To qualify for Public Service Loan Forgiveness (PSLF), you must make 120 total monthly payments while:
- Enrolled in an Income-Driven Repayment Plan
- Have Federal Direct Loans or have consolidated other federal student loans
- Working full-time for a government agency or certain types of nonprofit organizations
Before Graduating or Immediately Upon Graduation – check these eligibility requirements first and early on to plan for Public Service Loan Forgiveness:
- Check what kind of loan you have by logging in to www.StudentAid.gov.
- Confirm that you have a Federal Direct Loan that is not in default. This is the only federal loan that is eligible for PSLF.
- If some of your federal student loans are not Direct Loans (FFEL and Perkins Loan), they need to be consolidated to qualify; this is likely your situation if you borrowed before 2011. Payments on FFEL or Perkins Loans made before you consolidate will not be counted. Depending on your circumstance there may be pros and cons to consolidating in order to apply for PSLF.
As You Start Working in Public Service – Document Your Employment Using the PSLF Application Form:
- Submit a PSLF application form every year or when you change employers. You’ll want to have documented every qualified employer where you worked while you made a payment towards PSLF. Especially if you have multiple public service employers.
- Make sure that your PSLF application form has all required fields completed. Incomplete forms or inconsistencies may affect your eligibility. If you do not meet a PSLF qualification, the response letter to your application will provide more information.
- Make sure you have all the information required: employer’s address, Employer Identification Number (EIN) which can be found on your Wage and Tax Statement (W-2), and consistent info with your previous application.
As You’re Working in Public Service – Submitting your forms using the PSLF Help Tool:
- Log in with your FSA ID. The tool will import your loan info automatically.
- The Tool will ask a series of questions to confirm you’re on the right track to loan forgiveness and that your employer qualifies for PSLF.
- Find out if your loans qualify and options available to you if they don’t.
- Get a signature from an “authorized official” at your employer, typically someone in your human resources office.
- Print and mail your completed form. Save and archive your documentation (PSLF application, response letters from FedLoan Servicing, and employment documents) in case there are any discrepancies.
After Working at Least 10 Years in Public Service – Applying for PSLF and Getting Your Loan Forgiven:
- Upon making your 120th payment you’re ready to apply for PSLF. You must still be working for a qualified employer when you submit your application.
- Gather your current employer information and any documentation used to prove previous employers qualified while you made payments towards PSLF.
- Complete and submit the PSLF application by using the PSLF Help Tool (see above), by mail, or fax.
- If your PSLF application is approved, then all remaining balance including interest and outstanding principal will be forgiven. Any payments made after the required 120 will be refunded as well.
What are the Differences Between Federal & Private Student Loans?
Federal student loans are provided by the government after a student or their family fills out a FAFSA. The conditions are mandated by law and include specific protections (such as fixed interest rates and income-driven repayment plans) not usually associated with private loans. Unlike federal loans, private loans are provided by private companies like banks or credit unions. Private loans have terms and conditions that are set by the lender. Private student loans are generally more expensive and offer fewer benefits and protections than federal student loans.
How Do I Know If I Have a Private or Federal Loan?
Federal student loan information can be found by going to www.StudentAid.gov. If you do not know the name of your lender or servicer, and you cannot find your loan information at StudentAid.gov, you most likely have a private loan. You can find information about your private loan by checking your credit report.
Any student loan information that shows up on your www.StudentAid.gov account are federal loans. It is common that borrowers have both Federal and private loans. If you have a loan that doesn’t show up on your www.StudentAid.gov account, it is important to check your credit report to find out who your private loan company is.
Are There Different Interest Rates With Federal and Private Loans?
Federal loans have fixed interest rates that are usually lower than private loans. Private student loans can have variable or fixed interest rates. The interest rate on private student loans can be higher or lower than the interest rate on federal loans.
Do Private Student Loans Have Repayment Plans?
Only federal student loans have mandated repayment plans by the government. If you have a private student loan, and are struggling to make your monthly payment, you should contact your loan servicer to inquire about any repayment plans they offer.
What Are Income-Driven Repayment Plans?
