Student Debt Resource

11: Public Service Loan Forgiveness

/ Student Debt E-book

For those that plan to pursue a career in public interest law, the Public Service Loan Forgiveness program is a significant breakthrough. Established by the College Cost Reduction and Access Act of 2007, Public Service Loan Forgiveness (PSLF) offers forgiveness for eligible Federal Direct Loans after you have made 120 qualifying monthly payments, while working full time in a qualifying public service position. 

Please note: the below does not discuss in detail the Temporary Waiver Opportunity for Public Service Loan Forgiveness which expires on October 31, 2022. Check out the PSLF Coalition FAQs for more information here.  

The benefits can be considerable when combined with qualifying IDR plans such as the IBR, ICR, PAYE, or REPAYE plans. For a detailed explanation of IDR repayment plans, go to “Chapter 3: Income-Driven Repayment Plans.”  

It is important to make sure you take the right steps so that you may apply for and receive forgiveness after making your 120 qualifying monthly payments. 

There are four steps to earning Public Service Loan Forgiveness

Step 1: Make sure you have eligible loans. 

Step 2: Make sure you are working full-time in qualifying employment. 

Step 3: Make 120 qualifying payments on those eligible loans while you’re employed in a qualifying public service position. 

Step 4: Apply for forgiveness! 

Below outlines each of these four steps in detail so that you know what is necessary to qualify for public service forgiveness.  

Step 1: Eligible Loans 

The first step in working toward Public Service Loan Forgiveness is to make sure you have the right types of federal loans. Only Federal Direct Loans are eligible for Public Service Loan Forgiveness (PSLF), which means that only those payments made on Federal Direct Loans count toward the required 120 qualifying payments, and only Federal Direct Loans will be forgiven. Only Federal Direct Subsidized Stafford, Unsubsidized Stafford (now referred to as Direct Subsidized and Direct Unsubsidized), Grad PLUS, and Federal Direct Consolidation Loans are eligible. 

Parent PLUS, FFEL Loans, and FFEL Consolidation Loans can become eligible for Public Service Loan Forgiveness by being consolidated into a Direct Consolidation Loan. However, there are a few caveats to this rule: 

  • For Parent PLUS loans consolidated into a Direct Consolidation Loan, the new consolidation loan must be repaid under the ICR plan, and the consolidation must have occurred on or after July 1, 2006.  
  • FFEL Consolidation Loans that consolidated the separate federal student loan debt of two married individuals into one loan are ineligible for PSLF because spousal consolidation loans cannot be converted into a Direct Consolidation Loan.  
  • Only those payments made on the new Direct Consolidation Loan count toward the payments required for PSLF.  

TIP: If you are not sure of which type of loans you have borrowed, or how loan consolidation works, bookmark this page so you can return to it and go to Chapter 1: Understanding Your Student Loans and Loan Consolidation for an explanation. 

Step 2: Qualifying Employment 

To qualify for Public Service Loan Forgiveness, you’ll need to be working full-time in a qualifying public service position, while you make each of your 120 qualifying payments, and at the time that you send in your application for forgiveness, and when forgiveness is ultimately granted.  

What employment is considered full-time? 

The Department of Education’s 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.
    • You may combine one or more part-time jobs to reach the required average of 30 hours per week, but each of your employers must qualify. For example, you may work part time for the government and part time for a 501(c)(3) and add these hours together to reach 30 hours per week. 
  •  For a contractual or employment period of at least eight months, on an average of 30 hours per week.
    • Many legal fellows are employed under periodic contracts. To qualify, they would have to work an average of 30 hours a week over the term of the contract, which must be a period of at least eight months. 
  • Or, unless the qualifying employment is with two or more employers, the number of hours the employer considers full-time. However, labor regulations prevent employers from requiring an employee to work more than 40 hours per week in order to be considered a full-time employee.
    • For example: If your employer considers a full-time position to require 40 hours per week, you must be working 40 hours per week to qualify, but if you are working two part-time qualifying jobs, these will need to add up to only 30 hours per week. 

Note: If you take vacation or leave time provided by your employer or take leave pursuant to the Family and Medical Leave Act, this is not counted against you when calculating the annual or contractual average hours you have worked. 

