Serve the Public? Asking These 7 Questions Could Crush Your Student Loans

A male teacher helps his high school students with their classwork.
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If you’re choosing a career based on whether you’ll receive loan forgiveness, you could be in for a looonnng 10 years.

But if you have your heart set on serving the public — at a non-profit or government entity — and are facing a mountain of student loans, then the Public Service Loan Forgiveness (PSLF) program may be the way to wipe out your debt.

The process isn’t easy or quick, but we’ve come up with seven essential questions you should ask before you consider this option. But don’t worry, The Penny Hoarder is also going to help you answer them so you know if this is the right path for you.

7 Questions to Ask About Public Service Loan Forgiveness 

If you’re considering applying for PSLF, asking these questions early in the process can help you decide if the program is right for you.

1. Is My Loan Eligible for Forgiveness?

There are three requirements your loan must meet to qualify for PSLF:

You Have the Right Kind of Loan

The only loans that qualify for PSLF are the following Direct Loans:

  • Subsidized Loans.
  • Unsubsidized Loans.
  • PLUS Loans (Grad).
  • Consolidation Loans.
  • PLUS Consolidation Loans.

If you have Federal Family Education Loans (FFEL) or Perkins loans, they do not qualify for PSLF, but you can get them to qualify via loan consolidation. 

Direct Plus Loans for parents aren’t eligible for PSLF, but they can become eligible if you combine them into a federal Direct Consolidation Loan and then apply for the Income-Contingent Repayment (ICR) plan. 

You’re on an Approved Repayment Plan

To qualify for PSLF, you must be on one of the income-driven repayment (IDR) plans:

  • Income-Based Repayment Plan (IBR)
  • Income-Contingent Repayment Plan (ICR)
  • Pay as You Earn (PAYE)
  • Revised Pay as You Earn (RPAYE)

We cover each of these student loan repayment plans in more detail in this article

You’ve Made the Correct Number of Qualifying Payments

You’ll need to make 120 on-time (no later than 15 days past due), full monthly payments. Although payments do not need to be consecutive, any payments made during the following periods cannot qualify for PSLF:

  • While in school.
  • Grace period.
  • Deferment.
  • Forbearance.
  • Delinquency.
  • Default.
  • Any other status when you are not required to make payments.

To qualify for PSLF, payments must have been made after Oct. 1, 2007.

2. Is My Job Eligible?

Eligibility is not dependent upon your job title — it’s dependent upon who you work for.

So who can you work for? The government, a non-profit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code and private non-profit organizations that provide certain public services. Working for AmeriCorps and Peace Corps also qualifies for PSLF.

You must work full-time (at least 30 hours per week) to qualify, and you’ll need to certify your employment for each year (you can go back to former employers to ask them to certify past employment, if necessary). Employment periods do not have to be consecutive.

When you’re ready to apply for PSLF, you must still work for a qualifying employer.

You’ll need to submit an Employment Certification Form (ECF) for each qualifying employer.

3. Is There an Income Limit?

Technically, no. You can apply for PSLF regardless of your income. However, if your income is high enough, you will not qualify for an income-driven repayment plan. And if you’re making the regular, on-time payments via the standard repayment plan, you’ll pay off your loan in 10 years so there will be nothing left to forgive.

You’ll benefit the most when you have high debt relative to your income, so you’re better off starting early, according to Heather Jarvis, a student loan attorney.

“If you earn twice as much money in a year as what you owe on your student loans… you’re not going to be allowed to make payments low enough that they wouldn’t extinguish the debt before you got forgiveness,” Jarvis said. 

“But on the other hand, if you owe twice as much on your student loans as what you earn in a year and you’re planning to work for the government or a non-profit, then you might well benefit.”

4. Should the Low Acceptance Rate Concern Me?

Not to discourage you, but let’s look at the facts: Out of the approximately 76,000 PSLF applications that were processed by March 2019, 518 applications were approved. For those who didn’t major in math, that’s less than 1%. (And for those that didn’t major in statistics, that’s really low.)

Part of the reason for the low acceptance rate could be because the program is relatively new — it was established in 2007, so the first people to qualify just graduated in fall 2017. 

Those early adopters didn’t get to benefit from learning from past mistakes, including realizing how tough it was to follow the very strict requirements — applicants typically were rejected because at some point they were on the wrong kind of repayment plan.

