How To Qualify for Public Service Loan Forgiveness
Public Service Loan Forgiveness (PSLF) is a fantastic program is you can qualify for it. PSLF forgives the remaining balance on your federal student loans if you meet certain requirements, which include working full-time in a public service position while repaying your student loans.
The program is in danger of being cut in President Trump’s latest budget. However, this change would only apply to student loans taken out on or after July 1, 2021. Therefore, if you’ve been making payments under this program up to this point, you are still eligible.
PSLF Requirements & Guidelines
To qualify for PSLF, you must:
- be employed by a U.S. federal, state, local, or tribal government or not-for-profit organization;
- work full-time for that agency or organization;
- have Direct Loans (or consolidate other federal student loans into a Direct Loan);
- repay your loans under an income-driven repayment plan; and
- make 120 qualifying payments.
Unlike other forms of student loan forgiveness, your loan balance that is forgiven under PSLF is not considered taxable income, and therefore you will not pay taxes on the balance when it is forgiven. This distinguishes loans forgiven under this program from repayment options.
To make sure you’re fulfilling all of the requirements, you should submit an Employment Certification Form annually or when you change employers. The Office of Federal Student Aid will use the information you provide on the form to let you know if you are making qualifying PSLF payments so you can ensure on track to receive forgiveness on your loans.
You can find out if you’re eligible and apply for Public Service Loan Forgiveness on the Federal Student Aid website.
The video below explains the four most important things you need to know about qualifying for this program.
Low Approval Rates for PSLF
Why is it so important to make sure you’re following requirements when applying for Public Service Loan Forgiveness?
It’s very difficult to be approved. In fact, 98.6% of applicants for the program are rejected, according to Yahoo! Finance.
According to the Education Department’s most recent data as of Dec. 31, 2019, 126,817 borrowers submitted 161,328 applications, out of which 2,246 were approved. That’s an approval rate of just 1.4%.
Watch the video to make sure you’re following all of the necessary steps, and make sure you’re not making any common Public Service Loan Forgiveness mistakes.