Types of Employment Eligible for Public Service Forgiveness Loans 

Federal, state, local or Tribal government: You may work for any level of government: a local, State, Federal or Tribal government organization, agency or entity. You may be employed in any position, with one exception: you may not be a member of the U.S. Congress. However, you may work within Congress or for a Senator or Representative. 

A Tribal university or college 

A 501(c)(3) nonprofit organization: Employment at a nonprofit organization as defined under section 501(c)(3) of the Internal Revenue Code that is exempt from taxation under section 501(a) of the Internal Revenue Code is qualifying employment. While you may be employed in any position, the Department of Education has indicated that religious instruction, worship services or any form of proselytizing is not qualifying employment. If you are employed by a 501(c)(3) organization that engages in these activities, at least 30 hours or more of your time must be spent on other qualifying activities. 

 A full-time AmeriCorps position: Working in a full-time position approved by the Corporation for National and Community Service under Section 123 of the National and Community Service Act of 1990 qualifies. 

The Peace Corps: If you are working in a full-time assignment under the Peace Corps Act, this work will count as qualifying employment. 

A private public service organization: A private public service organization is a nonprofit organization that is not organized under Section 501(c)(3) that provides the following services: 

  • Emergency management 
  • Military service: Includes active-duty members of the U.S. Armed Forces or National Guard, unless the member is attending a service school or engaging in training.  
  • Public safety 
  • Law enforcement: Services provided must be publicly funded and pertain to crime prevention, crime control or reduction of crime, or the enforcement of criminal law.  
  • Public interest law services: legal services must be funded, in whole or in part by a local, state, federal or Tribal government.  
  • Early childhood education: Includes licensed or regulated health care, Head Start, and State funded pre-kindergarten.
    • Public service for individuals with disabilities and the elderly
    • Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations, and health care support occupations, as defined by the Bureau of Labor Statistics)
    • Public education
    • Public library services
    • School library or other school-based services 

Note: Regardless of the services it provides, a private public service organization cannot be a business organized for profit, a labor union, a partisan political organization, or an organization engaged in religious activities (unless the qualifying activities are unrelated to religious instruction, worship services, or any form of proselytizing).  

Additional requirements to know about qualifying employment 
  • Your qualifying employer(s) must be the entity from where your paycheck comes from. This means that contract or volunteer work at a 501(c)(3) will not count as qualifying employment.  
    • For example, a private attorney doing contract work for a Public Defender’s office would only have a qualifying employer if that office (or another government agency) actually paid them.  
  • You may switch jobs! As long as you switch to another qualifying employer and work full-time, your employment will continue to qualify. 

Step 3: Qualifying Payments 

Each payment must be made separately, on time, and for the full monthly amount due. In addition, you must be in one of these qualifying repayment plans: 

  • A Standard 10-Year Repayment Plan. While payments made under the Standard 10-Year Repayment plan count toward the 120 payments required for PSLF, you cannot make the full 120 payments under this plan because the loan is also paid off in full in 120 payments under the Standard 10-year Repayment plan. In simpler terms, there would be nothing left to forgive by the time you became eligible for forgiveness.  
  • A non-standard repayment plan in which you would make monthly payments that are as much or more than the monthly amount required under Standard Repayment, over a 10-year repayment period. Under such a plan, only the payments that are at least as much as the standard 10-year amount would count.  

NOTE: COVID-19 emergency measures suspended payments on federally-held student loans from March 20, 2020 through August 31, 2022  If you have Direct Loans that are not in default, and work full-time for a qualifying employer during the payment suspension period, suspended monthly payments will count toward Public Service Loan Forgiveness (PSLF) as if you continued to make regular monthly payments.   

For example, if you were in a graduated repayment plan where your payments started out low and then increased, only those payments that were at least as much as the standard 10-year amount would qualify. This option would still present the same issue as the Standard 10 Year Repayment plan with regards to the loan balance being paid off prior to becoming eligible for forgiveness. 

  • ICR plan. 
  • IBR plan. 
  • PAYE plan. 
  • REPAYE plan. 

Note: The IBR, ICR, PAYE, or REPAYE plan will be the preferred repayment plan for most borrowers who ultimately will earn PSLF because these plans will help ensure your monthly payments are affordable and that you receive the full forgiveness you have earned in return for their public service. 

