What Is Public Service Loan Forgiveness (PSLF)?

The Public Service Loan Forgiveness (PSLF) program helps public service workers by discharging their federal student loans after 10 years of service. This federal tax-free forgiveness opportunity is a way to draw borrowers into public service jobs and maintain employee retention. 

The program was introduced in 2007 and has had some speed bumps along the way, from limited application approval to confusion about what qualifies as eligible employment. However, with recent changes, more and more borrowers are becoming eligible for PSLF and can benefit from the program. 

How does Public Service Loan Forgiveness work? 

The Public Service Loan Forgiveness program offers a major incentive to federal student loan borrowers who work in public service. If you have eligible employment, the loan forgiveness program wipes out any of your remaining student loan balance after you make a total of 120 payments.

As of June 2023, more than 19,000 borrowers had their loans discharged through PSLF. On average, these borrowers had a balance of $96,343 forgiven, according to Federal Student Aid data. 

Related: How To Get Student Loan Forgiveness in 2023

How to qualify for PSLF

To get student loan forgiveness through the Public Service Loan Forgiveness program, you need to meet certain eligibility requirements. To qualify, you must:   

1. Make sure your loans are eligible

You must have federal Direct Loans from the U.S. Department of Education to qualify for PSLF. If you have Perkins Loans or a Federal Family Education Loan (FFEL), you can become eligible if you use a Direct Consolidation Loan to consolidate your loans. 

If you’re unsure what type of loans you have, log in to your Federal Student Aid account at StudentAid.gov. Then click on “View Details” and proceed to “Loan Types,” which will state the type of loans you have. 

2. Have a job that qualifies 

PSLF is employment-based, which means you need to work for an employer that meets certain criteria to qualify. If you work in the public service field, either in a not-for-profit or government setting, you likely qualify. 

You can use Federal Student Aid’s employer search tool to verify eligibility. You'll need the Employer Identification Number (EIN) for your organization and your job start and end date. 

3. Work full-time for a qualified employer

In addition to having a qualified employer, you must work full-time as well. PSLF eligibility criteria consider 30 hours or more full-time, even if that’s not what your employer would say. This number of hours counts if you work at multiple employers that would qualify for the program as well. 

If pursuing PSLF, it’s a good idea to submit your PSLF form each year to certify your employment. 

4. Choose an income-driven repayment plan

As part of the PSLF eligibility requirements, you must be enrolled in a qualifying income-driven repayment (IDR) plan, such as: 

• Saving on a Valuable Education (SAVE) plan
• Pay As You Earn (PAYE) plan
• Income-Based Repayment (IBR) plan
• Income-Contingent Repayment (ICR) plan 

Each IDR plan uses a percentage of your discretionary income to calculate monthly payments. The SAVE plan may be the most cost-effective and generous of these options, with interest subsidies and payments set at a low percentage of income. Other IDR plans typically use 10% to 20% of your income, whereas SAVE may go down to just 5% of your income if you only have undergraduate loans (starting in 2024). 

5. Make the required payments on time

You also need to make your payments on time. More specifically, you must make a total of 120 monthly payments to get your loans forgiven. But the good news is that these payments don’t have to be consecutive. Consider using automatic payments to ensure your loans are always paid by the due date. 

Applying for PSLF 

Here are the steps to take to apply for Public Service Loan Forgiveness: 

1. If you meet the eligibility requirements and are interested in PSLF, talk to your loan servicer. Your student loans will then be transferred to MOHELA, the current servicer for the PSLF program. 
2. Certify your employment every year and be sure to recertify your income on an IDR plan each year as well. 
3. Once you’ve made the required 120 payments and met your service obligations, you can submit the PSLF form using the PSLF help tool. 

Once your PSLF application is submitted, MOHELA will review both your employment and payment history. If your application is approved, then the rest of your federal student loan balance and interest will be discharged and you’ll be notified. 

If you made more than 120 payments, additional payments will be refunded to you. If you’re not sure where you’re at in the repayment process, you can check your status in your StudentAid.gov account. 

Recent updates to PSLF

Thanks to the one-time IDR payment count adjustment in 2023, PSLF borrowers may see an increase in their qualifying payments, getting them a step closer to loan forgiveness. 

Through this adjustment, some previous payments that didn’t meet the eligibility requirements may now be counted toward PSLF. If you were on a non-IDR repayment plan or had some periods of deferment or forbearance, some of those payments may now be included. 

Other permanent changes to the PSLF program include counting payments that may be late, a lump sum, or partial, and allowing credit for specific forbearance periods and deferments (including months tied to military service, economic hardship, or cancer treatment).  

PSLF alternatives  

If you don’t qualify for PSLF or no longer want to pursue the program, consider other student loan forgiveness programs and alternatives, such as: 

• Other job-based forgiveness programs: Teachers and health care providers may be eligible for other job-based forgiveness programs, such as Teacher Loan Forgiveness and the National Health Service Corps Loan Repayment Program. There may be additional state-based opportunities, such as the California State Loan Repayment Program. 
• Income-driven repayment forgiveness: You can easily shift from PSLF forgiveness to income-driven repayment forgiveness, but the timeline will change. Repaying loans on an IDR plan is a required part of PSLF forgiveness, which erases loans after 10 years. But if you no longer qualify for PSLF, you can still get forgiveness through one of the four income-driven repayment options after a period of 20 to 25 years, depending on the plan. 
• Student loan refinancing: Instead of forgiveness, you can also work to pay down your loan debt through student loan refinancing. Refinancing allows you to change the terms of your repayment and ideally qualify for a lower interest rate. The interest savings can speed up the repayment process and lower total costs over the life of the loan. This strategy does have a major risk, though. By going this route with federal student loans, you forfeit all federal loan benefits, including PSLF and other forgiveness programs. Be sure to carefully consider this before refinancing federal loans.