Public Service Loan Forgiveness (PSLF)

Many borrowers working in a health profession field consider pursuing Public Service Loan Forgiveness (PSLF), a program offered by the US Department of Education (ED).

How it Works - PSLF Eligibility

PSLF offers forgiveness on the remaining balance of your Federal Direct Loans after 120 qualifying monthly payments (such as payments made in the RePAYE, PAYE, or IBR repayment plans) while employed at least full-time (according to employer's definition of full-time and at least 30 hours per week) at a 501(c)(3) tax exempt non-profit or U.S. government organization. The remaining debt still owed would be cancelled and would also be tax-free.

Borrowers must meet three main requirements to accrue 120 months toward PSLF:

  1. Only Federal Direct Stafford or Grad PLUS Loans qualify.
    1. Perkins, FFEL, LDS, HPSL, NSL are not eligible unless consolidated.
    2. University Loans and private educational loans do not qualify.
  2. Only payments made in a qualifying repayment plan count.
    1. Income-Driven Repayment (IDR) plans such as RePAYE, PAYE, or IBR are the preferred plans.
    2. The Standard 10-year plan may count as well, but is not effective long-term since there would be a $0 balance after 120 months.
  3. Only approved employment with a Non-profit or government agency counts. Actual regulations can be found here.
    1. There may be restrictions if hired on a contract basis or in temporary employment.
    2. There may be restrictions based on religious practices related to your employment.

Sign me up! - What You Have to Do

First, what you don't have to do. Sometimes you may choose to consolidate your non-Direct Loans to make them eligible, but this may backfire. If you already have accrued months toward PSLF, any loan you consolidate would be re-set to 0 months. If you otherwise feel this may be useful, contact the financial aid office to discuss further. Here’s a typical consolidation outline:

  1. Go to https://studentloans.gov. Select the Repayment & Consolidation tab and then select “Complete a Consolidation Loan Application and Promissory Note”.
    1. The goal would be to
      1. Turn the Perkins Loan, LDS, HPSL and/or NSL into a Direct Loan so they can be included in the Income-Driven Repayment plans such as RePAYE or PAYE and count towards PSLF, though the subsidized grace period would end sooner on these non-Direct Loans; and/or
      2. Force the Direct Stafford Loans into repayment before the end of their grace period so you could start accruing months sooner towards PSLF and possibly gain a partial subsidy on the loans if in RePAYE.
  2. Uncheck the loans you don’t want to include. See our FAQ below about why this could be applicable.
  3. Then select to add the LDS, HPSL and/or NSL. For the servicer, select “other” and enter (if you borrowed these at a UC campus): Heartland ECSI P.O. Box 1278 Wexford PA 15090. Their phone number is 1-888-549-3274. The account number is your SSN. Estimate the disbursement date or look it up on your Heartland ECSI account.
  4. Next you will have the option of skipping the Grace period on all loans consolidated. Again, this could be helpful if you wish to accrue months sooner towards PSLF fresh out of school. To skip the grace period you would select 'Do Not Delay Processing'.
  5. You can also select the servicer. Many choose to switch/stay with Fed Loan Servicing to pursue PSLF whereas many stay with their current servicer for now if only consolidating some Direct Loans.
  6. Then you can select your repayment plans such as RePAYE, PAYE, or IBR in the next part of the consolidation process.
  7. Next authorize ED to retrieve your tax return as documentation of income using their “Date Retrieval Tool”. OR You will need to follow up with the servicer if requested.

Now for the stuff you really do have to do. Submit the Employment Certification Form (ECF) to verify you are in eligible employment. We recommend submitting it when you start a new position and then annually to document eligible months, while in an eligible repayment plan such as RePAYE or PAYE. You could technically wait until you think you've completed 10 years but what if your employment doesn't qualify? Find out as soon as you begin a new job.

Go to Apply/Re-Certify/Change an Income-Driven Repayment Plan (IDR) to select or renew the IDR plan every 12 months. If you forget to renew you may be kicked into Standard repayment and would have to make the larger payment until the renewal for IDR is processed.

Hurdles - Why Many Don't Get it and How to Maximize the Benefit

Congress has been debating with itself about what to do to PSLF since Congress passed it in 2009. There has been talk, and proposals, to limit how much graduate students receive (on the Democratic side) or ending it outright (on the Republican side). In the case of ending it, the ED has said, as have the congressional proposals, that existing borrowers would be grandfathered in and not lose eligibility because of the discontinuation of the program going forward. Bottom line, we cannot predict the future, or promise you anything, but the government knows that with 600,000 people pursuing loan forgiveness, it's better to let those borrowers stay in, than to face 600,000 lawsuits because people have made career choices in part because of this program.

Document everything. If confirmation of a repayment plan, or accrued months, or eligible employment, is provided through your borrower account on the servicer's website, screenshot it, snagit, take a picture with your phone, download it and save it to your desktop.

Also, do not try to prepay your loans while simultaneously pursuing PSLF. These are opposite strategies. In PSLF the goal is to pay as little as possible and have the tax payer pay the bill. The purpose of prepaying is to target high interest debt since that is costing you more, if the burden for repayment remains with you and not the taxpayer.

Be sure to renew your repayment plan at least on-time if not early. The servicer may put you in a one-month forbearance if you are late, as a courtesy. However that month won't count towards the 120. If you end up with a one-month forbearance each year, then after ten years you still have 10 more months to go. So in effect it would take you 11 years even if you do everything else right.

Frequently Asked Questions - Tips

  • How can I ensure I will be grandfathered in if there are changes?

    There is no way for the government to know you are even interested in PSLF unless you communicate this to them. You do this by submitting the Employment Certification Form (ECF). This has been referred to as the "foot in the door" so that even if something were taken from existing borrowers, you've gone one step further and declared your interest in PSLF. You can't ensure it, but can be amongst the 600,000.

  • Can I keep my servicer while pursuing PSLF?

    Only Fed Loan Servicing is authorized to monitor borrowers' progress toward PSLF. So unless Fed Loan is your servicer already, they will take over the servicing of your loans once you submit the ECF. Please note, your loans will end up in a forbearance for 1-2 months while the switch happens and those months would consequently not count towards the 120.

  • Must I consolidate all my Direct Loans in order to include the Perkins Loan, LDS, HPSL, and/or NSL?

    No. In fact you only need to include one Direct Loan in order to turn these loans into Direct Loans too. This is helpful for those who wish to consolidate these loans with a Direct Loan of a similar interest rate, while keeping the high interest loans separate in case they don't continue to pursue PSLF and chose to prepay high interest debt instead.

  • If I submit the ECF, am I locked into pursuing PSLF?

    No, you can stop pursuing PSLF at any time. However depending on your plan, you may have a higher balance than when you began. If you stop pursuing PSLF because of a private sector job that perhaps pays more, you can pre-pay at any time without penalty.

  • What if I get a job that doesn't qualify, am I out of luck?

    You can move in and out of qualifying employment. For example, if you have a 4-year Residency at UCSF that qualifies and then work for a private employer for two years, and then secure a job at the VA that qualifies, then the clock would stop after the 4 years at UCSF but pick up where it left off once you start at the VA (assuming all other requirements are in place and you submit your ECF).

More Resources

Check out the latest PSLF Help Tool from the U.S. Department of Education (ED) launched December 2018.

Official guidelines from the ED on PSLF can be found here.

Fed Loan Servicing has a website and phone number just for PSLF. Contact 1-855-265-4038 or visit myfedloan.org/borrowers/special-programs/pslf