Loan Forgiveness Is All About Where You Work—Not What You Do

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Janitor's Ring

Work on the maintenance team at a nonprofit? You may have the key to more than just all the doors in the building …

Did you hear there’s a repayment plan with $0 payments? Or that you can postpone payments for as long as you want? Well, with student loan info, sometimes the toughest thing is figuring out the fact from the fiction (and everything in between). These differences could literally cost you, so we enlisted loan expert Ashley Norwood to bust the myths. Today: eligibility for Public Service Loan Forgiveness.

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The Consumer Finance Protection Bureau (CFPB) announced a couple of months ago that approximately one-quarter of those working in the U.S. may be eligible for Public Service Loan Forgiveness (PSLF), and most don’t even realize it.

How could that be true?

A Very, Very Brief Look At PSLF

PSLF eliminates (“forgives”) the federal student loans of employees who work full time at public or nonprofit institutions while making 120 eligible student loan payments.

To qualify, your loans must come from the Direct Loan program, and you must make all 120 payments on or after October 1, 2007 (as well as under specific repayment programs: standard repayment, income-based repayment, Pay As You Earn, or income-contingent repayment). Because of this, no one will be eligible for forgiveness until October of 2017. (For more details, see this article.)

But back to that one-quarter of employees. You’d think someone who did public service work would know it, right? Well, here’s where the mythbusting comes in.

Job Vs. Employer

Most people associate PSLF with well-known public service jobs, like teaching, social work, or nursing. However, your job doesn’t determine whether you qualify—your employer does. Makes a big difference, right?

So, you may be eligible for forgiveness if you meet all the other criteria and work full time for an eligible employer. And that’s the same for everyone at that employer—from the CEO to the maintenance staff.

What Is An Eligible Employer?

Good question! You need to work for one of the following:

  • A government organization, which includes federal, state, local, tribal organization or college/university, or public child or family services agency
  • AmeriCorps
  • Peace Corps
  • A tax-exempt nonprofit under 501(c)(3) of the IRS tax code (check with your employer)
  • A nonprofit organization that provides one of following public services:
    • Emergency management
    • Military service
    • Public safety
    • Law enforcement
    • Public interest law services
    • Early childhood education
    • Public service for individuals with disabilities and the elderly
    • Public health
    • Public education
    • Public library services
    • School library or other school based services

Phew! Long list, right? That means there are a lot of potentially eligible employers out there. You may even be working for one right now.

What’s even better is that your payments don’t have to be consecutive. You can bounce in and out of the public or nonprofit workforce without penalty (other than taking longer to get your loans forgiven). Just remember that only eligible payments made during eligible employment count.

An Exception To Every Rule

Unfortunately, labor unions and partisan political organizations are not eligible—even if they are nonprofits. (Don’t kill the messenger.)

Also ineligible: religious organizations engaged in religious activities that are related to religious instruction, worship services, or any form of proselytizing. But, religious organization employees would be eligible as long as the previous statement doesn’t describe what you are employed to do. For instance, professors at a Catholic or Baptist college would be eligible.

Contact your student loan servicer if you have questions, and make sure to download the PSLF Employment Certification to track your eligible employment and payments. If you don’t submit that certificate once a year, it will be up to you to prove you worked at an eligible employer come forgiveness time.

If you still aren’t eligible for PSLF, check out our eBook to see if you may be eligible for any other forgiveness programs.

Have a question about PSLF? Just Ask our experts or post it in the comments below.

(Photo: brixton)

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  1. Sasha October 15, 2013 / 1:20 pm

    If you work for ASA are you eligible?

    • Ryan Lane October 15, 2013 / 1:33 pm

      Thanks for asking, Sasha! SALT’s parent company, American Student Assistance, is a 501(c)(3) nonprofit. However, to confirm its eligibility (or the eligibility of any employer), your best bet would be to check with a member of the human resources team.

      The CFPB has actually pulled together a toolkit to help employers spread the word to their employees. You can find that here: http://files.consumerfinance.gov/f/201308_cfpb_public-service-toolkit.pdf.

  2. Mo October 16, 2013 / 5:03 pm

    I work for a public school for the town I’m i qualified ??

    • Ryan Lane October 17, 2013 / 8:55 am

      Thanks for writing, Mo! Public education is considered a public service, so PSLF may cover your school. You should contact your servicer (the company you make your loan payments to) for more information. In addition, if you teach at that public school, you should also look into Teacher Loan Forgiveness. Depending on what you teach, where you teach, and how long you’ve been teaching, you may be eligible for anywhere from up to $5,000 or up to $17,500. Here’s some more info: https://www.saltmoney.org/content/media/Form/teacher-loan-forgiveness/_/R-101-2769. Hope it helps!

    • Ashley October 18, 2013 / 8:33 am

      Hi Mo! Just remember that if you do look into Teacher Loan Forgiveness that you can’t double dip. The same period of teaching can’t be used for both programs, but you can use TLF after 5 years, and then PSLF 10 years after that (15 in total).

  3. Sandra Betancourt January 26, 2014 / 11:35 pm

    So If i work for the US Census Bureau I would qualify if I work full-time? Parti-time would not qualify?

    Thank You,
    Sandra Betancourt

    • Ashley January 27, 2014 / 9:22 am

      HI Sandra, full-time work at any public organization (including the US Census Bureau) would count as eligible employment. What’s great about PSLF, is that your employment doesn’t have to be consecutive. Any payments made while you were working full-time count toward the necessary 120, but any made while you are only working part-time will not.

  4. Cynthia Jones April 2, 2014 / 6:29 pm

    My question would be- I work for the federal government as a registered nurse and will be graduating with MSN/FNP next year. I want to find some place that will repay a large portion of my student loans. Any suggestions?

    • Ashley April 3, 2014 / 11:58 am

      Well, Cynthia, make sure that you are aware of everything that you would need to be eligibel for PSLF. There’s an article linked in the post that you should find helpful. At the very least, with your employer, if you work to meet the other requirements, you could fall back on this after 10 years of eligible payments.

      Have you checked this out yet? https://www.saltmoney.org/Assets/PDFs/60-ways-to-get-rid-of-your-student-loans-without-paying-them.pdf
      The Nurse Corps Repayment Program may be something that you would want to investigate. You would have to work at a critical shortage facility or nurse faculty at a school of nursing. States like Florida, Illinois, Maryland, New York, and Rhode Island also have nurse loan repayment programs that you may be eligible for if you live and work in these states. Good luck!

  5. Alex June 12, 2014 / 11:58 am

    My spouse works at a community college as a professor. We thought she was eligible for this loan forgiveness but when we contacted ACS (our servicer) they stated that your family income was also taken into account and that she was ineligible to apply for this. Is this correct?

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