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The Public Service Loan Forgiveness (PSLF) program offers loan forgiveness after 10 years in public service. But it’s important that you don’t wait 10 years to start the application process. Instead, try to submit the PSLF Employment Certification form on an annual basis, or at least every time you change employers.
Submitting this form will help you see if your work could qualify you for PSLF, and if you’re on track to meeting its eligibility requirements. However, this form doesn’t guarantee that you’ll get loan forgiveness, as some borrowers found out the hard way. To get a better sense of the likelihood of getting loan forgiveness via PSLF, let’s look at the following topics:
PSLF denials have sparked legal wrangling
After you submit the public service Employment Certification form, your loan servicer should tell you whether your employer meets the requirements for PSLF.
In legal filings in 2017, however, the Department of Education stated it has never issued approvals to participate in its Public Service Loan Forgiveness program, according to the American Bar Association.
In other words, the approvals based on the public service employment certification forms were not binding.
This meant that even if your employers were previously approved, you could have that approval rescinded. As a result, your PSLF certification for past payments could be retroactively denied.
In December 2016, the American Bar Association filed a suit against the Department of Education. According to a statement, the ABA sued because the Dept. of Education started to disqualify some of those who were already approved for the PSLF program.
The ABA suit aimed to hold the Dept. of Education to the initial employer certifications. But in its response, the Dept. of Education seemed to say that such certifications were not official approvals for PSLF. The letters did not guarantee in advance that payments qualify for forgiveness.
Instead, the borrower must make 120 qualifying payments and then submit an application for Public Service Loan Forgiveness. Only after an official application is in will the Dept. of Education make an official approval or denial.
PSLF program eligibility has some gray areas
The earliest that borrowers could apply for PSLF was in the fall of 2017, since the program began in 2007 and requires 10 years of service. As borrowers found out the hard way at this time, the laws that governed the Public Service Loan Forgiveness program were often unclear and untested.
Borrowers who fell into gray areas of the law apparently had no assurance that they could count on loan forgiveness for their public service. Even today, many borrowers have to make decisions about their student loans without knowing for sure if they’ll get student loan forgiveness.
In 2018, the Department of Education offered the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program to borrowers who unknowingly made some payments on a nonqualifying repayment plan. If you were rejected from PSLF for making payments on the wrong plan, you might ask to be reconsidered through the TEPSLF program.
How to boost your odds of qualifying for PSLF
The Dept. of Education has indicated in its legal arguments that there’s only one sure way to know if you qualify for Public Service Loan Forgiveness: You’ll need to file an official application for forgiveness after 10 years of service.
Although PSLF may not be guaranteed, there are still steps you can take along the way to boost your chances. Here are the steps you should be taking to put yourself in the best position for student loan forgiveness:
- Submit a public service Employment Certification Form. This is the best way to help you figure out if you’ll be eligible for PSLF, even if the approval you get isn’t binding. If you get an approval letter, that’s a good sign (but as mentioned, it’s not guaranteed). If your employer is rejected, you can figure out what you need to do to establish eligibility. Gather and provide further information that supports your assertion that your employer qualifies for PSLF (or consider switching to a different employer).
- Choose your employer carefully. If you work for a government agency or a 501(c)(3) nonprofit, you’re likely in the clear. However, PSLF eligibility can get tricky with nonprofits that don’t hold the 501(c)(3) designation. Sometimes a nonprofit clearly provides a public service. Other times — as in the case with the ABA — it’s less obvious whether a nonprofit organization’s mission qualifies as public service. If you have a choice, opt to work for an employer that clearly meets the public service requirements versus one that doesn’t.
- Make sure you’re on the right student loan repayment plan. To be eligible, you’ll need to have direct loans on an income-driven repayment plan. Depending on the type of loans you have, you might need to consolidate your federal student loans to a type of loan and repayment plan that qualifies. Note, however, that consolidating your loans resets the clock on your qualifying payments.
Consider other student loan repayment and forgiveness options
This information from the Dept. of Education makes it harder to know if you can count on PSLF. Without knowing for sure, PSLF might not be worth it for some borrowers.
It might be time to revisit your student loan repayment options. Check out our Public Service Loan Forgiveness calculator to see how much of your balance could be forgiven.
Public Service Loan Forgiveness Calculator
One you crunch the numbers, you can compare the potential outcome to what you might get through other strategies, such as student loan refinancing or income-driven repayment plan forgiveness.
The Public Service Loan Forgiveness program offers vital student loan relief to many borrowers, but meeting its requirements can be difficult. Of course, that’s not a reason to automatically rule it out. Just make sure you understand all your options for student loan repayment and forgiveness, so you can make the best decision for your career and finances.
Rebecca Safier contributed to this report.
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