Income-Driven Repayment (IDR) can make monthly payments more affordable for borrowers with lower income. In an IDR Plan monthly payments are calculated as a percentage of ‘discretionary income’ based on income and family size. If your income increases while on an IDR plan, your payments can increase. Conversely, if you lose income perhaps due to losing your job, your monthly payment can be reduced to $0.00. After completion of an IDR Plan, any remaining debt may be forgiven. Below is a chart with how different IDR Plans monthly payments are calculated and an estimated timeline for the plan.
|Different IDR Plans
||How is my monthly payment calculated?
*percentage of “discretionary” income*
|How many years can I stay in the plan for?
*any remaining debt is forgiven after completing these timeframes*
|Revised Pay as You Earn (REPAYE)
|Pay as You Earn (PAYE)
|“New” Income-Based Repayment (IBR)
|Income Based Repayment (IBR)
|Income Contingent Repayment (ICR)
When Do I Sign Up For an Income-Driven Repayment (IDR) Plan?
After your 6-month grace period ends (when you leave your higher education program or graduate) you will automatically enter the 10-year Standard Repayment Plan. You can enroll in an IDR Plan at any time when you are paying off your student loans.
To remain in an IDR plan, you must recertify your income and family size with your servicer annually. If you don’t recertify by your specific deadline, your monthly payment will increase to the amount you would pay under the 10 year Standard Repayment Plan.
If you don’t recertify your income by the annual deadline any unpaid interest will be capitalized (added to the principal balance of your loans). This will increase the total cost of your loans over time because you will then pay interest on the increased loan principal balance.
Borrowers who fail to recertify can still reenter an IDR plan at any time. And, borrowers can recertify their income at any time if they need to adjust their payments due to loss of income or job.
What Happens If My Income Increases Under the Income-Driven Repayment (IDR) Plan?
If your income ever increases to the point that your calculated monthly payment amount would be more than the 10-year Standard Repayment Plan, you’ll remain on the IDR plan, but your payment will no longer be based on your income.
Instead, your required monthly payment will be the amount you would pay under the 10-year Standard Repayment Plan, based on the loan amount you owed when you first began repayment. Again IDR Plans are especially beneficial to borrowers who are lower-income or may have become unemployed.
What is the CARES Act & Executive Action?
The CARES Act provides relief to some student loan borrowers during COVID-19 by mandating that federally-held, direct student loans are automatically placed in an administrative forbearance that suspends both payments and interest until September 30, 2020. President Joe Biden used executive action to extend this relief until September 30, 2021.
Who qualifies to have loans paused?
Under the CARES Act and executive actions, federal Direct Loans all qualify as well as Federal Family Education Loans (FFEL) that are held by the Department of Education. The only loans that do not qualify are commercially-held FFEL Loans, Perkins Loans owned by your college, and private loans.
Is the pause automatic or do I need to opt-in?
The pause on most federal student loans is automatic and you DO NOT need to opt-in. Eligible federal loans are automatically placed in administrative forbearance from March 13, 2020, to September 30, 2021. If you made a payment after March 13, you can request a refund by contacting your servicer.
How does the pause work with the grace period upon graduation?
Existing rules allow for students who leave their program or recent graduates to not begin making payments on their federal student loans until 6 months after leaving school – this is called the “grace period.” Those whose “grace period” ends during the pause on federal student loan payments will automatically have their payments paused as well. Those whose “grace period” ends after the pause on federal student loan payments expires will immediately enter repayment.
How does this affect Public Service Loan Forgiveness?
The Department of Education states that suspended payments WILL be counted toward Public Service Loan Forgiveness (PSLF) if you meet all other loan forgiveness requirements. These requirements include if: (1) you have Federal Direct Loans, (2) continue to work for an eligible employer, and (3) were on a qualifying repayment plan prior to the implementation of the CARES Act.
What happens if I am already in default?
The Department of Education announced a pause on debt collection against defaulted borrowers, including wage garnishment, reduction of tax refunds, and reduction of Social Security and Social Security disability benefits. Recent guidance states that the pause on debt collection applies from March 13, 2020, to September 30, 2021. If collections against you were being processed after March 13, you are eligible for a refund on that amount.
What happens after September 30, 2021?
At this time, federal student loan payments will resume on October 1, 2021. If you are concerned about your ability to make payments, the guidance states that your federal loans are eligible for an income-driven repayment (IDR) plan, setting your payment based on your income for the next 12 months.
