Public Service Loan Forgiveness – All you need to Know!

Written by Aashna Dadiala

As a Media enthusiast, Aashna persued her love for words with a degree in Journalism and Mass Communications, and turning her passions into a career with UniAcco as a content writer.

June 4, 2021

Public Service Loan Forgiveness is a relief from having to repay federal student loans that were taken out to fund a post-secondary education. These are either in full or in part. In the United States, student debt has hit an all-time high. An estimated of 43 million people owing roughly $40,000 on average. Some of the obligation, however, may be cancelled or forgiven under specific conditions.

What Is Public Service Loan Forgiveness?

Public Service Loan Forgiveness

Public Service Loan Forgiveness (PSLF)is a loan forgiveness for the government or a non-profit organization. After 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying company. The outstanding debt on your Direct Loans is forgiven under the Public Service Loan Forgiveness (PSLF) Program.

Note that another Federal Student Loan Forgiveness and Discharge servicer is in charge of servicing this programme. Your eligible loans will be moved from Great Lakes to the servicer if you enrol in Public Service Loan Forgiveness.

Another federal student loan servicer handles the servicing for this program. Your eligible loans will be moved from Great Lakes to the servicer if you enroll in education loan forgiveness. 

What Types Of Loans Are Eligible For Student Loan Forgiveness?

PSLF is only available for Direct Loan Program loans that are not in default. PSLF does not apply to loans taken out under the Federal Family Education Loan (FFEL) Program. Federal Perkins Loan (Perkins Loan) Program, or any other student loan programme.

You can merge your FFEL or Perkins Loan Program loans into a Direct Consolidation Loan to take advantage of Public Service Loan Forgiveness. Payments made on your FFEL or Perkins Loan Program loans before you consolidated them do not count as qualified PSLF payments. This holds true even if they were made under a qualified repayment plan.

Federal student loan borrowers were automatically placed in administrative forbearance during the COVID-19 emergency to give assistance to borrowers. This allows you to temporarily cease paying monthly loan payments. Payments will be suspended from March 13, 2020, until at least September 30, 2021. However you can still make payments if you want to.

With Direct Loans and work full-time for a qualified company during the suspension, you will be eligible for PSLF. Temporary Expanded PSLF credit as if you had made on-time monthly payments in the right amount while on a qualified repayment plan. If you are interested in learning more about Student Loan Forgiveness, You can read The Complete List of Student Loan Forgiveness Programmes

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What Kind Of Nonprofits Are Eligible?

A tax-exempt organisation under section 501(c)(3) of the Internal Revenue Code qualifies as an eligible not-for-profit organisation. A non-profit organisation that offers a qualifying service but is not tax-exempt under section 501(c)(3) of the Internal Revenue Code

A labour union or a partisan political group, on the other hand, is not a Public Service Loan Forgiveness -eligible employer. Furthermore, if your employer requires you to participate in religious activities, you may be unable to qualify for Student Loan Forgiveness.

A public service must be provided by a not-for-profit organisation that is not exempt under section 501(c)(3) of the Internal Revenue Code:

  • Management of crises
  • Service in the armed forces of the United States or in the National Guard is referred to as military service.
  • Safety for the general public
  • Crime prevention, control, or reduction, or the execution of criminal laws are all examples of law enforcement.
  • Legal services supplied by an organisation that is supported entirely or partially by a federal, state, municipal, or tribal government in the United States are referred to as public interest law services.
  • Head Start, licenced or regulated daycare, and state-funded pre kindergarten are all examples of early childhood education.
  • Individuals with disabilities and the elderly are served by the government.
  • Nurses, nurse practitioners, nurses working in clinical settings, and other full-time professionals working in health care practitioner occupations (Bureau of Labor Statistics SOC Code Series 29-1000), health support occupations (Bureau of Labor Statistics SOC Code Series 31-0000), and certain community and social service occupations are all included in public health (Bureau of Labor Statistics SOC Code Series 21-1000)
  • Education in the public sphere
  • Services provided by public libraries
  • Services provided by the school library
  • Other services provided by schools

Is It Possible To Earn PSLF In Less Than Ten Years?

No, that is not possible. You’ll have to pay 120 times a year. You will not be eligible for PSLF any sooner if you pay more.

For up to 12 months, or until your next income-driven repayment (IDR) plan is due, you may prepay or make lump-sum payments that would apply to future months. If you recertified your IDR and your monthly payment was $100, but you paid $1200 for the first month’s payment. That payment would count as 12 payments for the year. You would have to wait until the following 12-month cycle to make another payment. Once you’ve validated your qualified employment for a 12-month period, these payments will count as qualifying payments toward Public Service Loan Forgiveness.

To be eligible for future months, you must make a prepayment. Over a 12-month period, pay a sum sufficient to completely meet future invoiced amounts. Make one or more prepayments to pay off your loan early (if you’re on an IDR plan, you can’t pay off your loan until your next annual recertification date— your annual recertification period is the 12-month period during which your payments are depending on your income); and having qualified employment that lasts until the due date of each month you prepay

Note that you cannot qualify for more than 12 months of qualifying payments if you make several prepayments in the same year.

Thank you for reading this blog ‘ Public Service Loan Forgiveness – All you need to Know!’. If you enjoyed reading this blog and would like to continue reading more about education loans and  List of Student Loan Forgiveness Programmes

 then do check out our following blogs.

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