In 2007, the Public Service Loan Forgiveness program was created to help public servants pay off their student loans after ten years. Fast forward 15 years, and that program is getting a makeover.  Are you eligible? 

The Public Service Loan Forgiveness (PSLF) program was part of the College Cost Reduction and Access Act of 2007.  This program benefits student loan debtors who choose a career in the public service sector. This would include careers in government, military, public safety, law enforcement, nursing, teaching, childcare, social work, and more.

Unfortunately, when the first round of borrowers applied for forgiveness in 2017, many people who anticipated their loans would be forgiven hit a variety of roadblocks. The program was confusing, misinformation was rampant, and forgiveness rates were low. 

To remedy this situation, in October 2021, the Department of Education announced changes and expansions designed to reduce the barriers and allow more people to qualify than ever before. In fact, if you didn’t qualify earlier, you may now!

Basics of PSLF

This loan forgiveness program serves as an incentive to attract top talent to public service fields and encourage them to stay for at least ten years. Typically, public service jobs do not pay as much as private sector positions. Therefore, adding this financial benefit helps to bridge the gap.

The foundation of the program is relatively straightforward.  Here are the requirements:

  • Work in a public service field
    • Full-time at least 30 hours per week is required.  Or part-time for two qualified employers, averaging at least 30 work hours per week between both may also qualify.
  • Make 120 on-time loan payments on Direct Loans
    • Direct Loans include subsidized and unsubsidized Stafford loans, PLUS loans, and direct consolidation loans. Unfortunately, private student loans are not eligible.
  • Make payments based on an eligible repayment plan
    • Eligible plans include: Pay As You Earn, Revised Pay As You Earn, Income-Based Repayment, or Income-Contingent Repayment.

If all qualifications are met, then the remaining outstanding loan balances are forgiven. Generally, when a loan is forgiven, the borrower is still required to pay income tax on the amount forgiven. This is not the case with PSLF. The forgiveness is tax-free!  

Unfortunately, these requirements were not fully understood and many who believed they met the requirements were sorely disappointed when they learned otherwise.  This prompted the Department of Education to makes some temporary and permanent changes to the program.

What has Changed?

Before October 2021, as noted above, only borrowers with Direct Loans and specific repayment programs were eligible for forgiveness. Often borrowers didn’t understand this until they applied for forgiveness and found out their prior payments or loan structure didn’t meet the necessary qualifications. 

Good news! One of the new changes initiates a “Limited PSLF Waiver” that will allow any prior payments while working for a qualifying employer to count as a qualifying payment regardless of the repayment plan.

Don’t delay! The waiver is only good through October 31, 2022. The process will take some time and may require you to consolidate your current loans to Direct Loans.  Borrowers can get started at . 

The Department of Education will also review all loan payments that were not previously counted toward PSLF due to technicalities.  Any identified qualifying payments will be automatically applied for those who have already certified some PSLF employment.

Military members are now able to apply months on active duty toward their payment record, even if their loans are in deferment or forbearance. In addition to that, the Department of Education will begin to cross-reference borrowers with data from other federal agencies to automatically provide military members and other federal employees with PSLF credits.  

For those who were denied loan forgiveness, there is hope!  All denied PSLF applications will be reviewed for errors. Borrowers will also have the chance to have a second review completed if they feel their application should be reconsidered.  

Federal Loan Payments Are Paused – What’s the Impact?

In March 2020, student loan payments were temporarily suspended due to the COVID-19 pandemic. As of January 2022, payments are scheduled to restart on May 1, 2022.  The PSLF program will count those 25 months of suspended payments toward the required 120 payments! Borrowers will receive credit for several months of payments they never had to make.  


The PSLF program hasn’t had the best reputation, but the recent changes should make it more user-friendly and accessible to the people it was designed to help. Borrowers should review their situation at . Don’t wait! The October deadline for the PSLF Waiver will be here before you know it!

Sarah Mahaffa, CFP® is a Senior Wealth Advisor with Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. For more information, visit their website at or email Sarah at

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