By Andrew Paulson, CSLP, Lead Student Loan Consultant and Co-Founder of our partner site StudentLoanAdvice.com
Public Service Loan Forgiveness or PSLF is the well-known holy grail of loan forgiveness programs. Unlike most other loan forgiveness programs, PSLF offers tax-free loan forgiveness. Also, Public Service Loan Forgiveness has no cap on the loan amount forgiven.
Any borrower who has a chance of working at a nonprofit should definitely be considering the program, even if you earn more than you borrowed for college. Yes, we’ve all seen the multitude of articles professing the dismal success rate and the subpar loan servicing which has backed the program. But with recent changes to the program, there’s significant momentum pushing up the success rate, and it should be on more people’s radar.
In this post we’ll discuss how the program works, its inception, success, and some speculation/projection for the future.
Public Service Loan Forgiveness Program
The PSLF program was created as part of the College Cost Reduction and Access Act of 2007 to provide tax-free loan forgiveness to indebted professionals who work as public servants. It was formed to benefit nurses, teachers, military, law enforcement, government workers, and others employed at nonprofits.
PSLF can help encourage borrowers to pursue careers in lower-paying jobs than they would otherwise by entering the private sector.
What Is Public Service Loan Forgiveness?
Public Service Loan Forgiveness is a student loan forgiveness program that provides tax-free loan forgiveness.
PSLF has four requirements:
- Qualifying Federal Student Loans—Direct Stafford (unsubsidized and subsidized), direct plus graduate and direct consolidation loans
- Qualifying Repayment Plan—IBR, PAYE, REPAYE, ICR, or the standard 10-year repayment plan
- 120 on-time, qualifying monthly payments—not required to be continuous
- Full-time employment at a qualifying employer such as a nonprofit or 501(c)(3)
How to Apply for Public Service Loan Forgiveness
The only mechanism in place to apply for public service loan forgiveness is the employment certification form (ECF). This form needs to be filled out for each qualifying employer to receive credit for PSLF.
Although you could wait until you reach 10 years of qualified employment, we recommend that borrowers complete the ECF form annually. The ECF form is used to obtain credit for past payments made and to apply for loan forgiveness once you’ve reached 10 years of payments. We recommend you keep track of the ECF forms and corresponding payment documentation.
Expect the servicer to come back with some mistakes. But if you’re certifying regularly, it'll be much easier to fix their mistake from two months ago rather than going back eight years and two jobs prior, fighting them on payments made to a now-defunct servicer.
Please note: borrowers must still be employed by a non-profit of 501(c)(3) at the time of forgiveness.
Changes to Public Service Loan Forgiveness
Public service loan forgiveness has had a couple of changes over the years. The first change or adjustment was the addition of the employment certification form in 2012. In the first couple of years, borrowers had little to no understanding of the program, and if you didn’t have a buddy who followed student loan law closely, then you would’ve heard from your financial aid officer that the program was not to be relied on.
Temporary Expanded PSLF (TEPSLF) was added in 2018 by the Consolidated Appropriations Act of 2018. This occurred as the first group of borrowers became eligible for PSLF in 2017 and about 99% of applicants were denied. TEPSLF has slightly different requirements than PSLF and has a limited amount of money backing it. So, the program is first-come first-serve. Also in 2018, Federal Student Aid released the PSLF help tool to assess your employer’s eligibility for PSLF.
The most recent change is the PSLF limited waiver released in October 2021. The limited waiver has huge ramifications for borrowers, but it's most helpful to those with FFEL loans. If you have FFEL loans and have worked as a public servant, you should look into it. All you have to do is consolidate your FFEL loans into direct loans and submit a PSLF certification form. However, we recommend you review WCI’s interpretation of the PSLF limited waiver. Also, this is a time-limited waiver that is set to expire in October 2022.
Is Public Service Loan Forgiveness Legit?
