According to the Consumer Finance Protection Bureau (CFPB), approximately one-quarter of those working in the United States may be eligible for Public Service Loan Forgiveness (PSLF)—and most don't even realize it. How could that be true? You'd think someone who did public service work would know it, right?
A Brief Look At PSLF
PSLF eliminates ("forgives") the remaining balance on federal student loans of employees who work full time at public or nonprofit institutions after making 10 years' worth of eligible payments (120 total).
To qualify, your loans must come from the Direct Loan program (you can consolidate Perkins and Federal Family Education Loan Program (FFELP) loans to become eligible), and you must make all 120 payments on or after October 1, 2007 (as well as under specific repayment programs: 10-year standard repayment, income-based repayment, Pay As You Earn, Revised Pay As You Earn, or income-contingent repayment). Because of this, no one was eligible for forgiveness until September, 2017.
PSLF has other eligibility requirements. However, the one that trips most people up (especially that one-quarter) is the type of work that makes you eligible.
Job Vs. Employer
Most people associate PSLF with well-known public service jobs, like teaching, social work, or nursing. But, your job doesn't determine whether you qualify—your employer does. That makes a big difference.
So, you may be eligible for forgiveness if you meet all the other criteria and work full time for an eligible employer. And that's the same for everyone at that employer—from the CEO to the maintenance staff.
What Is An Eligible Employer?
Good question! You need to work for one of the following:
- A government organization, which includes federal, state, local, tribal organization or college/university, or public child or family services agency
- Peace Corps
- A tax-exempt 501(c)(3) or 501(a) nonprofit (check with your employer)
- A nonprofit organization that provides one of following public services:
- Emergency management
- Military service
- Public safety
- Law enforcement
- Public service law
- Early childhood education
- Public service for individuals with disabilities and the elderly
- Public health
- Public education
- Public library services
- School library or other school based services
That long list means there are a lot of potentially eligible employers out there. You may even be working for one right now.
What's even better is that your payments don't have to be consecutive. You can bounce in and out of the public or nonprofit workforce without penalty (other than taking longer to get your loans forgiven). Just remember that only eligible payments made during eligible employment count. You must also still be working for an eligible employer when you apply.
An Exception To Every Rule
Unfortunately, labor unions and partisan political organizations are not eligible—even if they are nonprofits.
Also ineligible: religious organizations engaged in religious activities that are related to religious instruction, worship services, or any form of proselytizing. For instance, professors at a Catholic or Baptist college would be eligible. Employees of a church, even if they are not involved with the religious instruction, are not eligible.
Contact your student loan servicer if you have questions, and make sure to download the PSLF Employment Certification to track your eligible employment and payments. If you don't submit that certificate once a year, it will be up to you to prove you worked at an eligible employer come forgiveness time.
If you still aren't eligible for PSLF, check out our eBook 100+ Ways To Get Rid Of Your Student Loans (Without Repaying Them) to see if you may be eligible for any other forgiveness programs.