What is the Public Service Loan Forgiveness (PSLF) Program in a Graduate Program? Who all Qualifies for this Program?

Public Service Loan Forgiveness in the definition seems like a dream come true. Your student loan debt is swept clean in return for operating within the public sector for a specified period of time. It’s hard to imagine a better redemption opportunity than that if you work in a qualifying field.

But the PSLF’s truth isn’t all so bright. Although it’s definitely possible to gain loan forgiveness, it’s proving to be more complicated than anyone realized. Since the first batch of borrowers were eligible in 2017, only 96 persons have earned loan forgiveness, according to the Department of Education. Perhaps 96 sounds like a decent amount, but out of nearly 30,000 applications, that’s really all.

What is Public Service Loan Forgiveness in Masters Program?

Participants commit to work in some public service positions with the government and non-profit sectors in exchange for loan forgiveness under the government-funded student loan scheme known as Public Service Loan Forgiveness (PSLF), which was first implemented in 2007. In addition to meeting work standards, for some forms of loan arrangements, they must also make 120 on-time installments and satisfy other conditions.

Can I get Public Service Loan Forgiveness sooner than 10 years?

No. There are 120 individual monthly installments you must make. Paying extra would not make you qualify earlier to collect PSLF.

For up to 12 months, or when the next income-driven repayment (IDR) plan is due, you can pay in advance or make lump-sum payments, which will extend to future months. For instance, if your IDR was recertified and your monthly payment was $100, but you paid $1200 for the payment for the first month, that payment would be counted as 12 different payments for the year. Until the next 12-month period, you will not need to make another deposit. Once you approve your qualified jobs for the 12-month term, these contributions will count as qualifying payments towards PSLF forgiveness.

In order for the prepayment to be eligible for subsequent months, you must

  • For any month you plan to pay in advance during a 12-month period, pay a sum to completely meet future billed amounts;
  • Allow one or two prepayments to pay your debt in advance (if you are on an IDR schedule, you can not prepay until the next annual recertification date; your annual recertification period is the 12-month period where the expenses are based on your income); and
  • For any month you prepay, you have qualifying jobs that covers the due date.

Who Qualifies for Public Service Loan Forgiveness loan forgiveness?

You must make use of loans that are part of the William D. Ford Federal Direct Loan Program to apply. That include Direct Subsidized and Unsubsidized Loans; Direct PLUS loans; and Subsidized and Unsubsidized Loans from Direct Stafford. You will still be eligible if you use the Direct Consolidation Loan package in any of the income driven repayment programs.

On your loans, you must make 120 eligible, on-time payments. Qualified shall mean the balance owing within 15 days of the due date. Payments for lump sums count as one bill. There is no reason for the 120 payments to be consecutive. When you have breaks for deferment or forbearance, you will start, pause and start again. A payment is only eligible if it has been made after October 1, 2007.

For a local, national, federal, or tribal government entity or department, you must work full-time (at least 30 hours per week). You also qualify for 501(c)(3) agencies and other nonprofits that offer public service, such as health or schooling, by operating full-time.

You must request a job verification form after you complete the last of the 120 loan installments. At the moment you submit the paperwork, you may already be working with a professional public service. One of your supervisors must verify that your work and employer have applied for the program if you have moved occupations since the time that you make the 120 loan payments.

Ref: Public Service Loan Forgiveness (PSLF): How to qualify for student loan forgiveness

Qualifying Employment

Qualified employers of public service jobs include:

  • The government (including military, law enforcement, schools. and universities)
  • 501(c)(3) non-profit tax-exempt businesses; like tax-exempt hospitals, tax-exempt charitable groups, tax-exempt educational establishments, etc. 
  • Peace Corps or AmeriCorps
  • Other non-profit organizations that provide one of the following services:
    • Emergency management
    • Military service
    • Public safety
    • Law enforcement
    • Public interest law services
    • Early childhood education (including licensed or regulated healthcare, Head Start, and state-funded prekindergarten)
    • Public service for individuals with disabilities and the elderly
    • Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in healthcare practitioner occupations and healthcare support occupations, as such terms are defined by the Bureau of Labor Statistics)
    • Public education
    • Public library services
    • School library or other school-based services

Qualifying Loan Types

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans
  • Direct Consolidation Loans

PSLF qualifies for any loan obtained under the William D. Ford Federal Direct Loan (Direct Loan) Scheme.

PSLF does not qualify for loans from these federal student loan programs: the Federal Family College Loan (FFEL) and the Federal Perkins Loan (Perkins Loan) Program. However, when you consolidate them into a Direct Consolidation Loan, they may become available.

Private lenders’ student loans do not count for PSLF. Only qualifying payments you make on the current Direct Consolidation Loan which be counted towards the 120 payments needed for PSLF if you combine your loans. It does not count any contributions you made on the loans until you combined them.

What happens when you consolidate your loan after your qualifying payments?

You’ll lose credit on any PSLF payments if you have paid eligible PSLF payments on Direct Loans and then consolidate those loans. On the latest Direct Consolidation Loan, you’ll need to start over and make 120 qualifying payments. For this reason, you can keep your direct loans out of the consolidation and merge only the loans from other federal student loan programs if you have paid eligible PSLF contributions on your direct loans and you are thinking of consolidating those loans along with loans you received under other federal student loan programs.

Qualifying Repayment Plans

All of the income-driven repayment (IDR) programs include qualifying repayment plans (plans that base your monthly payment on your income). Although payments received under the 10-year Regular Installment Plan are qualifying payments, in order to benefit from PSLF, you will have to move to an IDR plan. In the 10-year Regular Installment Agreement, once you have completed the 120 eligible PSLF payments, the loans will be settled in full and there will be no amount to be forgiven. However, before you move to an IDR contract, you should know that under these contracts, your payment will increase based on your income and the amount you owe. If this is the case for you, and you do not want to pay this higher price, so you will not benefit from the PSLF Scheme.

The following repayment plans do not qualify for PSLF:

  • Standard Repayment Plan for Direct Consolidation Loans
  • Graduated Repayment Plan
  • Extended Repayment Plan
  • Alternative Repayment Plan

What about the 10-Year Standard Repayment plan for Graduate Students?

Since the 10-year Standard Repayment plan is available, the debt must be paid in full by the time you completed the 120 qualifying contributions if you were to remain on this schedule. You can move to an IDR package as soon as possible if you are trying PSLF and you are already on the Standard Repayment Plan.

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