Public Service Loan Forgiveness Guide

If you work in public service, or are planning a career in public service, then you have the potential to save thousands of dollars on your student loans with Public Service Loan Forgiveness.

First, thank you for your service.

Second, Public Service Loan Forgiveness is a must-know program to help you pay off your student loans faster.

Third, the requirements for Public Service Loan Forgiveness can be confusing.

So, let’s simplify it for you. Here is Make Lemonade’s Public Service Loan Forgiveness Guide:

What Is Public Service Loan Forgiveness?

The Public Service Loan Forgiveness Program is a federal program that forgives federal student loans for borrowers who are employed full-time (more than 30 hours per week) in an eligible federal, state or local public service job or 501(c)(3) non-profit job who make 120 eligible on-time payments.

This equates to 10 years of monthly student loan payments that are on-time and in full.

Insider Tip: Only payments made after October 1, 2007 are eligible. Therefore, any student loan payments made prior to this date would not count toward the 120 payments.

The 10 years of monthly student loan payments can be made under several qualifying student loan repayment plans:

  • Standard Repayment
  • Income-Based Repayment (IBR)
  • Pay As You Earn Repayment (PAYE)
  • Revised Pay As You Earn (REPAYE)
  • Income-Contingent Repayment (ICR)

Insider Tip: In order to be eligible for Public Service Loan Forgiveness, you have to make the majority of the 120 student loan repayments under an income-driven repayment plan.

Most borrowers prefer an income-based repayment plan because they can lower their monthly student loan repayment, and have a larger amount of their student loan forgiven. In contrast, the Standard Repayment plan assumes that all your student loans will be paid off in 10 years. Therefore, if you are enrolled in this repayment plan, there would not be any remaining student loans to forgive at the end of the repayment period.

Which Types Of Student Loans Are Eligible For Public Service Loan Forgiveness?

There are only two types of student loan that are eligible for Public Service Loan Forgiveness:

  • Direct Loans
  • Federal Direct Consolidation Loan

Only Direct Loans issued by the federal government are eligible for Public Service Loan Forgiveness. Eligible Direct Loans include:

  • Federal Direct Subsidized Stafford/Direct Loans
  • Federal Direct Unsubsidized Stafford/Direct Loans
  • Federal Direct PLUS Loans (for parents and graduate and professional students)
  • Federal Direct Consolidation Loans

What Types Of Student Loans Are Not Eligible For Public Service Loan Forgiveness?

If you have one of the following student loans, they are not eligible for Public Service Loan Forgiveness:

  • Private Student Loans
  • Federal Perkins Loans
  • Federal Family Education Loans (FFEL)

Insider Tip: Therefore, if you have a student loan that you borrowed from a private student loan lender such as Sallie Mae, then this type of student loan is ineligible.

How Do I Know If My Federal Student Loans Are Direct Student Loans?

You can check your federal loan type at My Federal Student Aid. If you see a loan type with the name “Direct,” then you have a Direct Loan. Otherwise, you have a student loan under a different federal program.

Are There Any Exceptions For Public Service Loan Forgiveness?

There are a few exceptions, including:

  • Direct Loans & Private Loans: While private student loans are not eligible for Public Service Loan Forgiveness, if you have a private loan and a Direct Loan, the Direct Loan portion is still eligible.
  • Federal Perkins & FFEL.  If you consolidate your Federal Perkins Loans and/or Federal Family Education Loans (FFEL), then these student loans would become eligible. However, only payments toward your Consolidated Loan count toward the 120 payments. If you made any prior payments before consolidating your student loans, then those payments would not count.

How Much Of My Direct Federal Student Loans Can Be Forgiven Through Public Service Loan Forgiveness?

100% of your direct federal student loans can be forgiven.

Insider Tip: You do not have to be employed at the same employer continuously for 10 years to qualify.

If I Work In Public Service, Are My Student Loans Automatically Forgiven?

No. Public Service Loan Forgiveness is not automatic. You have to apply once you have made qualifying payments each month for 10 years for a total of 120 payments.

How Can I Apply For Public Service Loan Forgiveness?

The U.S. Department of Education has not released the application for Public Service Loan Forgiveness, although it is expected to be available before October 2018 (the date when the first borrowers become eligible, since this date is 10 years after the start of the program).

After you make 120 qualifying monthly payments, you will then submit the application to receive loan forgiveness.

In the interim, although not required, you should submit the Public Service Loan Forgiveness Employment Certification Form  annually or whenever you change jobs to help you track your progress toward meeting the eligibility requirements. This form verifies that you have completed the employment requirements each year for the program. The U.S. Department of Education will review your form to ensure it is complete and meets the employment requirements.

Then, you should submit the form and employer’s certification to FedLoan Servicing, which is the U.S. Department of Education’s student loan servicer for the program. FedLoan Servicing will inform you if you are eligible, how many qualifying student loan payments you have made, and how many qualifying student loan payments remain for you to qualify for Public Service Loan Forgiveness.

