Public Service Loan Forgiveness: What It Is & How It Works

Public Service Loan Forgiveness Program

The Public Service Loan Forgiveness Program (PSLF) is a federal program that forgives the remaining balance of a borrower’s student loans after they make 120 qualifying monthly payments.

The PSLF has been around since 2007 but was only recently that the program has seen an increase in awareness.

Public Service Loan Forgiveness
Public Service Loan Forgiveness

There are currently over 4 million borrowers eligible for the forgiveness program and it is expected to grow to 10 million by 2025.

We will be looking at the Public Service Loan Forgiveness program, what is it, how it works & how it influences student employment, finance, credit score and employment.

What is the Public Service Loan Forgiveness Program

The Public Service Loan Forgiveness Program (PSLF) is a federal program that forgives the remaining balance of your student loans after ten years of payments.

The PSLF program was created to encourage students to enter public service careers and make it easier for them to repay their loans.

Most students because of PSLF had to get full-time employment in public sectors and not-for-profit organizations to be eligible. However, they had to forfeit private firms and profit-based organizations that pay very well to settle for public services that pay less.

If you are eligible for the PSLF program, you will be able to have your remaining student loan debt forgiven after making 120 qualifying monthly payments on a qualified student loan.

Being a public servant or working for a non-profit organization isn’t just one of the eligibilities to qualify for loan forgiveness. You still need to fulfil other requirements, which are:

  1. You must be legally employed by a United States federal, state, local or tribal government or a not-for-profit organisation, including federal service like the United States military service.
  2. You must work full time for that particular organisation or agency, which translates to 30 hours weekly.
  3. You must have William D. Ford direct loans (or consolidates other federal student loans into a Direct Loan scheme)
  4. You must repay your loans under an income-driven repayment plan. 
  5. You must make 120 qualifying monthly loan payments, which translates to 10 years’ worth of qualifying payments. For the payment to be tagged qualifying, it must fulfil the following criteria.

Do note that there is a provision of a limited PSLF waiver opportunity that spans from October 6th, 2021, to October 31st 2022. Due to this, you may be qualified to get credit for payments made on loans that ordinarily won’t qualify for PSLF.

Public Service Loan Forgiveness Program and Your Finances

Public Service Loan Forgiveness can be a great benefit for students who are considering careers in public service or government. However, it can also be a financial burden for those who have other debt obligations that they need to pay off before qualifying for PSLF.

This section will discuss how Public Service Loan Forgiveness affects your finances and what you need to do to qualify for the program.

One of the influences of public service loan forgiveness on your finances is that any amount that is forgiven through the income-driven repayment or other means will not be taxable or considered a taxable income by the end of 2025. This is called the “student loan forgiveness tax bomb.”

The public Service Loan Forgiveness program has its drawback on the post-student finances, even though it will forgive the loan after 10 years.

With PSLF, you will have to forgo a better-paying job in a private organization to work for the government or nonprofit. Also, this goes with the Teacher Loan Forgiveness program in which you will have to forgo teaching at a good school that pays well to teach in a remote small area.

Even after getting into public service or nonprofit, you are still required by the PSLF to make 120 qualifying monthly payments for good 10 years. If you are going with the income-driven repayment plans, this is more demanding as you have to spend 20 or 25 years before you can be forgiven.

Also, the forgiven balance will be taxable, and this might cause a serious problem between you and IRS if you can’t afford to pay the tax. This will leave you in the worst state, as you will constantly be caught in the debt trap and going around it. It will even better for you to go for a private organization or company that pays well to build your finances to pay off your debt.

Public Service Loan Forgiveness does not improve your finances; instead, it negatively affects your finances over the long run, especially if you are going through an income repayment plan.

Public Service Loan Forgiveness and Your Credit Score

Unlike debt settlement or bankruptcy, where your debts are discharged either in full or partially, PSLF doesn’t hurt your credit score at all.

Director of Education at Cambridge Credit Counseling, Martin Lynch, told CNET that for many student loan borrowers, credit scores won’t be impacted dramatically. He went further to state that student borrowers who make their qualifying payments on time and have their loans forgiven will even see a small increase in their credit score.

So be rest assured that your credit score is well protected from declining.

How to Get a Job with the PSLF in the Current Market?

To qualify for the PSLF, you must be a full-time employee of certain types of federal, state, or local public service jobs. These include:

  1. Teachers, professors, and researchers at accredited educational institutions
  2. Teachers in public schools or charter schools
  3. Teachers at public vocational schools
  4. Teachers at private elementary and secondary schools
  5. Teachers at tribal colleges or universities that receive federal funds from the Bureau of Indian Education (BIE)
  6. Employees at Emergency Management
  7. Government (excluding time served as a member of Congress)
  8. Public service for individuals with disabilities
  9. Public service for the elderly
  10. 501(c)(3) tax-exempt organizations
  11. Public library sciences
  12. Military Service
  13. Public Health (this includes nurses in a clinical setting, nurse practitioners, and full-time health professionals that work in health care practitioner jobs and health care support jobs, as defined by the Bureau of Labor Statistics)
  14. Public Safety
  15. Law Enforcement
  16. Social Work in family service or public child agency
  17. Public Interest Law Services (this includes legal advocacy, prosecution or public defence of low-income communities at a nonprofit organization)
  18. Volunteering full-time for the AmeriCorps or Peace Corps

To keep track of your eligibility and payment on an annual basis, fill out and complete the Employment Certification for Public Service Loan Forgiveness.


