Those who are employed by a government entity or nonprofit organization may qualify for the federal Public Service Loan Forgiveness Program. That can mean having the rest of your student loans forgiven as long as you make 120 payments while working full-time with a qualifying employer. In fact, completing the program can be more than just a financial lifeline, it can be the culmination of a decade-long project!
But employers must also shoulder some of the burden. In addition to having an employee that is working within the public service loan forgiveness program, employers must also certify employment and work with borrowers to document and authorize their status on paperwork such as the public service loan forgiveness employment certification form.
How To Qualify for Public Service Loan Forgiveness
In addition to making payments on time, qualification for the public service loan forgiveness program requires:
Full-time employment with a U.S. federal, state, local or tribal government, or a non-profit organization
Direct Loans or the consolidation of federal student loans into a Direct Loan
Making payments under an income-driven repayment plan
Paying 120 payments (10 years of qualifying payments)
Once those criteria have been met, the remaining balance will be waived per the terms of the public service loan repayment program. To help borrowers stay on top of their qualifications, the Department of Education recommends filing a public service loan forgiveness employment certification form each year, or whenever a qualifying borrower changes jobs. The information on the form is used to determine whether payments qualify for public service loan forgiveness, as well as when the repayment plan is projected to end.
Note that many repayments are paused right now due to the COVID-19 pandemic until sometime in 2022. However, borrowers that haven't been making payments may still be able to receive credits for payments that would have been made during the pandemic. To determine status and receive updates, borrowers should submit a public service loan forgiveness form each year.
How Do Employers Qualify?
On the other side of the PSLF coin, employers must also qualify for public service loan forgiveness in order for a borrower to maintain their status in the program. That said, employers qualify based on the type of organization, not what the particular employee may do. Any U.S. government organization qualifies, including the U.S. military and any 501c3 non-profits.
Employment that does not meet the criteria for public service loan forgiveness includes labor unions, partisan political organizations and for-profit companies and contractors. However, contractors can qualify for PSLF if the company they do work for fits the criteria. Exceptions can be made for non-profits that aren't 501c3 entities as long as the organization runs a qualifying public service.
Note that employees must work full-time, or at least 30 hours a week. However, it's also possible for employees to have multiple, part-time qualifying jobs that combine for more than 30 hours per week.
PSLF Loan Eligibility
The only types of loans that are eligible for public service loan forgiveness are Direct Loans or student loans that have been consolidated into Direct Loans. All other types of loans -- including Federal Family Education Loans, Perkins Loans and any private loans -- are not eligible for the PSLF program. Additionally, under the rules of the program, only payments made on consolidated loans are eligible for public service loan forgiveness -- payments made before consolidation won't typically count, though some payments may apply via limited PSLF waivers.
As for what constitutes a qualifying payment, those are only payments made after October 1, 2007 under a qualifying repayment plan. Each payment must be made in full and no later than 15 days past the due date, all while maintaining full-time employment with a qualifying employer.
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