Public Service Loan Forgiveness (PSLF) is a federal program that could erase your federal student loan debt. This program is designed to support people working in lower-paying, but vitally important public service jobs, like non-profit work, social work, healthcare, and others.
It is important for you to understand that there are requirements you must meet to receive this loan forgiveness – your student loans won’t just be automatically forgiven after a couple of years of public service work. There are several requirements you must meet to receive public service loan forgiveness. You must meet these requirements for a total of 120 monthly payments, so it is important that you are on track early on. Make sure to read all the requirements carefully. After meeting all the requirements, and after you’ve paid 120 monthly payments (that’s at least 10 years of cumulative payments), you will need to submit an application to apply for PSLF to have your debt forgiven. Here are some steps you can take to ensure you receive the loan forgiveness you are expecting.
- Have the Right Type of Loan – Federal Direct Loans
- Federal Direct Loans are the ONLY type of loan that qualifies for PSLF. If you have a different type of federal loan, for example, Family Federal Education Loans (FFEL) or Perkins, don’t worry! You can consolidate your loan to qualify. Word of caution here – there are many different factors to consider when consolidating a loan as this creates a new loan with new terms. Depending on your circumstance there may be pros and cons to consolidating in order to apply for PSLF.
- Have the Right Type of Employer:
- You must work full-time for a qualifying employer while you are making your 120 monthly payments to be eligible for PSLF. Working full-time means working at least 30 hours per week or meeting your employer’s definition of full-time. This is about who your employer is, not your job title. Many qualifying employers include non-profits, government jobs, and public service work. Check if your employer qualifies by asking your Human Resources Department.
- Be in the Right Type of Repayment Plan – Income-Driven Repayment:
- To benefit from PSLF, you should repay your federal student loans under an income-driven repayment (IDR) plan. Income-driven repayment plans require you to update (or “recertify”) your income/family size each year. Income-driven repayment plans can be highly beneficial for borrowers that have lower-incomes. Payments can be as low as $0.00 per month, especially for borrowers facing a loss of income or job, and still, qualify towards the required 120 monthly payments for PSLF.
There are other federal repayment options that do NOT count towards PSLF. These include Extended Repayment, Graduated Repayment, and Extended-Graduated Repayment. Also, you can’t make a qualifying payment while your loans are in any of these statuses: in-school status, the grace period, deferment, forbearance, and default.
You can’t qualify for PSLF faster by making larger payments. In fact, making larger payments can create a domino effect that disqualifies future payments as well. So, you will need to make a payment equal to the exact amount owed for that month to receive credit for a qualifying PSLF payment.
For full PSLF requirements and details go to www.studentaid.gov.
Luckily, financial aid covers most tuition and fees. Other expenses that arise from our college education are our personal expenses. Financial aid does not cover these, even though some of these expenses are related to college. Personal expenses include personal items such as laundry, going out to a movie, or eating out. Expenses vary from one student to the next based on their particular needs and lifestyle.
To learn more about personal expenses, download this guide Personal Expenses Explained. Guide provided by DecidED
Navigating your financial aid award letter can be confusing because of all the unknown terms and definitions. It is important to understand your total attendance cost so that you determine what you may need to pay out of pocket.
Tuition and Fees are part of the expenses on your financial aid award letter. Tuition refers to the cost of attendance and fees are other expenses like room and board, meal plans, and books!
To learn more about tuition and fees, download this guide Tuition and Fees Explained. Guide provided by DecidED
Being selected for verification regarding your financial aid doesn’t mean you did something wrong.
Sometimes students are selected for something called “verification.” It is very common for students to be selected for verification. If you are selected, you need to submit additional documents or information to the financial aid office at the college that confirms what you wrote on your FAFSA.
Completing this process will ensure you receive all the potential financial aid you are eligible for and that you get your financial aid on time.
To learn more about the verification process, download this guide What You Need to Know About Verification. Guide provided by DecidED
Work-study is one of the financial aid options that are available to you if you qualify for it. There are usually on-campus work-study programs or off-campus work-study programs. You must connect with your school to see what options are available for you.
There are several benefits of a work-study job including flexibility with hours, little or no commute since most opportunities are on campus, and easy access to campus resources.
To learn more about work-study programs, download this guide Work +Work-Study. Guide provided by DecidED