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Public Service Loan Forgiveness Could Cancel All of Your Student Loan Debt

Even if you're receiving some loan forgiveness, public servants can apply for full loan cancellation through this loan program.

Man in blue scrubs and a backpack with a look of relief
It can take up to 45 days to consolidate your loans if you're eligible for PSLF.
Halfpoint Images/Getty Images

This week, President Joe Biden announced widespread federal student loan forgiveness of up to $10,000 per borrower (or $20,000 if you received a Pell Grant) for those who made under $125,000 in 2020 or 2021 (or $250,000 for married borrowers). While additional changes were proposed for future student loan payment plans, Biden did not extend the deadline to apply for the Public Service Loan Forgiveness expanded benefits waiver, which is set to expire on Oct. 31.

The PSLF waiver offers full loan cancellation to teachers, first responders, government workers, firefighters and other public servants who have worked in a qualifying position for 10 years or more. While not new, the vast majority of borrowers who applied for the PSLF program prior to the expanded waiver were denied loan cancellation. New regulatory changes in October 2021 and April 2022 made forgiveness more accessible to more public servants -- roughly 3.5 million federal student loan borrowers.

Here's everything you need to know about applying for the PSLF expanded benefits waiver, including how to find out if you're eligible, when and how to apply, and how to consolidate your loans. For more, here's how student loan debt forgiveness can affect your credit score and here's what you need to know about your new loan servicer if you're eligible for the PSLF program.

What is the PSLF program and who can apply?

The PSLF program, first launched in 2007, was designed to help public servants pay off their loans faster. 

The program works by offering loan forgiveness to eligible public servants who have made 120 qualifying student loan payments. Yet, prior to last October's expansion of the program, it had a horrible approval rate: Almost 99% of borrowers who had applied since 2008 were denied.

To qualify for PSLF you must be employed full-time by a US federal, state, local or tribal government agency -- this includes the military -- or a nonprofit organization. You must have federal Direct Loans or other types of federally backed loans that have already been consolidated into Direct Loans and you must make 120 qualifying payments or 10 years of payments. Examples of borrowers who qualify for PSLF are workers like teachers, nurses and firefighters who serve their local communities. 

Do I qualify for loan forgiveness under the new PSLF terms?

The waiver only applies to federal loans, which make up the vast majority, or more than 90%, of total student loan debt. Borrowers in public service jobs may be able to receive forgiveness for FFEL, federally backed loans made through private lenders, Perkins loans and other nonstandard or non-income-driven repayment plans for federal loans under the expanded waiver (see below). 

Borrowers can also receive credit for previous payments and periods of employment, such as active military duty, that they wouldn't have qualified for in the past. 

The easiest way to figure out if you qualify is to apply for the limited waiver. Filling out the waiver will help you do things like consolidate different types of loans or certify previous periods of employment for credit.

How do I apply for PSLF forgiveness? 

The Department of Education has a dedicated tool to help guide your application for the limited waiver. The deadline to apply for the waiver is Oct. 31, 2022, but the sooner you apply, the better. Some borrowers may not have to take any action to have their loans canceled -- but it's a good idea to confirm your specific details.

If you have FFEL or Perkins loans, you'll need to consolidate them into Direct Loans. This process can take several weeks, and Martin Lynch, director of education at the Cambridge Credit Counseling Corp., recommends completing the process "at least 45 days before filing the PSLF application." That means you should take action to consolidate no later than the first week of September to ensure you have enough time to file. 

Do I need to consolidate my non-Direct Loans?

Previously, only Direct Loans with a standard or income-driven repayment plan qualified for PSLF. However, for a limited time, you may be able to receive credit for past payments on federal loans that did not previously qualify for PSLF, regardless of your repayment plan. Borrowers with FFEL, Perkins and other federal non-Direct Loans must consolidate their loans through the Direct consolidation program before applying for the PSLF expanded waiver.

You can consolidate qualifying federal student loans into a Direct Loan online at the Federal Student Aid website -- you can find the application for consolidation here. This will combine your existing federal loans into one Direct Loan with one interest rate and one monthly payment. By consolidating into one Direct Loan and then applying for the expanded PSLF waiver, your past payments can now count toward loan forgiveness, as long as you are in a qualifying public service job.

Am I eligible for Biden's loan forgiveness and PSLF forgiveness?

Anyone with qualifying federal student loans from the Department of Education who earned less than $125,000 in 2020 or 2021 ($250,000 for married couples who file taxes jointly) is eligible for up to $10,000 in loan forgiveness. If you received a Pell Grant, you're eligible for up to $20,000 in loan forgiveness. This includes anyone eligible for Public Service Loan Forgiveness.

Since PSLF borrowers are on income-driven repayment plans, Biden's loan forgiveness should be applied automatically, according to Federal Student Aid. This is separate from applying for the expanded PSLF waiver, which offers full loan forgiveness for more public service borrowers.

How does the student loan payment pause affect my PSLF eligibility?

Federal student loan payments have been on pause for over two years, and were just extended to resume after Dec. 31. Under the PSLF, each of those paused payments counts as a qualifying loan payment during this time. So, if your payments were paused for 26 months, that counts as 26 on-time payments, bringing you closer to your goal of 120.

What if I didn't receive credit for past payments?

In the past, if you had been making payments but your loan servicer had incomplete or inaccurate records, you had almost no recourse to counter their claims. Now, with the limited waiver, you can apply for forgiveness and have your payments counted toward your debt and forgiveness. 

Will the expanded waiver become permanent?

Given that millions of borrowers may lose out on student loan forgiveness if they don't file for the waiver before the deadline, many advocates are urging the White House to extend the waiver opportunity. So far, the White House has not indicated plans to make the new rules permanent, with Biden reminding borrowers this week to apply before the October deadline.

Correction, Jan. 25: This article previously stated that private loans would be eligible for student loan forgiveness under the new waiver. That was incorrect. In addition to Direct Loans, only FFEL loans -- which are federally backed, but often issued by private lenders -- Perkins Loans and other federal loans may qualify for the PSLF waiver.