Qualifying Payments

In order to qualify for Public Service Loan Forgiveness (PSLF), borrowers must not choose an extended repayment plan as many have done in the past. Qualifying monthly payments include only those made on time as part of Income Contingent Repayment (ICR) plan; Income-Based Repayment (IBR) plan; Standard Repayment plan based on a 10-year repayment schedule; or a repayment plan where the monthly amount paid was not less than the monthly amount required under Standard Repayment over a 10-year repayment period.

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Qualifying Employment

Qualifying public service employment is full-time paid work in the government; a 501(c)(3) nonprofit; an AmeriCorps position; the Peace Corps; or for a private “public service organization.”

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Eligible Loans

Most students borrow federal student loans (like Stafford loans and GradPLUS loans). Students borrow these federal student loans from one of two major federal student loan programs: the Federal Family Education Loan (FFEL) program or the Federal Direct loan program.

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Definition of Full-time

Final regulations define “full-time” as working in qualifying employment in one or more jobs for the greater of:

• An annual average of at least 30 hours per week;
• For a contractual or employment period of at least 8 months, an average of 30 hours per week; or
• Unless the qualifying employment is with two or more employers, the number of hours the employer considers full-time.

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Taxes

The U.S. Department of the Treasury confirms, in a September 19, 2008, letter to members of Congress, that public service loan forgiveness under the College Cost Reduction and Access Act meets the requirements of Internal Revenue Code Section 108(f) and is therefore not taxable income to the borrower.

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