In this series, we explore popular Federal and State-based financial assistance programs. Designed to help you reduce the costs of your nursing education, the benefits can be determined based on the area in which you live, position, place of employment, and level of education.
Below are some basic guidelines around the Public Service Loan Forgiveness (PSLF) Program. There are many requirements and restrictions that apply. Please be sure to investigate the options thoroughly to ensure you are eligible and can take advantage of forgiveness benefits.
Public Service Loans Forgiveness Program
By definition, the PSLF Program was established to encourage individuals to work in public service by forgiving the remaining balance of their Direct Loans after they have made 120 qualifying payments while employed by a qualifying employer.
Overview
To be eligible, candidates must be employed by a public service organization defined by the program conditions and be a full-time employee (30+ hours per week). Loans under the Direct Loan Program are eligible for forgiveness after 10 years of repayment. The repayment timeline began in 2007 so only payments made after this date will contribute towards the 120 payments needed to ensure forgiveness.
There is no income requirement to qualify, however, the required monthly payment amount under most of the qualifying repayment plans is based on income. Therefore your income level over the course of your public service employment may be a factor in determining whether you have a remaining loan balance to be forgiven after making 120 qualifying payments.
Qualified employment for the program is not based on the specific job that you do for your employer. Rather, it is about the employer. Organizations must meet the definition of “public service organization” and the following types of organizations qualify:
- Government organizations at any level (federal, state, local, or tribal)
- Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
- Other types of not-for-profit organizations that provide certain types of qualifying public services
- Serving in a full-time AmeriCorps or Peace Corps position also counts as qualifying employment for the PSLF Program.
Loan forgiveness is available only for Direct Loans, however, loans made under other federal student loan programs may become eligible if they are consolidated into a Direct Consolidation Loan. Loan amounts forgiven are not considered income by the Internal Revenue Service and are not subject to federal income tax on the amount of your Direct Loans that is forgiven after you have made the 120 qualifying payments.
