Here’s what you need to know about public service loan forgiveness

Among the other points you should know: Under public service loan forgiveness, your debt is forgiven tax-free.

Federal Family and Education loans and private loans do not qualify. If you have a F.F.E.L. loan, you may be able to consolidate it into a direct loan (which is eligible), but keep in mind that if you have some direct loans, you’ll be pulled back to day one of your 10-year-timeline on those.

“Consolidating loans resets the clock on public service loan forgiveness,” Kantrowitz said.

There are some 14 ways to repay your student loans, but to qualify for public service loan forgiveness you need to be enrolled in one of these four income-based repayment plans: income-contingent repayment, income-based repayment, pay-as-you-earn repayment and revised pay-as-you-earn repayment. (The standard repayment plan also qualifies, but under it you’d have paid off your loans in 10 years, anyway.)

Kantrowitz said some people assume they’ll qualify for forgiveness after 10 years of payments. However, it’s not about how long you’ve been paying but how many qualifying payments you’ve made. Maybe you took a leave from public service work, for example, halting the timer on your payments for a few months or even years. Again, it’s after 120 qualifying payments that your loans will be eligible for forgiveness.

On that note, if you miss a payment, or if you switch jobs, you don’t lose the qualifying payments you’ve racked up. Your payments don’t need to be consecutive.

Does your employer count as public service? It’s complicated. The American Bar Association sued the Education Department after the government changed its terms on which work qualifies for the program, throwing some borrowers off the path to debt forgiveness. Last week, a judge ruled those tweaks were “arbitrary and capricious.”

Some people wonder if their employer counts if it’s a contractor for the government. Not always, Kantrowitz said. “Government contractors must themselves be qualifying organizations for their employees to qualify for public service loan forgiveness,” he said.

In light of the confusion, all borrowers should fill out a so-called employer certification form at least once a year to confirm that their workplace makes them eligible. These forms will also enable you to keep records of your confirmed qualifying payments.

More and more companies are charging people to apply for loan forgiveness. You should not pay for this service, Kantrowitz said. “If you have to pay money to get money, it’s probably a scam,” he said. Even approach your servicer with skepticism, he said. “Take everything the lender says with a grain of salt.”

Kantrowitz has put together a one-page checklist for public service loan forgiveness. The Education Department also recently released a help tool for those in the program. And CNBC has interviewed some of the people who have emerged successfully from the maze. You can read their tips here.

Have you had a bad experience with the public service loan forgiveness program? We want to hear from you. Please email me at

More from Personal Finance:
What you need to qualify for public service loan forgiveness
Government may forgive student loans if you meet demands
Education Dept. fails on public service loan forgiveness: Senators

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