The good news: people who take jobs in public service (such as teaching, government, or AmeriCorps/Peace Corps) could be eligible for a new federal student loan forgiveness program that would help them reduce payments on some financial aid loans. The not-so-good news: it could take up to ten years for people to find out if the work they’ve been doing qualifies for the program.

The Public Service Loan Forgiveness program enables people to have the balance of their federal financial aid loans forgiven if they are employed full time by a public service organization and have made at least 120 monthly payments on their student loans at the time they apply for loan forgiveness. The program is effective for payments beginning after October 1, 2007; therefore, the first cancellations of loan balances will not be made until October 2017. Details of the program were finalized in October 2008 as part of the College Cost Reduction and Access Act of 2007. The program became widely publicized beginning in July 2009, when the federal government’s income-based repayment program was launched. The two programs together provide the greatest benefit for student borrowers in low-paying public service careers.

Not all federal student loans are included in the Public Service Loan Forgiveness program. Only those loans made through the William D. Ford Federal Direct Loan program (Direct Loan) are eligible: this includes subsidized and nonsubsidized Stafford/Ford Loans, Direct PLUS Loans for parents and professional students, and Direct Consolidation Loans. Other federal loans may qualify if they are consolidated into the Direct Consolidation Loan. It is not available for private or alternative student loans, state loans, or federal loans in the Guaranteed or FFEL program.

Under the forgiveness program, the scope of public service jobs is broad, potentially enabling many graduates to apply. According to Federal Student Aid, an office of the U.S. Department of Education, qualifying jobs include those in:
  • Federal, state, local, or tribal government organizations, agencies, or entities (including most public schools, colleges, and universities)
  • AmeriCorps and Peace Corps jobs
  • Public child or family service agencies
  • Nonprofit, 501c3, tax exempt organizations, whether public or private
  • Tribal colleges or universities
  • Labor unions
  • Partisan political organizations
  • Organizations engaged in religious activities
  • Public services such as emergency management, military service, public safety, law enforcement, public interest law, early childhood education, public service for individuals with disabilities and the elderly, public health, and public library services.
For this program, “full-time employment” is defined as thirty hours a week or the number of hours an employer considers full time (whichever is greater), or thirty hours per week total if working for multiple employers. For teachers, full-time employment is considered eight or nine months (a school year).

Under a typical student loan repayment program, loans would be paid off in 120 payments, or ten years. However, the Public Service Loan Forgiveness program also assumes that the borrower is participating in either an income-based repayment or income-contingent repayment plan, which allows the borrower to make smaller payments or even no payment over a longer period of time. Under one of these programs, it is possible that one’s student loan would not be paid in full at the end of ten years. In that case, someone working in one or more public service jobs during that time could have the balance of his or her loan forgiven.

The U.S. Department of Education does not currently have a formal process for registering for public service loan forgiveness or for confirming eligible employment. Borrowers who think they may qualify should save records that identify their employer, as well as their dates and hours of employment. This checklist can help borrowers gather the documentation they will need for the program.

This web site includes overviews of the Public Service Loan Forgiveness program, income-based repayment and income-contingent repayment programs. Other places to get more information about Public Service Loan Forgiveness include: