible for PSLF through rehabilitation or consolidation. 

Direct PLUS Loan

Direct PLUS Loans can help graduates and professional students pay qualified education expenses. Parents can also take out Direct PLUS Loans on behalf of an eligible student. 

• PSLF eligible? Yes, with no maximum limit
• Eligibility criteria: Direct Plus Loans made to graduate and professional students are eligible for PSLF as long as they’re not in default. 
• Details to know: Parents who take out Direct PLUS Loans on behalf of an eligible borrower would first need to consolidate them in order to enroll in a qualifying repayment plan. 

Direct Consolidation Loan

Direct Consolidation Loans allow you to combine multiple federal loans into one with a single monthly payment. You may need to consolidate certain loan types for them to be eligible for PSLF. 

• PSLF eligible? Yes
• Eligibility criteria: Loans eligible for consolidation include Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans, Subsidized and Unsubsidized Stafford Loans, Perkins Loans, and Federal Family Education Loans (FFEL). 
• Details to know: If you consolidate your loans, qualifying payments you made on Direct Loans are credited to your consolidation loan using a weighted average of those payments.

>>Read more: Should You Consolidate Your Student Loans if You Want PSLF?

---

Tip

Not sure which type of federal student loan you have? You can log in to StudentAid.gov, select “My Aid” from the menu, and navigate to the “Loan Breakdown” section to see your federal loan types. 

---

Do parents qualify for PSLF?

Parents who take out Direct Plus Loans on behalf of an eligible student can qualify for PSLF, but they must meet two conditions first:

1. Consolidate PLUS loans into a Direct Consolidation Loan
2. Enroll in the Income-Contingent Repayment plan

Parents also must make 120 qualifying payments and work for an eligible employer. Only qualifying payments toward the new Direct Consolidation Loan count toward the 120-payment total. Previous payments to the PLUS loans don’t count. 

The federal government is offering a one-time payment count adjustment to eligible borrowers enrolled in income-driven repayment plans, which would give them additional payment credit. Parents who consolidated PLUS loans into a Direct Loan may be eligible. If you qualify, the Department of Education will contact your loan servicer to make the adjustment for you automatically. 

Do payments on income repayment plans qualify for PSLF?

To qualify for PSLF, you must be enrolled in a qualifying repayment plan, which includes income-driven repayment options. Payments made while enrolled in an income-driven repayment plan count toward your 120-payment total as long as you have eligible employment and work at least 30 hours per week on average. 

You could qualify for PSLF on the 10-year standard repayment, but you’d likely realize a greater financial benefit from choosing an income-driven repayment plan instead. IDR plans can lower your monthly payments below what they would be on the Standard plan. The Department of Education offers a loan simulator tool you can use to estimate your payments. 

Note: Certain repayment plans don’t qualify for PSLF. They include:

• Standard repayment plan for Direct Consolidation Loans
• Graduated repayment
• Extended repayment

If you’re enrolled in any of these payment plans and are interested in pursuing PSLF, evaluate which IDR option you might be eligible for. Your loan servicer may be able to offer guidance on which plan is best based on your financial situation. 

---

Tip

Chloe Moore, CFP®, points out: “There’s no benefit to paying more than required if you’re pursuing PSLF. You should select the qualifying repayment plan that has the lowest payment so the largest portion of your loans is forgiven.”

---

How to apply for the public service loan forgiveness program

You can apply for Public Service Loan Forgiveness online at the Department of Education’s website. You must log in using your Federal Student Aid (FSA) ID to complete the application. 

Here’s how the process works: 

• Step 1: Verify your loan eligibility. Log in to StudentAid.gov, and navigate to the “Loan Breakdown” section to review the types of loans you have and confirm whether they’re eligible for PSLF.

Source: StudentAid.gov

• Step 2: Log in to the PSLF Help Tool. The PSLF Help Tool is where you’ll apply for loan forgiveness. You’ll use your FSA ID and password to log in.

• Step 3: Verify your employer is eligible. The Department of Education offers an online search tool you can use to check whether your employer is eligible under PSLF rules. You can search by Employer Identification Number (EIN) to find out whether your employer is listed. 

• Step 4: Complete your application. To apply for PSLF, submit Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application. The PSLF Help Tool should generate this form for you; your employer will need to sign it. 

• Step 5: Submit your form to your loan servicer. Once your employer signs the certification form, you’ll submit it to the Higher Education Loan Authority of the State of Missouri (MOHELA), the dedicated loan servicer for PSLF. MOHELA will then tell you how many qualifying payments you’ve made toward loan forgiveness. 
• Step 6: Make qualifying payments. Once you’ve gotten the count started, continue making qualifying payments. You’ll also need to submit an updated employer certification form each year or any time you change employers. 
• Step 7: Submit your request for forgiveness. If you’ve made 120 qualifying payments, you can submit a PSLF form for forgiveness through the PSLF Help Tool. It will go to MOHELA for final approval. 

---

Tip

If you’d like to track your payment progress, sign up for Account Access through MOHELA. 

---

The pros and cons of PSLF

Public service loan forgiveness can help ease the burden of student debt, but it may not be appropriate for every borrower. Here are several main advantages and disadvantages to keep in mind if you’re considering PSLF.

Pros

• No fees to apply or to consolidate federal student loans. 

• Forgiven amounts are not counted as taxable income by the IRS. 

• Enrolling in income-driven repayment to qualify for PSLF could lower your monthly payments. 

• Your loan servicer may be able to help you choose an IDR plan or navigate the PSLF paperwork. 

Cons

• Public service careers may not have the same earning potential as private sector jobs. 

• Private student loans are not eligible for PSLF.

• Public service careers may not have the same earning potential as private sector jobs. 

• Government policy changes could affect who’s eligible. 

Is PSLF right for you?

Whether public service loan forgiveness might be right for you can depend on the specifics of your situation. Asking yourself the following questions can help you to decide whether it might be worth pursuing:

• Am I committed to working in a public service job for the time required to make 120 qualifying payments to my loans?
• Can I ensure I’ll be able to work full-time for that entire period?
• Will I be able to qualify for an income-driven repayment plan?
• Does my current employment meet the eligibility requirements? 
• Are my loans eligible for PSLF? 
• How much of my loan balance might be forgiven?

---

Our expert’s take

Chloe Moore

CFP®

Consider your current student loan debt-to-income ratio and income trajectory. If your student loan balance is equal to or greater than your long-term earning potential, you’re an excellent candidate for PSLF. If your earning potential is much higher than your student loan balance or you’re not sure you’ll continue to work for a qualified employer, PSLF might not be the best option for you long term. In some cases, it could make sense to just pay the loan balance off over the 10-year period.  

---

If you’re not sure whether PSLF is right for you, consider other options for managing your student debt, such as student loan consolidation through a private student loan lender. Many student loan refinancing companies can refinance federal and private student loans at low rates.

Keep in mind: You’ll need to meet minimum credit score and income requirements to qualify for student loan refinancing with most lenders. If you’re new to building credit, you may need to enlist the help of a cosigner to qualify and get the best interest rates. 

Looking at all the possibilities can help you decide which course to take as you seek student loan debt freedom.