Yes, PSLF is legit, and many white coats have been receiving it. WCI has a podcast dedicated to financial milestones called Milestones to Millionaire, and host Dr. Jim Dahle has interviewed a number of people who have actually received PSLF. Not all have had the smoothest process in obtaining PSLF, but the financial benefits have outweighed the additional paperwork and headache.
There is a significant portion of StudentLoanAdvice.com’s clients who are also on track to obtain PSLF. The value add of pursuing PSLF over refinancing or taxable loan forgiveness is real, and it can be life-changing in some circumstances.
PSLF Success Rate
Ahh, the number we’ve all been waiting for . . . here is a report from the Department of Education (ED) over the years. We’ve taken TEPSLF and PSLF and combined them together in the reporting below.
The numbers prior to September 2019 have said only about 2% of applicants had received PSLF. Reporting began to improve in 2019. Here are a couple of figures:
Until September 2021, only 16,119 public servants had received PSLF. As of January 2023, there has been 388,2220 borrowers who have now received PSLF. That's close to $27 billion in student loans discharged. And, although the table doesn't show it, as of February 2023 it is reported over 450,000 borrowers have reached the forgiveness milestone.
The reason for the jump in applications approved is the recent PSLF waiver and IDR Waivers which mainly benefits those with FFEL loans. We expect this number to continue as more borrowers learn about the program.
Now more than ever is the BEST TIME to consider PSLF, given the positive momentum of borrowers getting their loans forgiven tax-free.
The Future of PSLF
Our crystal ball is cloudy on the future of PSLF, but we do believe that the success rate will continue to increase—and not just be a one-off bump with the recent release of the PSLF waiver.
In our consultations, many clients express their concern about changes to PSLF in the future.
- “What if the loan forgiveness becomes taxable?”
- “What if they cap the loan forgiveness amount?”
- “What if they phase out high earners?”
Each of you signed a master promissory note (MPN) to take out your federal student loans. If the federal government follows its normal process to change federal student loans, those currently in the program would be grandfathered into the old one. Essentially, if you have a federal loan now, you can pursue the program.
You’re not alone if you’ve pondered deeply whether to do PSLF. At Student Loan Advice, we’ve met with hundreds of borrowers like you who are facing similar challenges. We can help you weigh the pros and cons of the different options and which would result in the optimal outcome for defeating your debt and moving you closer to financial freedom. Contact our experienced team at studentloanadvice.com today!
Did you successfully get PSLF? What was your experience like? Do you think the new changes will help the success rate of those applying? Comment below!
My wife and I are dual physicians. We received $420k in combined total forgiveness 11/21.
We both work in primary care and academics.
We dominantly used married filing jointly and RePaye.
Monthly payments (combined) ranged from near zero to a peak of $2400 with 3 dependents and family combined income of $320k.
Biggest unpleasant surprise was not being able to drop below 30 hours per week to be with our young kids.
Post forgiveness we both still work in public service. My wife did drop hours though!
Chris,
Thanks for sharing. It’s great to see the success of you and others receiving this milestone.
Andrew StudentLoanAdvice
That’s definitely a PSLF downside–not only do you have to work for a 501(c)3, but you have to do it full-time. Not too different from HPSP though. The military will also require you to work for them and to work full-time whether you want to or not.
Graduated in 2009 with $181k in debt at 6.8%, paid $90k, $170k forgiven this year. Repayments were IBR throughout residency and fellowship, then REPAYE once I started my academic faculty position. Started certifying annually as soon as the forms became available, and forgiveness was pretty straightforward as a result. Glad it was all done before FedLoan got out of the business.
CK Yuen,
Wow, seems like a pretty good investment for your medical career. Appreciate the post.
Highlights a point if you are working in academics or will be out of training, definitely consider PSLF.