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What Happens If You Don’t Make your Student Loan Payment?

What are Some Prospective Employers of the PSLF?

Some prospective employers of the PSLF include:

  1. Educational institutions that have a tuition-free or low-cost program
  2. Nonprofit organizations that provide education for at-risk students and adults
  3. Companies that offer tuition reimbursement for employees working in a field related to their education

Steps to Apply for the PSLF Program

The Public Service Loan Forgiveness (PSLF) is a federal program that forgives the remaining balance of a borrower’s student loan debt after making 120 on-time monthly payments.

  1. Steps to Apply for the PSLF Program:
  2. Fill out the application form and submit it online by clicking here.
  3. Check your eligibility by visiting here.
  4.  Make sure you are enrolled in an eligible repayment plan by clicking here.
  5. Make sure you have made 120 qualifying payments as this will help tell of your status.
  6. You have to make sure to remain in the qualifying employment when applying for, and receiving forgiveness

To save time during the PSLF application, ensure you inform your employer early enough to prepare the necessary documents you be needing for the application.

The Risks of Applying for a Public Service Loan Forgiveness Without Seeking Professional Guidance

There are risks associated with applying for a public service loan forgiveness without seeking professional guidance. Let’s look at some of the risks.

  1. One of the risks is that you may not qualify for forgiveness. You may fulfil all the eligibility requirements and yet be denied forgiveness.
  2. The risk of not qualifying for the forgiveness is very high, especially if you have a low income and no other source of funds to pay your loans. You might be left with no option but to default on your loans if you do not qualify.
  3. You might end up paying more than what was originally required by the loan repayment plan.
  4. Despite being on the income-driven repayment, you’re still accruing interest on the loan.
  5. There are high chances that you may end up owing more after 10 years. While going for a private job might give you the money to settle your student loans quicker—without the help of PSLF.
  6. Another major risk is that Congress can easily change the law that can make loan forgiveness a devoid case; so you are never certain about it.

So it is important to consult professional assistance when going for PSLF so that he/she will help guide you through the process or help you choose a better option to pay off your debts. There are many other ways you can offset your debts, and some of this information is exclusive, this is why you need professional assistantship.

When Will You Qualify & What are Your Chances?

According to estimates, about 98% of eligible PSFF applicants are denied forgiveness. So your chances of your application being qualified are very slim.

When denied, you should check and ask the reason why you were denied. If you were denied because of your repayment plan, you can immediately switch over to the income-driven repayment plan and apply the next year.

Another reason why you may be denied forgiveness is that you are on the wrong type of federal loan. Also, you should note that private loans are not eligible either.

To maximize your chances of being approved, check everything in detail and do it carefully. Examine your loan forgiveness plan in the records you submit. 

To increase your chances, you can submit paperwork every year to ensure you are on track. For instance, Public Service Loan Forgiveness applicants are usually encouraged to certify their employment in a public service job with the government on an annual basis.

The fact here is that when you have a government-stamped paper trail for your paperwork, it is harder for your application to be denied, which automatically means that you have a higher chance of being accepted.

If you were rejected for the student loan forgiveness but still feel that you are eligible enough to be rejected, you can always email the government at [email protected]. In this e-mail, you should state what you want the  Department of Education to examine in your eligibility. Ensure you are clear and specific.

Frequently Asked Questions (FAQs)

Do I have to pay student loans if I’m not working?

If you are not working or you aren’t able to get a full-time job, your student loan can be deferred for up to three years. Deferments are always available for federal student loans, but not always for private student loans.

What student loans are not eligible for forgiveness?

The Education Department clearly stated that non-consolidated Parent PLUS loans are not qualified for forgiveness. Even if you consolidate them into a Direct Consolidation Loan by October, it is atoll not eligible for PSLF.

What happens to student loans if you lose your job?

If you lose your job, you may qualify for student loan deferment. Unemployment deferment is available for federal student loans. Also, you can get student loan deferment for some private loans. This unemployment deferment pauses the payment of your student loan until you find a full-time job that is capable of making payments again.

What is the income limit for student loan forgiveness?

Biden Administration has set income limits on student loan forgiveness. According to the Administration, the relief limit has been set for students earning between $125,000 and $150,000 individually or a combined income between $250,000 and $300,000 for married borrowers.


Before going for the Public Service Loan Forgiveness, you must seek professional guidance as they will help to make safe decisions. PSLF seems to be a good idea, but it is not without disadvantages on your finances, tax rates and career choices. 

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