TIP: If you are unsure of which repayment plan is best for you, refer to Chapter 3: Income-Driven Repayment (IDR) Plans, for an explanation. Do not choose an extended repayment plan as they do not qualify for PSLF. Also, steer clear of graduated repayment plans because most payments made under these plans will not qualify. Additionally, be wary of “standard” plans if you have a consolidation loan because they may have a repayment period other than ten years, and will not qualify. 

If you still have questions about how income-driven repayment plans work with PSLF, register for a free informational webinar led by Equal Justice Works and the PSLF Coalition to learn more. 

Additional details to know about qualifying payments 
  • Qualifying payments do not need to be consecutive. While you must maintain qualifying public service employment for payments made on your Federal Direct Loans to count toward PSLF, your payments do not need to be consecutive. You may take time off* from your eligible employment (for example, to take a non-qualifying position or to stay home with family).
    • Should you take time off, payments must still be made on your loans during this time (unless you are in deferment or forbearance,) but they would not count toward the 120 qualifying payments required for PSLF. However, when you are back in full-time eligible employment, payments will begin to count again – and the count will pick up where you left off.
  • Be wary of consolidating loans for which you’ve already made qualifying payments. The Department of Education has indicated that subsequently consolidating Direct Loans for which you’ve already made qualifying payments toward PSLF will restart the count for these loans.
  • Watch out for Non-qualifying Payments! Only payments made after October 1, 2007, on eligible Federal Direct Loans qualify. In addition, the following payments do not count toward the 120 required for forgiveness:
    • Payments made under a fixed-term repayment plan, with a term of more than ten years (for example, twenty or thirty years);
    • Payments made while not working in full-time qualifying public service employment;
    • Payments made on ineligible loans (e.g., FFEL Loans, Perkins Loans);
    • Payments not made within 15 days of the due date; and
    • Payments made while you are in default. 

NOTE: If you are choosing a repayment plan for a Federal Direct Consolidation Loan and select the “Standard Repayment” option, your repayment term will differ based on how much you owe. “Standard Repayment” on a Direct Consolidation Loan will not count if the term is longer than 10 years. 

TIP: Consider avoiding large, lump-sum payments on your eligible loans. Unless you fall within a narrow exception for Segal AmeriCorps Education Awards, a lump-sum payment will count as only one qualifying payment regardless of the amount you submit. 

Step 4: Track Your Payment Progress 

You can – and should, track your progress toward the 120 payments required for loan forgiveness via PSLF, by using the Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application. 

Here are recommended steps to take to track your progress:

  • Get the Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application from the Student Aid website: Public Service Loan Forgiveness Application for Forgiveness (studentaid.gov)
  • Complete SECTION 1: BORROWER INFORMATION
  • Sign SECTION 2: BORROWER REQUEST, UNDERSTANDINGS, AND CERTIFICATION
  • Give this to the human resources person (or their equivalent) at your jobs. Have them complete SECTION 3: EMPLOYER INFORMATION and SECTION 4: EMPLOYER CERTIFICATION.
  • Retrieve the form.
  • Mail the completed form to the address in SECTION 7: WHERE TO SEND THE COMPLETED FORM.
    • The Department of Education will then review the form.
    • The Department will then reply in one of the following ways:
  • Request more information
  • Send you a letter of email notifying you of the number of payments you have made toward PSLF and how many more you must make. Additionally, you will be notified whether your present employer qualified as an eligible public service employer.

Note: Submitting the form may result in your existing loan servicer being changed to MOHELA.

Tip: Submit the form anytime you want an update on how many PSLF qualifying payments you made but always submit when you change employers.

While certification of employment in advance of application for forgiveness is not required, it is the only way that the Department of Education will keep track of your progress toward meeting the PSLF eligibility requirements. We suggest you submit the form annually, but you may submit the form less frequently to cover more than one year’s employment. You also may use the form to cover more than one employer. Whether or not you periodically submit the form, you will still be required to submit a form for each employer that you want considered for PSLF, at the time that you apply for forgiveness. Tracking progress as you go may be easier than gathering 10 years’ worth of information at once; it and may save you time when you’re applying for forgiveness. 

TIP: Submit the PSLF Certification Form anytime you want an update on how many PSLF qualifying payments you have made but always submit a new form when you change employers. 

Note: Submitting the PSLF Certification Form may result in your existing loan servicer being changed to FedLoan servicing. 