How Many Borrowers Have Submitted An Employment Verification Form For Public Service Loan Forgiveness?

As of September 30, 2016, there are 494,200 cumulative Public Service Loan Forgiveness borrowers.

While the first borrower for Public Service Loan Forgiveness will be eligible for the program starting in October 2018, FedLoan Servicing has tracked the number of borrowers who have self-identified as interested in Public Student Loan Forgiveness based on their (annual) submission of an employment certification form.

Since 2012, 740,872 employment certification forms have been approved and 372,422 have been denied.

Are There Other Types of Student Loan Forgiveness?

Yes, there are other types of student loan forgiveness such as Teacher Student Loan Forgiveness and Perkins Loan Cancellation. There are also alternatives to Student Loan Forgiveness such as student loan refinancing and student loan consolidation, for example, which do not require employment in public service.


Best Student Loan Refinancing For 2018

Lender
Rates (APR)
Minimum Credit Score

Overview

Variable Rates: 2.57% - 5.87%
Fixed Rates: 3.25% - 6.32%
Average Savings: $21,810
Minimum Credit Score: None
Minimum Income: None
Fees: None

Details

Eligible Loans: Private & Federal
Minimum Loan Amount: $45,000
Loan Terms: 5-20 years
Borrower Residency: All States except AL, KY, MS, VT
Unemployment Protection: Yes
Co-signer Option: Yes
2.54% - 7.38%
Good or Excellent

Overview

Variable Rates: 2.54% - 7.38%
Fixed Rates: 3.25% - 7.13%
Average Savings: $30,069
Minimum Credit Score: Good or Excellent
Minimum Income: None
Fees: None

Details

Eligible Loans: Private or Federal
Minimum Loan Amount: $5,000
Loan Terms: 5, 7, 10, 15, 20 years
Borrower Residency: All states
Unemployment Protection: Yes
Co-signer Option: Yes

Overview

Variable Rates: 2.56% - 7.74%
Fixed Rates: 3.15% - 8.12%
Average Savings: $15,270
Minimum Credit Score: 680
Minimum Income: $24,000
Fees: None

Details

Eligible Loans: Private & Federal
Minimum Loan Amount: $5,000
Loan Terms: 5, 7, 10, 15, 20 years
Borrower Residency: All states, except ME, ND, NV, RI, WV
Unemployment Protection: Yes
Co-signer Option: Yes

Overview

Variable Rates: 2.50% - 6.40%
Fixed Rates: 3.25% - 6.95%
Average Savings: N/A
Minimum Credit Score: 680
Minimum Income: $75,000
Fees: -

Details

Eligible Loans: Private & Federal
Minimum Loan Amount: $5,000
Loan Terms: 5 - 15
Borrower Residency: All states
Unemployment Protection: -
Co-signer Option: Yes

Overview

Variable Rates: 2.69% - 6.01%
Fixed Rates: 3.09% - 6.69%
Average Savings: N/A
Minimum Credit Score: 680
Minimum Income: $35,000
Fees: None

Details

Eligible Loans: Private & Federal
Minimum Loan Amount: $15,000
Loan Terms: 5, 7, 10, 15, 20 years
Borrower Residency: All States
Unemployment Protection: Yes
Co-signer Option: Yes
3.46% - 7.28%
680 (620 with a co-signer)

Overview

Variable Rates: 3.46% - 7.24%
Fixed Rates: 3.50% - 7.28%
Average Savings: $18,423
Minimum Credit Score: 680 (620 with a co-signer)
Minimum Income: $42,000 ($0 with a couple loan)
Fees: None

Details

Eligible Loans: Private & Federal
Minimum Loan Amount: $7,500
Loan Terms: 5, 8, 12, 15 years
Borrower Residency: All states
Unemployment Protection: Yes
Co-signer Option: Yes

Overview

Variable Rates: 2.80% - 5.90%
Fixed Rates: 3.37% - 7.02%
Average Savings: $20,200
Minimum Credit Score: 680
Minimum Income: None
Fees: None

Details

Eligible Loans: Private & Federal
Minimum Loan Amount: $5,000
Loan Terms: 5, 7, 10, 15, 20 years
Borrower Residency: All states
Unemployment Protection: Yes
Co-signer Option: Yes
1.95% - 3.95%
Excellent

Overview

Variable Rates: -
Fixed Rates: 1.95% - 3.95%
Average Savings: -
Minimum Credit Score: Excellent
Minimum Income: -
Fees: -

Details

Eligible Loans: Private & Federal
Minimum Loan Amount: $40,000
Loan Terms: 5, 7, 10, 15 years
Borrower Residency: Only for the residents of New York City, San Francisco, Palo Alto, Los Angeles, Newport Beach, San Diego, Portland (Oregon), Boston, Palm Beach (Florida) or Greenwich
Unemployment Protection: -
Co-signer Option: Yes

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