What if you could get rid of five figures of student loan debt overnight? For hundreds of thousands of borrowers, that's exactly what happened, thanks to Public Service Loan Forgiveness (PSLF).

As of June 2023 — the last available data — 670,264 federal loan borrowers have qualified for loan forgiveness under PSLF, with an average balance of $69,776 discharged per borrower.

But PSLF is notoriously difficult to qualify for, and it takes years of qualifying employment and payments. Taking steps now to ensure you're on the right track can prevent nasty surprises and disappointment later.

What is Public Service Loan Forgiveness?

PSLF is a federal loan forgiveness program exclusively for federal student loan borrowers. It provides forgiveness of up to 100% of your outstanding loan balance after you complete the program's work obligation.

Under PSLF, you must work for a qualifying employer — typically a nonprofit organization or government agency — full-time for at least 10 years. While employed by an eligible employer, you must make 120 monthly payments toward your debt under a qualifying payment plan.

Once you reach the necessary years of employment and number of payments, the government discharges your eligible federal student loans. Unlike some other loan forgiveness programs, the amount forgiven through PSLF is not taxable as income, so you don't have to worry about a surprise tax bill.

Eligibility requirement for PSLF

The eligibility requirements for PSLF are strict:

Qualifying loans

The following loans qualify for PSLF:

• Direct Subsidized

• Direct Unsubsidized

• Direct Consolidation Loan

• Direct Grad PLUS

• Direct Parent PLUS (Parents must first consolidate their loans with a Direct Consolidation Loan and enroll in a qualifying repayment plan)

Loans issued under the Federal Family Education Loan (FFEL) or Perkins Loan programs can qualify for PSLF, but borrowers must first consolidate with a Direct Consolidation Loan.

Only federal student loan borrowers are eligible for PSLF; those who have private student loans are not eligible.

Eligible employers

Eligible employers include:

• Nonprofit organizations with tax-exempt 501c)(3) status

• Government organizations, including those at the federal, state, local, or tribal levels

• U.S. Armed Forces

Ineligible employers include for-profit institutions, labor unions and partisan political organizations.

PSLF requires borrowers to work full-time for an eligible employer for at least 10 years. For the purposes of PSLF, the government defines full-time employment as working at least 30 hours per week (for teachers, an employment period of at least eight months is considered qualifying employment for a full year).

You can use the employer search tool to find out if your workplace counts as an eligible employer.

Qualifying payment plans

You must make 120 monthly payments while employed by a qualifying employer to have your loans forgiven under PSLF. Those monthly payments must be made under a qualifying payment plan; only the following income-driven repayment (IDR) plans are eligible:

• Income-Based Repayment (IBR)

• Income-Contingent Repayment (ICR)

• Pay As You Earn (PAYE)

• Saving on a Valuable Education (SAVE)

Other repayment plans, such as extended or graduated repayment, are not eligible.

Payments made under a 10-year standard repayment plan do count toward the necessary payments needed for PSLF, but if you stick to that plan, you'll likely pay off your debt before you qualify for loan forgiveness. To take advantage of PSLF, you'll need to enroll in an IDR plan.

[Important: Previously, the government temporarily expanded PSLF's requirements to include payments and loans that wouldn't usually qualify. However, that waiver ended in October 2022.]

How to apply for PSLF

If you believe you meet the requirements for PSLF, you can apply for loan forgiveness by following these steps:

1. Verify your loan and employment eligibility

Use the PSLF Help Tool to verify that your loans and employer are eligible for PSLF. If your employer is in the database, the PSLF Help Tool will show their information. If they are not, you can submit a request through the tool to review your employer's eligibility.

2. Consolidate non-eligible federal loans

If you have federal loans that are not eligible for PSLF in their current state, such as Parent PLUS Loans or Perkins Loans, you can consolidate them with a Direct Consolidation Loan. Once they've been consolidated, you can enroll in an IDR plan and pursue loan forgiveness.

Apply for a Direct Consolidation Loan online.

3. Notify your loan servicer of your intention to pursue PSLF

Next, notify your current loan servicers about your intention to apply for PSLF. You can do so by contacting your loan servicers over the phone or by submitting a request through the PSLF Help Tool.

Your loan servicers will transfer your loans to MOHELA, the designated loan servicer for PSLF applicants.

4. Enroll in a qualifying plan

Apply for one of the IDR plans by contacting MOHELA by phone or by applying for an IDR plan online. When applying, you can request that MOHELA put you into the plan with the lowest possible monthly payment.

Depending on your circumstances, you could qualify for a payment as low as $0. If you qualify for a $0 payment, you are not required to pay any money toward your loans, but each month that you are eligible for $0 payments will count toward the 120 necessary monthly payments needed for PSLF.

5. Certify your employment annually

Certifying your employment ensures that your employment and payments count toward PSLF, and your loan servicer will update your payment count so you can track your progress toward loan forgiveness.

Although you can wait until your 10 years of employment are over, it's better to certify your employment annually. Particularly if you switch employers, certifying annually prevents any issues or delays that you would experience reaching out to previous workplaces to verify your employment.

You can certify your employment using the PSLF Help Tool; the tool will automatically send your employer an email requesting that they digitally sign the form to verify your employment.

6. Make 120 monthly payments while working for an eligible employer

While working full-time for an eligible employer, continue making your monthly payments under a qualifying plan. Once you reach 120 monthly payments, you can submit the final PSLF application form.

7. Submit the final PSLF application

You can submit the final PSLF application through the PSLF Help Tool or by downloading and printing out the PSLF form.

MOHELA will review your information to determine your eligibility for loan forgiveness. If your application is approved, MOHELA will send you a notification confirming that your loans will be forgiven and list the outstanding interest and principal that is eliminated.

If you made any payments beyond the necessary 120 needed for loan forgiveness, MOHELA will treat those payments as overpayments and refund the additional funds to you.

Important: Your application may be denied due to certain payments not counting toward loan forgiveness or a period of ineligible employment. However, that doesn't mean you can't qualify for PSLF later; if you aren't yet eligible for forgiveness, you can still make progress if your current employer and payment plan are eligible.