Part One: Ten Things You Should Know About Public Service Loan Forgiveness

This is Part One of a two-part series about Public Service Loan Forgiveness. We will publish Part Two on December 22nd.

It's no secret that higher education comes with a hefty price tag. From tuition and textbooks to housing and transportation, the total cost to earn a degree increases more and more each year.

For those students who want to work in the public sector after graduation, the burden of educational debt seems even heavier when compared to the relatively low salaries of employees at government and nonprofit organizations. Thankfully, there are programs like Public Service Loan Forgiveness (PSLF) in place to help offset some of this financial weight for eligible graduates.

PSLF was signed into law as part of the College Cost Reduction and Access Act of 2007 to help alleviate the debt burden placed on borrowers who choose to enter low-paying, full-time public service work after graduation. The PSLF program provides tax-free forgiveness on federal loans for borrowers who satisfy a number of requirements.

For those interested in pursuing a public service career after graduation, here are five things you should know about PSLF:

1. You have to make at least 120 on-time monthly payments to qualify for PSLF. These payments must be made after PSLF was enacted on October 1, 2007 - payments made before this date don't count. The payments must cover the full monthly installment amount, and cannot be late (no more than 15 days after the scheduled payment due date). In addition, the 120 payments must be paid separately, month by month. There's no way to make 120 payments in less than 10 years, even if you try to double up on the monthly amount. Since the program was enacted in 2007, the Department of Education will not begin accepting applications until 2017.

2. You must work full-time for a government, 501(c)(3) nonprofit, or public service organization. Employees of labor unions, political organizations, for-profit organizations, and non-501(c)(3) non-profits that don't provide a qualifying service are not eligible for PSLF. You can read the full definition of a "public service organization" in Section 6 of the PSLF Employment Certification Form. Completing this form is also a great way to ensure that your employment is covered under PSLF.

3. You must have federal Direct loans. The PSLF program doesn't apply to private or commercial loans. The older Federal Family Education Loan (FFEL) program is also ineligible for PSLF. FFEL was discontinued in 2010, but if you are an older borrower with FFEL loans be sure to consolidate them in with your federal loans to become eligible for PSLF. You can contact your loan servicer or access the National Student Loan Data System to figure out exactly which loans you have.

4. You must be enrolled in one or more federal Direct loan repayment plans. All of the income-driven repayment plans (Income-Based Repayment, Pay As You Earn, Income Contingent Repayment, and the newer as-yet-released REPAYE program) and the Standard 10-Year Repayment Plan are eligible for forgiveness under PSLF. Technically, you could be enrolled in other Direct loan repayment plans; however, your payments must be equal or greater than the monthly amount due under a Standard 10-Year plan.

5. The payments do not have to be consecutive. It's fine if it takes you longer than 10 years to make 120 qualifying payments. Let's say you work in a public service position for 2 years and make 24 qualifying payments. You take a break to travel, still making payments on your loans but working in a non-qualifying job. After a year, you go back to your public service position. Even with that year-long break, your payments towards PSLF would pick back up where you left off once you make your 25th qualifying payment.

If you need help understanding PSLF, download our free e-book Take Control of Your Future or listen in on one of our upcoming debt relief webinars. We provide lots of information about income-driven repayment plans and PSLF to help students and graduates learn how to better manage student debt.

Check back with us later on this month for Part Two of this series!

Ashley Matthews is a Program Manager for Law School Engagement & Advocacy, managing the Student Debt and Student Engagement programs. Prior to joining Equal Justice Works, she worked as Communications Manager for Legal Services Corporation where she helped design strategies to increase congressional awareness of federally funded civil legal aid. She also led the digital content and communications team for, a public service initiative of the National Association for Law Placement (NALP). Ashley received her J.D. from the University of Miami School of Law.

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