The Public Service Loan Forgiveness Program may be a useful option for eliminating student loan debt if you work for a government agency or non-profit organization. Qualified borrowers may be eligible to eliminate their debt after just 120 payments, if they know how to approach it properly.

Employment Eligibility

If you work full-time for a qualified organization, you can have your college debt forgiven after 120 qualifying, on-time payments with no tax implications. Qualified organizations include:

  • Federal, state, or tribal government agencies
  • Not-for-profit, tax-exempt 501(c)(3) organizations
  • Select other non-profit institutions that provide approved services such as public health, law enforcement, or early childhood education

Employment in many non-profit sectors may qualify you, so be sure to review the full list of certified fields through the official Public Service Loan Forgiveness Program page.

Full-Time vs Part-Time

Working full-time hours is required to be eligible for this program, but in rare cases you can also qualify by working multiple part-time positions at approved institutions.

Ways to qualify include:

  • Meet your employer’s definition of full-time status or work at least 30 hours per week
  • Work part-time at more than one approved non-profit agency, with a combined schedule exceeding 30 hours weekly.

Note: Time spent for religious instruction, worship services, or any type of proselytizing does not count toward calculating full-time hours regardless of other qualifying factors

Eligible Loan Types

Any loan received under the William D. Ford Federal Direct Loan Program is eligible for this program. Other federal loans, such as a Federal Family Education Loan (FFEL) or a Federal Perkins Loan, are not currently eligible, but may become eligible if you consolidate them into a Direct Consolidation Loan. Before you jump at this option, be aware that any payments made before consolidating your FFEL or Perkins loans will not count toward the 120-payment requirement.

Eligible Repayment Plans

For various reasons, not all payment plans can take advantage of the PSLF program. Your loans will likely need to be repaid through an Income-Driven Repayment Plan to receive the full benefits of forgiveness.

The Standard Repayment Plan is also eligible for PSLF, but as this plan is designed to repay your entire loan in 120 payments, it is unlikely that there will be a significant loan balance to forgive.

Qualified Monthly Payments

To receive credit for payments, they have to meet specific criteria:

  • Only payments made after October 1, 2007
  • Payments must be the full amount shown on your bill
  • Payment must be received no more than 15 days after the due date
  • Payments must occur while employed full-time with a qualified employer.

In addition, you can only make such payments during your schedule repayment period. Payments during any of the following periods will not be counted, regardless of your employment status:

  • In School
  • Grace Period
  • Deferment
  • Forbearance
  • Default

You will also only receive credit for one payment per month no matter how much you pay or how many payments you submit.

Note that special rules may apply for borrowers that are currently Peace Corp or AmeriCorp Volunteers.

Final Payments

Once you’ve made your 120th qualified payment, you will need to submit a PSLF application (currently under development and slated for release by October 2017). You must be working at a qualified institution when your final payment is made to complete the PSLF program.