Public Service Loan Forgiveness, or PSLF, Pitfalls to Avoid

The Public Service Loan Forgiveness program is one of the most popular student loan forgiveness options available. But it’s way more complicated than it sounds.

Written by Mark Kantrowitz / March 16, 2022

Quick Bites

  • Congress added a number of requirements to the Public Service Loan Forgiveness program to reduce the costs, so it’s more confusing than ever.
  • The complexity of Public Service Loan Forgiveness creates many pitfalls that you must avoid if you want to qualify for forgiveness.
  • Borrowers must make 120 qualifying payments on eligible loans in an eligible repayment plan while working full-time in qualifying employment.
  • The Limited PSLF Waiver addresses some of the pitfalls on a temporary basis.

The Public Service Loan Forgiveness (PSLF) program is complicated, with many details that borrowers have to get correct. The complexity of PSLF can make it hard for you to understand just how to get student loan forgiveness, and even lenders can have difficulty implementing it.

In a nutshell, to qualify for Public Service Loan Forgiveness, you must make the correct number of qualifying payments on eligible loans in an eligible repayment plan while working full-time in an eligible job. But there are myriad ways things can go wrong in any of those steps.

The Limited PSLF Waiver has made it a little easier to qualify for PSLF, but it’s temporary. Here’s what you need to know if you want to try for loan forgiveness via the PSLF program.

Inside this article

  1. Pitfall #1: Ineligible loans
  2. Pitfall #2: Wrong repayment plan
  3. Pitfall #3: Not enough payments
  4. Pitfall #4: The wrong job

Pitfall #1: Confusing what’s an eligible loan for the PSLF

Only loans in the William D. Ford Federal Direct Loan Program (Direct Loans) are eligible for PSLF. But Congress put many restrictions in place, so it gets confusing.

Generally, eligible loans include:

  • Federal Direct Stafford Loans

  • Federal Direct PLUS Loans (Parent PLUS and Grad PLUS)

  • Federal Direct Consolidation Loans

Loans in the Federal Family Education Loan Program (FFELP) and Federal Perkins Loans are not eligible by themselves, but if you consolidate either of these loans with a Direct Loan, then they are eligible for PSLF.

Confusing, right? Hang in there.

If you and your spouse consolidated your student loans under the Federal Family Education Loan (FFEL) program into one joint loan, it’s not eligible for PSLF, and you can’t consolidate it with a Direct Loan to become eligible either.

However, joint consolidation loans with your spouse made in the Direct Loan program are eligible. Only the portion of the joint loan that corresponds to the loans borrowed by the borrower who makes 120 qualifying payments will be forgiven. For example, say Alice and Bob have a joint consolidation loan and Alice qualifies for PSLF after 120 payments as a full-time teacher. Only Alice’s share of the joint loan will be forgiven.

Private student loans are not eligible, period.

Determining whether a student loan is eligible can be confusing because some lenders have made or serviced loans in all of the student loan programs. So you’ll want to check with each loan servicer to clarify what specific types of student loans you have.

Pitfall #2: Picking the wrong repayment plan

Eligible repayment plans include the Standard 10-Year Repayment Plan and four income-driven repayment plans:

  • Income-Contingent Repayment (ICR)

  • Income-Based Repayment (IBR)

  • Pay-As-You-Earn Repayment (PAYE)

  • Revised Pay-As-You-Earn Repayment (REPAYE)

Of course, if you are in the Standard 10-Year Repayment Plan, there wouldn’t be a need for loan forgiveness because at the end of the 120-payment period, you would have paid off your loan. So if you want to get PSLF, choosing one of the four repayment plans above makes more sense, since you will likely have a loan balance after making the 120 required payments in these plans.

You may find yourself in the Standard 10-Year Repayment Plan, however, if, say, you become ineligible for one of the four payment plans and have to have your remaining loan balance go into the standard plan. For example, you might be in the PAYE program for nine years, but then your income increases, making you ineligible for the PAYE program, in which case you switch into standard repayment. That lets you finish out the 120 payments. Since the first nine years were under PAYE, there is some remaining debt to forgive.

As you can imagine, there are borrowers who repaid their loans in the wrong repayment plan. To address this, Congress enacted Temporary Expanded Public Service Loan Forgiveness (TEPSLF) to allow borrowers in graduated repayment or extended repayment to qualify for PSLF.

To qualify, your last payment and the payment 12 months before must have been at least as much as they would have been under an income-driven repayment plan. (The Limited PSLF Waiver allows borrowers to repay their loans in any repayment plan, dropping the TEPSLF requirements, but only until Oct. 21, 2022, at which time the TEPSLF rules kick back in.)

Parents are eligible for PSLF, based on their qualifying employment (not the qualifying employment of the student on whose behalf they borrowed), but they must repay the Parent PLUS loans in an income-driven repayment plan to have some remaining debt forgiven.

