Public Service Loan Forgiveness (PSLF) is a program that forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer. To be eligible for PSLF, you must work for a government organization at any level (federal, state, local, or tribal), a nonprofit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code, or certain other types of nonprofit organizations.
To qualify for PSLF, you must also make 120 on-time, full, scheduled monthly payments on your Direct Loans while working for a qualifying employer. Only payments made under certain repayment plans count towards the 120 payments required for forgiveness. These plans include the Standard, Extended, Graduated, and PAYE (Pay As You Earn) repayment plans.
If you think you may be eligible for PSLF, it’s important to keep track of your qualifying payments and to submit the Employment Certification Form (ECF) annually or whenever you change employers to confirm your eligibility and to make sure that you are on track to have your loans forgiven.
How 120 Payment System Works
The 120 payment system for Public Service Loan Forgiveness (PSLF) is a way to track your progress towards having your remaining student loan balance forgiven. Under PSLF, you may be eligible to have your remaining student loan balance forgiven after making 120 qualifying monthly payments on your Direct Loans while working full-time for a qualifying employer.
To qualify for PSLF, you must work for a government organization at any level (federal, state, local, or tribal), a nonprofit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code, or certain other types of nonprofit organizations. You must also make 120 on-time, full, scheduled monthly payments on your Direct Loans under a qualifying repayment plan while working for a qualifying employer.
Only payments made under certain repayment plans count towards the 120 payments required for forgiveness. These plans include the Standard, Extended, Graduated, and PAYE (Pay As You Earn) repayment plans. If you are not sure which repayment plan you are on, you can check with your loan servicer or log in to your account on the Federal Student Aid website to see which plan you are enrolled in.
It’s important to keep track of your qualifying payments and to submit the Employment Certification Form (ECF) annually or whenever you change employers to confirm your eligibility and to make sure that you are on track to have your loans forgiven. If you think you may be eligible for PSLF, it’s a good idea to consult with your loan servicer or a financial aid advisor to ensure that you are on the right track.
When Clock Start for My 120 Loan Payments?
The clock for your 120 loan payments for Public Service Loan Forgiveness (PSLF) begins when you first make a qualifying payment on your Direct Loans. To qualify for PSLF, you must make 120 on-time, full, scheduled monthly payments on your Direct Loans under a qualifying repayment plan while working full-time for a qualifying employer.
Only payments made under certain repayment plans count toward the 120 payments required for forgiveness. These plans include the Standard, Extended, Graduated, and PAYE (Pay As You Earn) repayment plans. If you are not sure which repayment plan you are on, you can check with your loan servicer or log in to your account on the Federal Student Aid website to see which plan you are enrolled in.
It’s important to keep track of your qualifying payments and to submit the Employment Certification Form (ECF) annually or whenever you change employers to confirm your eligibility and to make sure that you are on track to have your loans forgiven. If you think you may be eligible for PSLF, it’s a good idea to consult with your loan servicer or a financial aid advisor to ensure that you are on the right track.
Which Loans Are Eligible for PSLF?
Only Direct Loans are eligible for PSLF. Direct Loans are federal student loans that are made directly by the U.S. Department of Education. These loans include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans.
If you have other types of federal student loans, such as Federal Family Education Loans (FFEL) or Federal Perkins Loans, you may be able to consolidate them into a Direct Consolidation Loan to become eligible for PSLF. However, only payments made on the Direct Consolidation Loan after it has been consolidated will count towards the 120 payments required for forgiveness.
It’s important to note that private student loans are not eligible for PSLF. If you have both Direct Loans and private loans, only the Direct Loans will be eligible for forgiveness under the PSLF program.
How Do I Apply for Public Service Loan Forgiveness?
To apply for Public Service Loan Forgiveness (PSLF), you must first make sure that you are eligible for the program. To be eligible for PSLF, you must:
- Have Direct Loans: Only Direct Loans are eligible for PSLF. These include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans.
- Work for a qualifying employer: You must work for a government organization at any level (federal, state, local, or tribal), a nonprofit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code, or certain other types of nonprofit organizations.
- Make 120 qualifying payments: You must make 120 on-time, full, scheduled monthly payments on your Direct Loans under a qualifying repayment plan while working for a qualifying employer.
- Enroll in a qualifying repayment plan: Only payments made under certain repayment plans count towards the 120 payments required for forgiveness. These plans include the Standard, Extended, Graduated, and PAYE (Pay As You Earn) repayment plans.
If you think you may be eligible for PSLF, the first step is to complete the Employment Certification Form (ECF) to confirm your employment and to ensure that you are on track.
Is Loan Forgiveness Taxable?
Loan forgiveness is generally considered taxable income by the Internal Revenue Service (IRS). This means that if you have part or all of your student loans forgiven, you may have to pay taxes on the forgiven amount.
There are some exceptions to this rule, however. For example, if you have your loans forgiven through the Public Service Loan Forgiveness (PSLF) program, the forgiven amount is not considered taxable income. In order to qualify for tax-free forgiveness under PSLF, you must work for a government organization at any level (federal, state, local, or tribal), a nonprofit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code, or certain other types of nonprofit organizations. You must also make 120 on-time, full, scheduled monthly payments on your Direct Loans under a qualifying repayment plan while working for a qualifying employer.
Other programs that offer tax-free loan forgiveness include the Teacher Loan Forgiveness program and the Perkins Loan Cancellation program.
It’s important to note that even if your loan forgiveness is considered taxable income, you may be able to claim certain deductions or credits to reduce your tax liability. It’s a good idea to consult with a tax professional or to refer to IRS guidance for more information on how loan forgiveness may affect your taxes.
