Blog: Can You Rely on Public Service Loan Forgiveness?

Many student loan borrowers spend years paying off their debt, but forgiveness programs can help cut that time down. The Public Service Loan Forgiveness (PSLF) program allows certain federal student loan borrowers to get their loans forgiven after at least 10 years of working in the public sector. While the potential to have your loan forgiven sounds appealing, the eligibility is very strict.

My friend Catherine works at a non-profit in Washington, D.C, providing therapy to middle school kids with special needs. She recently expressed her burden of paying off her student loans. I told her to look into the Public Service Loan Forgiveness program. It was great to hear that she already knew about it. But I was surprised that she refuses to enroll because she didn’t trust that the government would honor their word.

What is the Public Service Loan Forgiveness Program?

The Public Service Loan Forgiveness Program (PSLF) was created in 2007 and signed into law by President George W. Bush. The program allows federal student loan borrowers to have their federal student debt forgiven after 10 years of working for either the government or a 501(c)(3) non-profit. You must have also made 120 qualifying monthly payments under an income-driven repayment plan.

It started as a way to encourage people to work in the public sector. The salaries are usually lower in the public sector but the need is high.

Has the COVID-19 pandemic changed any aspect of the PSLF?

Federal student loan borrowers who are seeking public service forgiveness don’t need to make payments until September 30, 2021.

The other good news: If you have qualified federal loans that are not in default, and work full-time for a qualifying employer during the payment suspension, you can still earn credit toward PSLF.

Why should I consider it?

If you have a large amount of student loan debt, then Public Service Loan Forgiveness (PSLF) could potentially save you thousands of dollars. It also might knock years off your repayment timeline. You must meet all of the criteria to be eligible, but the payoff can be worth it.

You can find out more about the Public Service Loan Forgiveness program here. 

About Alvin Carlos, CFA, CFP®

Alvin Carlos, CFA, CFP® is passionate about helping middle class professionals make smarter financial decisions. He is the CEO of District Capital Management, a financial planning and investment management firm for the everyday people. Alvin is a CERTIFIED FINANCIAL PLANNER™ practitioner and has a Masters degree in International Relations from SAIS-Johns Hopkins. In his spare time, Alvin enjoys swing dancing and Ultimate Frisbee. He also volunteers for Catholic Charities’ new Financial Stability Network, which helps low-income folks with their finances.

View all posts by Alvin Carlos, CFA, CFP®