What Loans Don't Qualify for Public Service Loan Forgiveness?

Public Service Loan Forgiveness (PSLF) is a federal program that offers debt relief to borrowers who work for a government or nonprofit employer. To qualify for PSLF, you must work full time for a qualified employer or at least 30 hours per week. Eligible loans include federal Direct Loan Program and federal loans that were consolidated into a federal consolidation loan. Unfortunately, Federal Perkins Loans and Federal Family Education Loan (FFEL) Loans are not eligible for PSLF.

However, they may be eligible if you consolidate them into a Direct Loan Program consolidation loan. It is noteworthy that unions, partisan political organizations and for-profit organizations (including for-profit government contractors) are not considered qualified employers. In some cases, the loan servicer has not correctly counted the amount of eligible payments. These borrowers can request a review by appealing the decision.

Providing documentation of payments, as explained below, can help. It is also possible that some borrowers are requesting the forgiveness of all their loans, even though some loans may have entered on different dates. Public service loan forgiveness is by loan, not by borrower. Therefore, loans obtained for graduate school will likely qualify for loan forgiveness later than loans obtained for undergraduate college, if the number of eligible payments for each loan is different. You can consolidate other types of federal student loans, federal family education loans, or Perkins loans to make them eligible for PSLF.

The consolidation loan application does not currently include a checkbox to request these repayment plans, so you must apply separately. Today, the Department of Education announces a set of actions that, in the coming months, will restore the promise of PSLF. We will offer a limited-time exemption so that student borrowers can count payments for all federal loan programs or repayment plans for forgiveness. This includes types of loans and repayment plans that were not previously eligible. We will look for opportunities to automate PSLF eligibility, provide borrowers with a way to correct errors, and make it easier for military members to obtain credit for forgiveness while serving. We will combine these changes with an expanded communication campaign to ensure that affected borrowers are aware of these opportunities and encourage them to apply.

PSLF allows borrowers with federal direct loans who make 120 eligible monthly payments while working full time for a qualifying employer to receive forgiveness of the remainder of their balance. Exemptions to PSLF qualification mean that a wider range of previous federal loan payments will count toward forgiveness, as long as you worked for a qualifying employer at the time. Active duty service members may qualify for student loan deferrals and deferrals that help them overcome periods when the service inhibits their ability to make payments. By paying off loans after 10 years of public service, PSLF removes the burden of student debt on public officials, makes it possible for many borrowers to stay in their jobs, and attracts others to work in high-need fields. However, please note that you must submit a PSLF employer certification form during the deferment period to receive the loan repayment credit. Federal Student Aid will develop and implement a process to address student loan deferment and payment deferment periods for active duty service members and update affected borrowers to let them know what they need to do to take advantage of this change. The limited exemption applies to borrowers with direct loans, those that have already been consolidated into a direct loan and those that are consolidated into a direct loan before October. Under the limited exemption, any payments made on your federal loans, regardless of which repayment plan you've been on, will count toward PSLF.

However, once you refinance federal loans, they are no longer eligible for forgiveness programs or income-based repayment. If you have a combination of FFEL loans and Direct Loans, please refer to the sections above to understand how your Direct Loan Program Loans will be affected.

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