Step 5: Apply for Forgiveness! 

After you make your 120th qualifying payment, you will need to apply to receive loan forgiveness. The application is now available and has been accepted since October 2017, which is the earliest that borrowers were eligible to apply for forgiveness.  

When applying for forgiveness, you must (1) complete an application for forgiveness, (2) include an employer certification for each qualifying employer to the application, (3) be employed by a qualifying public service organization at the time you submit the application for forgiveness, and at the time that the remaining balance on your loan is forgiven.  

Note: Failure to remain employed throughout the application process will result in a denied application. The Department of Education may verify this continued employment.  

When you submit the form, it is important to notice the checkbox under Section Two. that will allow you to decide if you want to continue paying on your loans while your PSLF application is being processed, or to enter a period of forbearance.  If you decide to continue to pay on your loans, you will receive a refund for any payments you made after the 120 required payments. You can also enter forbearance during the processing period and not pay on your loans, however, in the event your application is denied, all accrued interest will capitalize. Applications are expected to take 60-120 days to process. 

Public Service Loan Forgiveness Is Not Taxed 

Forgiveness received through the Public Service Loan Forgiveness program is not considered taxable income. 

Generally, income from the cancellation of debt is taxable, but under Section 108(f) of the Internal Revenue Code, certain student loan forgiveness may be excluded from taxable income if forgiven because of the borrower working for a certain period “in certain professions for any of a broad class of employers.” Additionally, the Consolidated Appropriations Act of 2021 provides for tax-free student loan cancellation through December 31, 2025. 

The U.S. Department of the Treasury confirmed 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 Section 108(f) and is therefore not taxable income to the borrower. 

How Public Service Loan Forgiveness Works: An Example with Pam Prosecutor 

Pam Prosecutor is an assistant district attorney in Chicago. She has an adjusted gross income of $45,250. She has a husband, one child and a father for whom she provides 70 percent of support. This means Pam Prosecutor has a household size of 4. Pam also has $85,000 in Direct PLUS Loans at a six percent interest rate from law school. Let’s explore how much money PSLF will save Pam under the various repayment plans:  

PAYE: Pam pays $70 to $471 a month for 240 months with a total loan cost of $56,471. However, with PSLF, Pam pays $70 to $205 a month for 120 months with a total loan cost of $15,826.  

REPAYE: Pam pays $70 to $674 a month for 300 months with a total loan cost of $91,767 However, with PSLF, Pam pays $70 a month for 120 months for a total loan cost of $15,826.  

IBR (at 15 percent): Pam pays $104 to $944a month for 300 months with a total loan cost of $136,845. However, with PSLF, Pam pays $104 to $308 a month for 120 months for a total loan cost of $23,738.  

ICR: Pam pays $344 to $894a month for 300 months with a total loan cost of $163,632. However, with PSLF, Pam pays $344 to $663 a month for 120 months with a total loan cost of $59,044.  

With PSLF, Pam could have monthly payments as low as $73 (under the PAYE or REPAYE plans), make 120 payments, and have up to $126,000 in unpaid loan principal and interest forgiven.  

Repayment Plan First Monthly Payment Last Monthly Payment Total Amount Paid  Projected Loan Forgiveness Repayment Period
Standard $978 $978 $117,382 $0 120 months
Graduated $564 $1,693 $126,310 $0 120 months
Extended Fixed $590 $590 $176,988 $0 300 months
Extended Graduated $482 $843 $191,709 $0  300 months
Revised Pay As You Earn (REPAYE) $73 $213 $16,695 $105,552 120 months
Pay As You Earn (PAYE) $73 $213 $16,695 $126,105  120 months
Income-based Repayment (IBR) $110 $320 $25,043 $117,757  120 months
IBR for New Borrowers $73 $213 $16,695 $126,105 120 months
Income-Contingent Repayment (ICR) $349 $674 $60,204 $84,686 120 months

Note: The Department of Education assumes that monthly payments will change under IDR plans if income will rise over the course of Pam’s career by five percent annually. If Pam’s income does not rise by this amount (or at all), her monthly payments will remain closer to her first monthly payment amount. Also, if Pam gets married, has children or acquires other dependents, the amount she pays will also decrease. 

As you can see, PSLF can save you a lot of money, and allow you to have a public service legal career without being in financial distress.