Public Service Loan Forgiveness (PSLF) is a federal program. It’s designed to forgive the outstanding student loan debt of qualifying borrowers and is only applicable to federal student loans. As nice as that sounds, it isn’t very easy to qualify for those benefits. There are a lot of requirements to meet. That said, let’s go over just what those criteria include. Here’s what you need to know about qualifying for Public Student Loan Forgiveness:

You Must Be Employed By A Qualifying Employer

To qualify for PSLF, who you work for is more important than your specific role in the organization. The two major categories of qualifying employers include:

• All government organizations at U.S. federal, state, local, or tribal levels, including the U.S. military, which is a federal service
• Not-for-profit organizations that are exempt from tax

Serving as a full-time Peace Corps or AmeriCorps volunteer will also qualify you for forgiveness.

With regards to employment, you’ll only qualify for forgiveness if you’re directly employed by the qualifying employer. Working for a contractor who’s employed by a qualifying employer will not qualify you for forgiveness

You Must Be Employed Full Time And Complete The Specified Minimum Working Hours

To comply with this requirement, you must meet your specific employer’s definition of full-time work. Or you must complete at least 30 hours of work a week. PSLF uses whichever is greater.

You may also qualify if you’re employed part-time by more than one qualifying employer at the same time. This only applies if your combined work hours average at least 30 hours a week.

You Must Have Eligible Loans

There are several different types of federal student loans but not all are eligible for forgiveness. Only Direct Loans are eligible for Public Service Loan Forgiveness.

The types of federal loans that qualify for PSLF include:

• Subsidized Federal Direct / Stafford Loans
• Unsubsidized Federal Direct / Stafford Loans 
• Direct PLUS Loans
• Federal Direct Consolidation Loans

Loans from the Federal Perkins Loan Program and Federal Education Loan (FFEL) Program don’t qualify for PSLF. Student loans from private lenders are not eligible for PSLF.

You Must Have Made Qualifying Payments

To qualify for forgiveness, it’s not enough to just pay off your loan. How you pay and the number of payments you’ve made also matter.

To qualify for Public Student Loan Forgiveness you must make 120 qualifying payments. Qualifying payments include:

• Payments made after October 1, 2007
• Repayments made under a qualifying repayment plan
• Payments made while employed full-time by a qualifying employer
• Repayments made for the full amount due on your bill
• Payments made no later than 15 days after the stated due date

It’s important to pay attention to each of these criteria. These are a few things you should know about qualifying payments:

The 120 qualifying monthly payments don’t necessarily have to be consecutive payments. For example, if you worked with a non-qualifying employer for some time, you’ll still get credit for earlier qualifying payments you made. What’s important is that the payments must have been made in a minimum of 120 payments.

Only payments made during the periods when you’re required to make a payment are considered for forgiveness. This means payments made during the grace period or while still attending school don’t qualify. Neither do payments made during deferment or forbearance periods

You’ll have certain leniencies if you’re in the Peace Corps or AmeriCorps.

The 120 Payments Must Be Made Under A Qualifying Repayment Plan

All federal repayment plans qualify for Public Service Loan Forgiveness. This includes the standard 10-year repayment plan. While payments made under this plan qualify for forgiveness, you should be aware of a key limitation in this plan.

Under the standard repayment plan, by the time you’ve made 120 qualifying payments, your loans will be paid in full.  If you’re pursuing forgiveness, you must enroll in an appropriate Income-Driven Repayment (IDR) plan such as:

• Income-Based repayment plan
• Pay As You Earn (or “New Income-Based Repayment”)
• Revised Pay As You Earn
• Income-Contingent Repayment Plan

Income-Driven Repayment plans set your monthly payments to your income. Before enrolling in any of these IDR plans, you should know that the cost of the loan may increase. How much you pay depends on two things – your monthly income and the total amount you owe. If the loan cost increases with an IDR plan, it may not be worth it for you. In this case, the PSLF Program may not benefit you either.

What If You Don’t Qualify For Public Student Loan Forgiveness?

As you can see, the PSLF program has very stringent qualifying requirements. It’s absolutely crucial to meet every one of the program’s qualifying criteria every year. You won’t qualify if you meet only some requirements and not the others.

If you don’t meet PSLF’s requirements, it’s time to explore other options to manage your student debt. One of the most popular options for managing student loans is refinancing.

Refinancing your student loans allows you to choose a term and monthly payments that suit your financial situation. If your credit is good, you’ll qualify for a lower interest rate, saving a substantial sum in interest. If your budget is flexible, you can increase your monthly payments and reduce the loan term. This will help you pay off your debt earlier and also save on accrued interest on the shorter loan term. If you’re struggling financially, you can lower your monthly payments to make them more affordable. While you’ll end up paying more in accrued interest, it will minimize the immediate risk of delinquency and default.

You should be aware that when you refinance federal student loans, they lose all protections associated with the original loan. That means the refinanced loans will no longer be eligible for forgiveness.