If you owe twice as much on your student loans as what you earn in a year and you’re planning to work for the government or a non-profit, then you might well benefit.

You know yourself pretty well, right? Are you the kind of person who can commit to not only making on-time payments but keeping up with the paperwork you’ll be required to submit? Do you understand what types of loans you have and feel comfortable navigating federal bureaucracy? 

If any of those questions gave you a case of the queasies, you might want to think long and hard about whether you’re prepared to be one of the chosen few for PSLF — check out our guide to paying off your student loans.

5. How Do I Apply?

If you’re a very recent college grad, you can put your pen down.

You cannot apply for PSLF until you’ve made your 120 qualifying payments, so you’ll need to wait at least 10 years (and hope the program doesn’t end between now and then).

During that time, you can complete and submit your ECF annually or when you change employers. 

It’s a good idea to submit ECFs during your qualification period rather than waiting until the end, since the Department of Education will review your employer’s eligibility, notify you of any issues and transfer any loans to FedLoan Servicing that are not already serviced by that program. 

After your loans have been transferred to FedLoan Servicing, you’ll be able to track how many qualifying payments you’ve made. Whenever you submit an ECF, you’ll receive a letter with the updated number of qualifying payments you’ve made.

And once you’ve reached your 120 qualifying payments, you can fill out and submit the PSLF application by downloading the PSLF application — forgiveness is not automatic, so you must fill out the application to be considered. If you need assistance, check out this tool from the Department of Education

6. What If I Already Made a Mistake? (aka What’s TEPSLF?)

If you are among the many who realize a little too late that you had mistakenly thought you were meeting the requirements for a qualifying repayment plan, there’s still hope. 

In 2018, lawmakers created a $350 million fund to give those who were denied forgiveness a second chance. It’s known as the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) opportunity.

But if you thought the original PSLF was tough, you should prepare yourself for even less of a chance — mostly because the fund is temporary, has limited funding and provides relief on a first come, first serve basis. 

Among the loans not eligible for TEPSLF are defaulted Direct Loans and Direct PLUS Loans made to parent borrowers, as well as FFEL, Perkins and private loans.

Under this program, borrowers still have to adhere to most of the qualifications for the forgiveness program: direct Loans, qualifying employment and correct number of payments. 

The only difference is that if you made some or all of your payments on the graduated repayment plan, extended repayment plan, consolidated standard repayment plan or consolidated graduated repayment plan, you could still qualify for forgiveness.

If you meet the qualifications for student loan forgiveness, fill out this template from the Department of Education and an email to [email protected] as soon as possible:

To: [email protected]

Subject: TEPSLF request

I request that ED reconsider my eligibility for public service loan forgiveness.

Name: [Enter the same name under which you submitted your Public Service Loan Forgiveness application]

Date of Birth: [Enter your date of birth in MM/DD/YYYY format]

Thank you.

You should receive a response from FedLoan Servicing ([email protected]) within 60 to 120 days notifying you know if your loan can be considered for TEPSLF.

7. What If I’m Still in the Process of Reaching 120 Payments?

For those who are still working toward that goal, the TEPSLF isn’t going to help you, at least for now.

And unfortunately, the fund may be empty long before you can take advantage, since the future of the program is still unclear, according to Adam Minsky, a New York student loan lawyer.

Among the loans not eligible for TEPSLF are defaulted Direct Loans and Direct PLUS Loans made to parent borrowers, as well as FFEL, Perkins and private loans.

“Could someone who has made less than 10 years of payments on the wrong plan have those non-qualifying payments count under this expansion? Yes, it’s possible,” Minsky said. “But they’re not going to be able to get a definitive answer to that until they have accrued 120 qualifying payments, they apply, they get denied and then they appeal.

“The vast majority of people are going to be in the situation… where they have made some years of payments that don’t count and then they’re questioning whether or not they will be able to get those years counted, and the answer is there is absolutely no way to know.”

Until you know for certain that your student loans are forgiven, keep track of every communication with your student loan servicer and double-check any information it gives you for accuracy. After all, forgiveness could save you from thousands of dollars in student loan debt.

Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Former staff writers Lisa Rowan and Desiree Stennett contributed to this post.