Parent PLUS loans are not directly eligible for an income-driven repayment plan. However, if the Parent PLUS loans entered repayment on or after July 1, 2006, and are included in a Federal Direct Consolidation Loan, the consolidation loan is eligible for income-contingent repayment (ICR).

Pitfall #3: Missing the number of qualifying payments

PSLF forgives the remaining debt after 120 qualifying payments made since Oct. 1, 2007. The payments do not need to have been consecutive.

PSLF is all or nothing. You cannot qualify for PSLF with fewer than 120 qualifying payments.

There are borrowers who apply for PSLF before they have been paying their loans for 10 years, which means before they have made the necessary 120 payments (you can’t make 120 qualifying payments in less than 10 years). In other cases, the loan servicer did not correctly count the number of qualifying payments.

The qualifying payment count is per loan, not per borrower, so different loans may qualify for forgiveness at different times.

The PSLF servicer had a strict interpretation of the rules, as required by the U.S. Department of Education. This meant that partial payments did not count toward PSLF, even if the amount was off by just a penny. Late payments, which were made more than 15 days after the due date, also did not count toward forgiveness. The Limited PSLF Waiver addresses both of these problems for now, but again, that waiver is void at the end of October, so the strict payment rules will go back in effect.

Payments made during the initial in-school and grace periods, deferments, forbearances and default do not count toward PSLF.

You must also file your annual recertification paperwork for the income-driven repayment plan on time. If you filed the paperwork late, your loans were placed in a temporary forbearance and the payments do not count toward PSLF even if they were for the correct amount. Check what the recertification deadlines and rules are for your loans to be sure you don’t miss it.

Originally, lump sum payments did not count toward PSLF, except for education awards and transition payments earned from AmeriCorps and the Peace Corps, and student loan repayment assistance received by members of the U.S. Armed Forces.

However, the U.S. Department of Education is now allowing borrowers to make a lump-sum payment for up to 12 months or their annual recertification date for income-driven repayment, whichever comes first. The prepayment must fully cover the amount due each month and the borrower must still satisfy the other requirements, such as full-time employment in a qualifying job.

One important note about consolidated loans: Consolidation resets the qualifying payment count. There is an exception for FFELP loans, though. The Limited PSLF Waiver allows payments made on FFELP loans to count if the borrower was employed full-time in a qualifying job, the loans are consolidated into a Federal Direct Consolidation Loan and the borrower files a PSLF form using the PSLF Help Tool by the Oct. 31, 2022, deadline.

Suspended payments during the payment pause and interest waiver established by the CARES Act for pandemic relief count toward PSLF, provided that you remain employed full-time in a qualifying public service job. The payment count will be updated to reflect the suspended payments after you submit an Employment Certification Form (ECF) that covers the time period during which the payment pause and interest waiver are in effect (your employer will have to fill out its part of the form also).

Pitfall #4: Choosing the wrong public service jobs

To qualify toward PSLF, the payments must have been made while the borrower works full-time in a qualifying public service job. (The Limited PSLF Waiver does not waive this requirement.)

Qualifying employment includes working directly for a U.S. federal, state, county, tribal or local government agency or for a nonprofit or 501(c)(3) organization. Working for a nonprofit organization that is not 501(c)(3) can count if the employment involves certain types of qualifying public services, such as public-interest law, emergency management and public safety.

The following types of public service jobs are not eligible:

  • Working for a government contractor (employment must be directly with the government agency)

  • Working for a labor union

  • Working for a partisan political organization

  • Volunteer service, except through AmeriCorps or Peace Corps

  • Being a member of Congress

You can check whether your employment qualifies using the PSLF Help Tool.

Note that the requirement is based on whether the employer is a qualifying employer, not the specific job. Janitors can qualify, if their employer is a qualifying employer.

You must continue working in qualifying employment until the loans are forgiven. Once you qualify for PSLF, any extra payments you made beyond the 120 required payments will be refunded to you.

Working full-time means working for at least 30 hours a week (or your employer’s definition, whichever is greater) in a single qualifying job or a combination of part-time qualifying jobs. Teaching can count as full-time despite the summer break if the employer considers the teacher to be employed for the full year.

Tip: If you started qualifying work or ended qualifying work in the middle of a month, the payment does not count toward PSLF.

It helps if your employer completes their part of the Employment Certification Form (ECF), which you can submit through the PSLF Help Tool. You should submit an ECF at least once a year and whenever you change jobs. This will make applying for PSLF go much smoother. It will also confirm the number of qualifying payments you have made, letting you address problems sooner.

About the Author

Mark Kantrowitz

Mark Kantrowitz

Mark Kantrowitz is a nationally-recognized expert on student financial aid, the FAFSA, scholarships, 529 plans and student loans. His mission is to deliver practical information, advice and tools to students and their families so they can make smarter, more informed decisions.

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