What Is Public Service Loan Forgiveness, and How Do I Qualify?

Are you thinking about earning a degree for a government or public service career but have concerns about taking out a college loan to pay for it? If so, you may be eligible for help paying for and reducing your college loan amount through the government’s Public Service Loan Forgiveness (PSLF) Program.¹

The PSLF Program is a federal student aid program that allows participants who work for a qualifying public service organization to make 120 monthly affordable college loan payments for 10 years and then get the balance of their undergraduate or graduate school loan forgiven.

This federal student aid program was created in 2007 as part of the College Cost Reduction and Access Act to encourage graduates work in public service organizations while helping to ease the financial burden of pursuing a college education.

What Types of Loans Qualify

To be eligible, students must receive their college loans through the Federal Direct Loan program, which provides loans directly to students at participating schools, such as Walden University. The following eligible Federal Direct Loans are available:

• Subsidized loans, which are need-based college loans available to undergraduate students and do not require a credit check. The government pays the interest on the loan while a student is enrolled at least half-time in an academic program.
• Direct unsubsidized loans, which are available as undergraduate and graduate school loans and also do not require a credit check. However, these loans are not need-based and require students to pay the accruing interest while pursuing a college degree. Students can make arrangements to postpone payments through a special promissory note that is part of the loan agreement or through their loan servicer, the company that sends the bill each month and tracks payments. You can find out who your servicer is from the National Student Loan Data System.²
• Graduate Plus Loan, which is a graduate school loan that does require a credit check and can be used after a borrower has reached limits on the unsubsidized loans. This is available to graduate students who are enrolled at least half-time and have a good credit rating. Students can borrow up to the cost of attendance minus the financial aid they already receive.

Assistance in Making Loan Payments

The Standard Repayment Plan for loans in the federal student aid program requires students to pay a fixed installment amount over a 10-year period, so they can pay back the loan as quickly as possible with minimal interest.

However, to qualify for eventual loan forgiveness through PSLF, students must participate in a monthly “income-driven” repayment plan. These repayment plans allow students to pay an affordable lower installment amount based on their income over a longer period of time—between 20 and 25 years.

In general, under these income-driven plans, you will need to make qualifying monthly payments based on a manageable percentage of your discretionary income, ranging from 10% to 20% over a 20- to 25-year period, depending on the specific plan. The two main income-driven payment plans³ are PAYE (Pay as You Earn) and IBR (Income-Based Repayment), which base installments on a percentage of income and cap it at an amount that is never higher than what you would pay under the 10-year standard pay plan.

The REPAYE (Revised Pay as You Earn) and ICR (Income-Contingent Repayment) plans, on the other hand, are based on current income and could be higher than the standard payment amount, depending on the size of your income.

For the PSLF program, all of this means that in the first 10 years of loan repayment, you can pay an affordable qualifying monthly payment while working for a qualifying public service employer and be eligible to have the remainder of the loan canceled or forgiven.

What Is a Qualified Public Service Employer?

To qualify for loan forgiveness through the PSLF program, you need to work (in any type of position) for an organization that the federal government designates as an employer dedicated to working in the public interest or for the public good.⁴ Qualified employers fall under these categories:

• Federal, state, local, or tribal government agencies.
• Tax-exempt nonprofit organizations under 501 (c) (3) IRS code or public charities, private foundations, or private operating foundations.
• Other nonprofit organizations not under 501 (c) (3) IRS code that provide the following types of public services: law enforcement, public interest law service, early childhood education, public health, and public education.

Those volunteering for AmeriCorps or the Peace Corps while earning a degree can also qualify for loan forgiveness.

Applying for Loan Forgiveness

To receive loan forgiveness, you must complete the Loan Forgiveness Application after you’ve made 120 qualified payments through a qualifying repayment plan, while you’ve been employed in a qualified public service organization.

It is possible to change employers over the 10-year repayment period. If you know you’d like to work toward loan forgiveness, you will need to complete and submit for each of your employers an Employment Certification for Public Service Loan Forgiveness Form annually, or when you change employers.

This form confirms that your employer is qualified and helps ensure the payments you’ve been making count toward loan forgiveness. If you don’t submit these employment certification forms annually or periodically when you change employers, you will need to complete one for each employer and submit them as part of your application when you apply for loan forgiveness.

Federal Student Aid and Federal Direct Loans at Walden University

As long as you’re working for a qualifying public service employer, you can pursue any career and still be eligible for loan forgiveness. Walden University offers a variety of college degree programs to help you advance your public service career, and using Federal Direct Loans to help fund your education can help you qualify for possible loan forgiveness.

As a participating institution certified by the U.S. Department of Education, Walden University offers a variety of federal student aid resources to help students fund their education. More than two-thirds of Walden’s degree-seeking students currently receive some form of financial aid, and many defray up to 100% of their tuition and fees through low-interest Federal Direct Loans.⁵

If you are currently working or plan to work while you’re in school to meet PSLF requirements, an online higher education could be the right choice. Walden University offers online bachelor’s and graduate degree programs designed to work with your busy life.

Walden University is an accredited institution offering bachelor’s, master’s, and doctoral degree programs online. Expand your career options and earn your degree using a convenient, flexible learning platform that fits your busy life.

¹ Source: www.studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service
² Source: https://nslds.ed.gov/nslds/nslds_SA/ 
³ Source: www.studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven
⁴ Source: www.studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service/questions
⁵ Source: Walden University’s Office of Financial Aid. Data reports as of 2017.

Walden University is accredited by The Higher Learning Commission, www.hlcommission.org.