What Happens to PSLF If I Default on My Loans?
If you default on your student loans, you may lose your eligibility for Public Service Loan Forgiveness (PSLF). Defaulting on your loans means that you have failed to make your required monthly payments for an extended period of time, usually 270 days or more.
If you default on your loans, you may face serious consequences, including wage garnishment, tax refund garnishment, and damage to your credit score. Defaulting on your loans can also make it more difficult and more expensive to borrow money in the future.
If you are having trouble making your student loan payments, it’s important to contact your loan servicer as soon as possible to discuss your options. Your servicer may be able to help you enroll in a different repayment plan or may be able to offer you forbearance or deferment, which can allow you to temporarily stop or reduce your payments.
If you are struggling to repay your loans and are concerned about losing your eligibility for PSLF, it’s a good idea to consult with a financial aid advisor or a student loan counselor for guidance. They may be able to help you understand your options and develop a plan to get back on track with your payments.
How To Appeal Your PSLF Payment Count
If you think that you have made qualifying payments towards Public Service Loan Forgiveness (PSLF) but your payment count is not accurate, you may be able to appeal your payment count. Here are some steps you can take:
- Review your payment history: Check your payment history to make sure that you have made the required number of payments and that they were made on time. You can review your payment history by logging in to your account on the Federal Student Aid website or by contacting your loan servicer.
- Gather documentation: If you think that there is a mistake in your payment count, gather any relevant documentation that may help support your case. This might include copies of your payment records, proof of employment, or other documentation that shows that you have made the required payments.
- Submit an appeal: If you believe that there is a mistake in your payment count, you can submit an appeal to your loan servicer. Be sure to include any relevant documentation to support your appeal. Your servicer will review your appeal and will either correct your payment count or provide an explanation for why it is correct.
- Contact the Department of Education: If you are not satisfied with the decision of your loan servicer, you can contact the Department of Education’s Loan Resolution and Customer Advocacy team for further assistance.
It’s important to keep in mind that appeals can be time-consuming and may not always be successful. If you are having trouble making your student loan payments and are concerned about losing your eligibility
Temporary Expanded PSLF (TEPSLF)
The Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program was created to provide additional loan forgiveness to certain Direct Loan borrowers who were unable to qualify for the Public Service Loan Forgiveness (PSLF) program. The TEPSLF program was implemented as part of the Consolidated Appropriations Act of 2018 and was available from June 7, 2018 to September 30, 2021.
To be eligible for TEPSLF, you must:
- Have Direct Loans: Only Direct Loans are eligible for TEPSLF. These include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans.
- Work for a qualifying employer: You must work for a government organization at any level (federal, state, local, or tribal), a nonprofit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code, or certain other types of nonprofit organizations.
- Make 120 qualifying payments: You must make 120 on-time, full, scheduled monthly payments on your Direct Loans under a qualifying repayment plan while working for a qualifying employer.
- Enroll in an income-driven repayment plan: You must be enrolled in an income-driven repayment plan, such as PAYE (Pay As You Earn) or REPAYE (Revised Pay As You Earn), at the time you submit your request for TEPSLF.
If you think you may be eligible for TEPSLF, you can submit a request to your loan servicer. The servicer will review your request and determine whether you are eligible for TEPSLF. If you are approved, your servicer will forgive the remaining balance on your Direct Loans.
It’s important to note that the TEPSLF program has now ended and is no longer available to new borrowers. If you are a Direct Loan borrower who is interested in loan forgiveness, you may still be able to qualify for PSLF or other loan forgiveness programs. You should contact your loan servicer or a financial aid advisor for more information on your options.
PSLF FAQs
Here are some frequently asked questions about Public Service Loan Forgiveness (PSLF):
- What is PSLF? PSLF is a program that forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.
- Which loans are eligible for PSLF? Only Direct Loans are eligible for PSLF. These include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans.
- Who is eligible for PSLF? To be eligible for PSLF, you must work for a government organization at any level (federal, state, local, or tribal), a nonprofit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code, or certain other types of nonprofit organizations. You must also make 120 on-time, full, scheduled monthly payments on your Direct Loans under a qualifying repayment plan while working for a qualifying employer.
- How do I apply for PSLF? To apply for PSLF, you must first complete the Employment Certification Form (ECF) to confirm your employment and to ensure that you are on track to have your loans forgiven. You can find the ECF on the Federal Student Aid website. You should submit the ECF annually or whenever you change employers.
- Can I consolidate my loans to become eligible for PSLF? If you have Federal Family Education Loans (FFEL) or Federal Perkins Loans, you may be able to consolidate them into a Direct Consolidation Loan to become eligible for PSLF. However, only payments made on the Direct Consolidation Loan after it has been consolidated will count towards the 120 payments required for forgiveness. Private student loans are not eligible for PSLF.
- How do I track my progress towards PSLF? To track your progress towards PSLF, you should keep track of your qualifying payments and submit the Employment Certification Form (ECF) annually or whenever you change employers. You can also log in to your account on the Federal Student Aid website to see how many payments you have made towards the 120 required for forgiveness. If you have any questions about your eligibility or progress towards PSLF, you should contact your loan servicer or a financial aid advisor.
It’s important to note that even if you think you are on track to have your loans forgiven under PSLF, you should continue making payments until you receive written confirmation that your loans have been forgiven. If you stop making payments before your loans are forgiven, you may lose your eligibility for PSLF and may be required to repay your loans in full.
