Public Service Loan Forgiveness: Debunking Common Misconceptions

Public Service Loan Forgiveness (PSLF) is a life-changing program fraught with misconceptions. Let’s debunk common myths about PSLF so you can choose whether to pursue forgiveness with confidence.

What is Public Service Loan Forgiveness?

Public Service Loan Forgiveness (PSLF) is a program that forgives and removes the remaining federal student debt for public service workers who meet certain criteria:

• Work full-time for a qualified employer
• Have outstanding student debt in an eligible loan
• Are on an eligible repayment plan

Borrowers who meet this criteria can apply to have their loans forgiven after 120 qualified payments have been made. Those pursuing forgiveness should use the PSLF Help Tool to submit applications and track payments.

9 PSLF Myths Debunked

Myth 1: My loans will automatically be forgiven after 10 years of public service

Your loans will not automatically be forgiven for working in public service. You need to make 120 qualified payments and apply to be eligible for PSLF. Applying requires filling out an Employment Certification Form that proves you worked for an eligible employer at the time you made each payment to your loans.

Myth 2: All loans are eligible for forgiveness under PSLF

PSLF only forgives federal Direct student loan debt that meets certain requirements. Private loans are not eligible for forgiveness under PSLF.

Eligible Loans

• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Direct PLUS Loans
• Direct Consolidation Loans

Ineligible Loans

• Federal Family Education Loans (FFEL)
• Federal Perkins Loans
• Private Loans

Your loans must also be on an income-driven repayment (IDR) plan or 10-year Standard Repayment Plan to be eligible for forgiveness.

Eligible Plans

• 10-year Standard Repayment Plan
• Income-Based Repayment (IBR) Plan
• Income-Contingent Repayment (ICR) Plan
• Pay As You Earn (PAYE) Plan
• Saving on A Valuable Education (SAVE) Plan

Ineligible Plans

• Standard Repayment Plan for Direct Consolidation Loans
• Graduated Repayment Plan
• Extended Repayment Plan

You can gain eligibility for PSLF by combining your federal loans into a Direct Consolidation Loan and getting on an IDR plan.

Myth 3: I can only have one loan forgiven at a time

PSLF forgives all remaining federal student debt a borrower has, even if that debt is spread over multiple loans. However, every loan payment must be certified, so having multiple loans can make the process tedious.

Combining your federal loans into a Direct Consolidation Loan can make keeping track of repayment and certification easier.

Note that consolidating your loans will take a weighted average of the qualified payments. For example, if you’ve made 60 qualified payments to one loan and 20 qualified payments to the other, consolidating will place your total qualified payment count at 40.

Myth 4: Any public service job is eligible for PSLF

PSLF is only for employees of qualified employers who work full-time (at least 30 hours per week). Most of these employers are 501c3 nonprofit organizations or governmental agencies.

Eligible Employers

• US-based government organizations
• Not-for-profit organizations with 501c3 designation
• Not-for-profit organizations that devote a majority of full-time equivalent employees to providing public service

Ineligible Employers

• For-profit organizations
• Labor unions
• Partisan political organizations

Volunteering with AmeriCorps and Peace Corps counts as qualified employment.

Teachers and adjunct faculty also qualify, even if working on semester or quarter basis. Teachers must work full-time for 8 months out of the year and adjunct faculty should multiply each credit or contact hour by 3.35 to see if they qualify as full-time (at least 30 hours per week).

Note that contractors are technically employed by their contracting company, not the company they work with. If you’re unsure who your employer is, check your W-2.

Myth 5: I’m eligible for PSLF whether or not my employer is qualified

PSLF is based on your employer. You must work for a qualified employer to be eligible for forgiveness. The good news: if you work for a qualified employer, you can receive PSLF even if your specific role is not public service-related.

If your employer is not listed or has previously been deemed ineligible, you can provide documentation to request an eligibility review through the PSLF Help Tool.

Myth 6: Changing employers resets the clock

PSLF is based on the payments made (and certified) while working for a qualified employer. These payments do not need to be made under the same employer.

However, you will need to make sure your new employer is eligible. If they are not, your payments will not count toward PSLF.

Myth 7: The 120 payments must be consecutive and made on time

Payments do not need to be consecutive to be eligible for forgiveness, but only payments made while working for a qualified employer count. Having a break in employment will not set you back.

Late payments, paying ahead, and partial payments are all acceptable – as long as the total amount owed that month is paid, you’ll receive credit for a monthly payment.

Myth 8: Default, deferment, and forbearance disqualify me from PSLF

Falling into default, deferring repayment, or going into forbearance do not disqualify you from PSLF or restart your repayment count.

However, the time spent in default, deferment, and forbearance generally does not count toward PSLF (there are limited accepted types of deferment and forbearance that do count). This prolongs the time before your loans can be forgiven.

Myth 9: Changing repayment plans puts me back at square one

Changing repayment plans does not mean starting over. As long as you are moving from one eligible plan to another, you maintain your PSLF eligibility and your total payment count.

Note that only payments made on IDR plans and the 10-year Standard Repayment Plan count toward PSLF.

Don’t wait for forgiveness to deal with your loans

Though forgiveness is great, getting there can be an uphill battle. Only 2.3% of applications for Public Service Loan Forgiveness have been accepted since November 2020, and 14.4% of pending applications have yet to be processed.

Recent cuts to the Department of Education mean wait times for PSLF approval are only growing longer. Plus, incoming changes to federal loans raise questions about the future of borrower forgiveness and Public Service Loan Forgiveness overall.

With the uncertainty surrounding PSLF, it’s important to have a backup plan. Depending on your circumstances, forgiveness may still be worth working toward, but it shouldn’t be your only option to deal with your loans.

Do your research!

With the program changing quickly and often, there are a lot of misconceptions about Public Service Loan Forgiveness. It’s important to do your own research and stay up-to-date on changes in order to understand what they mean for you.

PSLF can be challenging and tedious, but it can also be life-changing. Learn what you can to work toward forgiveness with confidence, and don’t forget to build a backup plan so you’re headed in the right direction no matter what the future holds.

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For more information, see our Insider's Guide to PSLF.