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Public Service Loan Forgiveness

The Public Service Loan Forgiveness program offers eligible full-time public service employees an option for forgiveness of the remaining balance due on eligible, non-defaulted Federal Direct student loans after making 120 monthly payments.  The College Cost Reduction and Access Act (CCRAA) has established October 1, 2007 as the start date for the Public Service Loan Forgiveness program, making approximately October 2017 as the earliest that borrowers can receive loan forgiveness.  At this time, there is no information regarding the application process for the program; however the U.S. Department of Education (USDE) will develop an application form.  Interested borrowers should visit the USDE's website for more information.

To Qualify:
A borrower must:
  • Make 120 qualifying monthly payments on an eligible Federal Direct Subsidized Stafford, Unsubsidized Stafford, Parent PLUS, Grad PLUS or consolidation loan on or after October 1, 2007,
    • Borrowers with FFELP loans can consolidate or re-consolidate into the Direct Loan program beginning July 1, 2008 in order to qualify,
    • All payments must be made within 15 days of the scheduled due date;
  • Be employed in a public service job (see below) during the time he or she makes the qualifying monthly payments,
    • Periods of service or payments made on an eligible loan prior to October 1, 2007 do not count toward this qualification;
  • Be employed in a public service job (see below) at the time the Secretary of Education forgives the loan; and   
  • Make qualifying payments under one (or a combination of) the following repayment plans:
    • Income contingent repayment plan,
    • Income-based repayment plan (available July, 2009),
    • Standard repayment plan with a 10 year repayment  period,
    • One of the other Direct Loan repayment plans under which the borrower paid a monthly amount that is not less than what the borrower would pay under a 10 year repayment plan.

Public Service jobs as defined by the CCRAA are as follows:

Emergency management, Government, Military Service, Public safety, Law enforcement, Public health, Public education (including early childhood education), Social work in a public child or family service agency, Americorps or Peace Corps service, Public interest law services (including prosecution or public defense or legal advocacy in low in come communities at a nonprofit organization), Public child care, Public service for individuals with disabilities, Public service for the elderly, Public library sciences, School-based library sciences and other school-based services, or at a non-profit organization that is described in section 501(c)(3) of the Internal Revenue Code of 1986 that is tax exempt; or teaching as a full-time faculty member at a tribal college or university as defined in section 316(b) and other faculty teaching in high-needs areas, as determined by the secretary.

CAUTION:  In general, only borrowers who qualify for reduced monthly payments through the Direct Loan income-contingent or income-based plans will have a remaining balance after making 120 payments on a loan.