Andrew StudentLoanAdvice
Enrolled spouse in the PSLF program in 2013. Had $260k in Direct Loans and was working at non-profit hospitals throughout career. We did make a mistake by deferring for two years (2007-2008) as that would have resulted in faster payoff. Kept current with payments and used the IBR plan. Did get several payments not counted as they were paid “outside payment window” which actually was me paying them too early in the month – instead of paying on 27th every month I paid on 15th. Lesson learnt. Kept nagging away with the recertification form for employment every year. Covid hits and we sent in a PSLF employment form. At this point we were 12 payments away from completion. The loan has now been unceremoniously forgiven – we have checked the website showing zero balance and have received a letter showing no payments but my spouse still gets emails saying we are looking at your payments.
So I would encourage enrollment in the program if you can do so, be diligent with payments – but make sure you don’t pay too early, and continually do recertification of employment forms every 4-6 months. It is feasible to achieve in the program the zero balance – we got lucky with Covid and suspension of payments.
SM,
Great point. Avoid paid ahead status. This is when you’re trying to do a good thing by paying early or perhaps making a lump sum payment for the next two months. Would echo making the required monthly payment on-time and not try to complicate it for your servicer. They are bound to make mistakes even when you do everything right.
Was working with a client this week who had the same thing happen. We logged into fedloan and couldn’t find her loan balance. Everything said paid in full. We were in disbelief because they hadn’t sent her any correspondence this has been done yet. If you’ve reached 120 payments and submitted all your PSLF forms, I’d regularly check fedloan’s site because there seems to be a lag in reporting when someone’s reached PSLF.
Andrew StudentLoanAdvice
Glad for you all who were able to take advantage of the program. My experience has been simply bureaucratic horror and hopelessness with 11 years and counting. In fact, if given the option to return my medical degree and never work in that profession again for loan forgiveness, I would relinquish it in a nanosecond.
Hang in there. This too shall pass.
I graduated medical school in 2010 with approximately 180k in federal student loan debt. I did income-based repayment during my 4 year OB residency and then worked for a 501(3)c after graduation. The remaining 115k balance was forgiven 1/2022. I certified my employment after residency graduation and then yearly. Due to several delays in processing my conversion to direct loans, I had about 10 months of payments made during residency that didn’t qualify which was frustrating. However, the recent pause due to COVID made up for it. Overall the process was straightforward. I have now transitioned to a part time hospitalist position at a different 501(3)c organization and am very happy with the change and extra time with family.
I graduated med school in 2000. Deferred through residency and fellowship to 2006 with FFEL loans (Stafford). Loan’s were around 160k. Did a 30 year consolidation at 2.2% Payed the regular payments. Never really thought about PSLF before since IBR would be too high. WCI wasn’t around until 2011 so never thought about throwing tons of money at the loans.
However, just converted to Direct Loans and am mid way through forgiveness of the 76k I have left. Perhaps this one time where not listening to Jim makes sense!
Seriously though my one complaint is why so many hoops to jump through? There should be a way to just say through Navient (my servicer who knows all my payment history), look these are ffel loans, certify my employment, >10years of payments, poof. Instead you do a consolidation app, wait, then the pslf app, then wait, then wait some more.
Be glad you get loan forgiveness. I graduated in 2002 with over $200k in debt and paid it off in 4 years post residency by working hard in a non desirable city and living cheaply. I was an idiot to back it back so soon — trying to be financial responsible.
I don’t blame people for taking advantage of the program though but personally don’t think it’s fair. I think it should be capped at $50k and go towards people with more low income jobs. Why should A janitor pay taxes to foregive a doctor’s debts. I think they should keep tuition prices down rather then having crazy debt driven tuition inflation and foregiveness.
Yea it is frustrating that “those who did the right thing” are penalized sometimes. Imagine those who refinanced in February 2020.
New rules allowing lump sum payments counting for 12 months, or until next IDR recertification, if you remain at qualifying site and working full time. Not sure if paying a larger amount though would put you in pay ahead status or not yet.
RY,
Yes, there is this new rule out there. You can do this, and they shouldn’t put you into pay ahead status. But, just be 100% sure Fedloan is aware you’re doing a lump sum payment.
