Public Service Loan Forgiveness is one of the best ways to get rid of those pesky student loans but beware, there are 3 essential requirements you must meet to qualify for PSLF.
- You must make 120 on-time payments on the right type of loan
- You must be enrolled in the right type of repayment plan
- You must be making these 120 payments while at the right type of employment
The right type of loan:
- Must be Federal Direct Loans
- Not Perkins Loans
- Not FFEL Loans
- Not Parent Plus Loans (or a consolidation loan that repays a Parent PLUS loan)
The right type of repayment plan:
- Income-driven plans such as IBR, PAYE or REPAYE
- The 10-year standard repayment plan does count (although, if you paid on a 10-year loan for 10 years, you probably don’t have a balance left so it’s pointless)
- Congress did recently pass the Temporary Extended PSLF for borrowers that may have been paying on a graduated repayment plan by accident, thinking they could still qualify for PSLF. This is a limited pool of money and is offered only on a first come first serve basis.
The right type of employment:
- Government organization at any level (federal, state, local, or tribal)
- Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the IRC
- Other types of not-for-profit organizations that are not tax-exempt under Section 501(c)(3) of the IRC, if their primary purpose is to provide certain types of qualifying public services
