If you are working in public service and have been making loan payments for the last ten years, you may be wondering what loans qualify for PSLF. The answer is: most federal loans do! In this blog post, we will go over what types of loans qualify for PSLF and what steps you need to take to apply for forgiveness. So, keep reading to learn more about PSLF and how it can help you achieve your financial goals!
What Loans Qualify for PSLF Table of Contents
What is PSLF?
The Public Service Loan Forgiveness Program (PSLF) is a federal program that forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.
What Are The Benefits of PSLF?
The PSLF program offers a number of benefits to participants. For one, it can help you get out of debt more quickly than you might be able to on your own. Additionally, it can lower your monthly payments, making it easier to afford your other expenses. Finally, if you work in a public service job, the PSLF program can give you some financial stability and security.
What Loans Qualify for PSLF?
Only Direct Loans from the Department of Education qualify for PSLF. This includes Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans. Perkins Loans, Stafford Loans, and Federal Family Education Loan (FFEL) Program loans do not qualify. However, you can consolidate these loans into a single Direct Consolidation Loan to take advantage of PSLF.
What Loans Do Not Qualify for PSLF?
Just because you have a student loan doesn’t mean it qualifies for PSLF. In order for your loan to qualify, it must be one of the following:
- A Direct Subsidized or Unsubsidized Loan
- A Direct PLUS Loan for graduate or professional students
- A Direct Consolidation Loan that didn’t repay any other loans that weren’t eligible for PSLF
If you’re not sure what kind of loan you have, you can check on the National Student Loan Data System. If your loans don’t qualify, don’t fret! You may still be able to consolidate them into a Direct Consolidation Loan and then make qualifying payments.
There are also a few types of loans that won’t qualify for PSLF, even if they’re Direct Loans. These include:
- Direct PLUS Loans made to parents
- Loans that are in default
- Loans that were consolidated but didn’t repay any other loans that weren’t eligible for PSLF
- Private education loans
Do Subsidized Loans Qualify for PSLF?
The simple answer is no. Any type of loan that accrues interest while you’re in school does not qualify for PSLF. This includes both subsidized and unsubsidized Direct Loans, as well as PLUS Loans for graduate or professional students. The good news is that there are other ways to get your loans forgiven through PSLF.
One way to make sure your loans qualify for PSLF is to consolidate them into a Direct Consolidation Loan. As long as you continue to make payments on this consolidation loan under an eligible repayment plan, the entire amount will qualify for forgiveness after 20-25 years. You can also switch to an income-driven repayment plan, which will lower your monthly payments and help you manage your debt.
Is The PSLF Program Worth It?
Yes, it is definitely worth it but to qualify, you must:
- Have made 120 qualifying monthly payments while employed full-time by a qualifying employer
- Be employed by a government organization, not-for-profit organization, or other type of organization that provides certain public services
- Have Direct Loans—only Direct Loans qualify for PSLF
Do Extra Payments Count for PSLF?
No, unfortunately, any extra payments you make will not count towards the 120 monthly payments required for PSLF. Only your regularly scheduled, full monthly payment counts. However, making extra payments can help you pay off your loans faster and save on interest.
What if I Have More Than One Loan?
If you have multiple loans from different lenders, you’ll need to make sure that each of those loans qualify for PSLF in order for any of them to be eligible. That means that each loan must:
- Be a Direct Loan from the Department of Education
- Be in the correct repayment plan (see above)
- Be made under certain qualifying circumstances (such as working full-time for a qualifying employer)
What if I Have a Parent PLUS Loan?
Unfortunately, Parent PLUS Loans do not currently qualify for PSLF. However, there is legislation pending that would change this.
Do Stafford Loans Count for PSLF?
The simple answer is that Stafford Loans do not currently count for PSLF.
This is because Stafford Loans are not Direct Loans.
To be eligible for PSLF, you must have a Direct Loan from the Department of Education.
There are four types of Direct Loans:
- Subsidized Direct Loans
- Unsubsidized Direct Loans
- PLUS loans for graduate or professional students
- Consolidation Loans
Luckily, if you have a Stafford Loan, it’s easy to convert it into a Direct Loan.
You can do this by consolidating your Stafford Loan into a Direct Consolidation Loan.
Once you’ve consolidated your loan, it will be eligible for PSLF.
You can consolidate your loans through the Department of Education’s Direct Consolidation Loan program.
Do Grad PLUS Loans Qualify for PSLF?
The simple answer is yes, Grad PLUS loans do qualify for PSLF. But there’s a little more to it than that. If you have a Grad PLUS loan, you might be able to get it forgiven through PSLF, but you’ll likely have to consolidate your loans first.
Here’s what you need to know about consolidating your Grad PLUS loans:
- You can’t consolidate private and federal loans together. You’ll need to consolidate your federal loans separately from your private loans.
- Once you consolidate your federal loans, you’ll have a new interest rate based on the weighted average of all the rates on your existing loans.
- You can consolidation your Grad PLUS Loans into a Direct Consolidation Loan.
- You might lose certain benefits if you consolidate your loans, so make sure to weigh the pros and cons before you decide to do it.