They still find a way to make mistakes when you’re doing everything else right even when you’re simply making the required monthly payment. So, I’m not a huge fan of the lump sum payment but the rules allow you to do so now.
Andrew StudentLoanAdvice
As I have received such great help on this site, I wanted to provide an update in case it helps anyone else out there considering PSLF. I graduated in 2005 and consolidated my FELP loans at 1.6%. (they were eventually managed by Navient). I paid off my higher interest private loans within 2 years. Given the low interest I decided not to rapidly pay off my FELP loans and started regular repayment in fellowship 2008. I worked and am currently employed in academics for a 401c3 organization for over 10 of those years.
As of October this year I had made 123 payments and consolidated with Direct Loans after announcement of changes to PSLF. I applied for PSLF and submitted paperwork early November. I placed all payments with Navient and loans with FedLoan in forebearance while processing as I felt I had made all required payments. I am under the impression additional payments with Navient would not have been refunded.
In January, I received confirmation that my employment was accepted, but denied forgiveness based on not having made any payments. I contacted FedLoan and was told this is standard and they were reaching out to Navient to confirm payments. They indicated my loan request was still being processed. This week (Feb 20) my loans were forgiven and balance is listed as 0$. Best of luck to others.
Congrats to you, thanks for sharing!
Hi. I work as a psychologist though the Veterans Administration and specialize in treatment for PTSD. Feel very fortunate for the fulfilling work. Been with the VA 12 years and last week after paying on loans for 21 years (and the debt somehow only getting larger, not smaller, despite my monthly payments being like a second mortgage), I got the letter today from Fedloanservicing that my loans are forgiven. I don’t even feel like it is real. I’m so grateful and I’ll continue my path to help Veterans. And I can’t describe the weight taken off me. I would have kept paying them, as I took them out and they were my responsibility, but I am so very grateful this worked out. I heard the tales that barely anyone had this positive result despite being enrolled in PSLF, so I had given up hope.
Congrats!
I did pediatric residency and fellowship (6 years) and took a job in academics in 2015. I tried to first apply for PSLF towards the end of fellowship and only found out at that point that the payment plan I was under did not count for PSLF. But I had (relative to peers) a low loan amount and I had consolidated all my loans and so had a very low interest rate and payment amount so I figured, forget it…I’ll just keep paying monthly.
When the TEPSLF was announced, I re-submitted my paperwork as by this time I had paid more than 10 years of payments. At the first round of submission, I had 114 of 120 payments counted and then a bunch of payments “under review.” I had to call into the help line and wait forever and to speak with a customer service person to try to figure out why the payments were under review as they were no different than the ones that had counted. That person was helpful and figured out that it was a technical snafu. I subsequently got a letter in the mail saying that all my loans had been forgiven and then even more surprisingly found out when I went to do my taxes this year, that I had gotten a bunch of payments to my bank account to account for the overpayments that I had made given that I had made 10 years of payments. It took some persistence and patience, but the system worked!! No student loan debt!!
Nick,
Wow! Thanks for sharing your experience. Did they tell you your loans were forgiven from TESPLF or regular PSLF?
Andrew StudentLoanAdvice
Glad it worked out so well for you. Congrats!
I’m another FFEL—>Navient—>direct loan consolidation success. Never thought I’d qualify for PSLF due to FFEL exclusion, but the waiver fixed that. Consolidating to fed loan was tricky because I’d changed my name years ago, and StudentLoan.gov and the NSLD thought I was 2 different people. I was grateful for the expert advice from Molly at Student Loan Planner—would recommend working with an expert, like this article’s author, or someone at SLP—a small investment for the 144K forgiveness.
WillowMD,
Thanks for sharing your success! It can definitely be tricky navigating this process and can take quite a bit of time. Waiting for the consolidation to go through. Then waiting for the PSLF application to be processed, etc.
The cherry on top is worth it though.
Andrew StudentLoanAdvice