How The PSLF Program Erases Student Debt for Federal Employees

There are many worker benefits that federal employees aren’t aware of. Even if you have worked for the federal government for several years, you might not realize that there are certain programs, options, and opportunities to take advantage of. Time and again, one of the most often overlooked options for students is the Public Service Loan Forgiveness (PSLF) Program for student debt.

The PSLF program can save federal employees tens of thousands of dollars in forgiven student loans, pulling them out of debt so they can invest in healthcare, retirement, and other important costs.

Here’s what you need to know about the PSLF program and how you can enroll to start saving today.

Who Qualifies for the PSLF Program?

Employees who work full-time for the federal government are the main qualifying candidates for PSLF. Some part-time employees might qualify for PSLF if they have a qualifying second part-time job that means you work more than 30-hours per week. This program isn’t limited to your position or title, which means both higher and lower-level employees can apply for student loan forgiveness if they meet the number of hours working in their qualifying position.  

Once federal workers check their qualifying employment status, they can review their current levels of debt to see if they are eligible for help.

A few of these qualifications include:

• Owing more student debt than you make each year (for example, owing $40,000 and earning a $30,000 annual salary).
• Staying in good standing with your current student loans (not defaulting on them).
• Owing federal student loans, not private students loans and debt.

The PSLF program can review different federal student loans and consolidate them into one payment plan, but they are unable to help employees with private student debt. Employees remain qualified if they change positions within the federal, local, or state government. However, employees who leave their government job and enter the private sector no longer qualify for PSLF. This includes employees who leave to become government contractors.   

How Does the PSLF Program Work?

Candidates can apply for PSLF through the Department of Education (ED). Interested participants submit an Employment Certification for Public Service Loan Forgiveness form and create a plan to pay off student loan debt.

Once the form is submitted, there is a review process where the ED reviews your payments to make sure they qualify and confirms your past employment with your employers. Applicants may need additional information to get approved. If everything is in order, then the remaining balance on your student loans will be forgiven and you can move forward debt-free.  

Federal employees need to make at least 120 qualifying payments before they can apply for PSLF. This means they need to work for the government for at least 10 years, paying off their debt monthly. The earliest PSLF beneficiaries will have started making payments on their student loans in October 2007 and will be completing their 120th payment this year.

This isn’t a program for employees who want their loans forgiven immediately, but rather for federal workers who plan to stay with the government and follow a dedicated plan out of student debt. Students who graduate in December 2017 will be eligible for loan forgiveness in 2027 if they follow the payment plan exactly.  

Why Do So Few Employees Take Advantage of This Student Debt Forgiveness Program?

The Department of Education is working to raise awareness about student loan options so employees can better prepare to pay off their student loans and receive forgiveness. However, U.S. News reports that out of 42 million federal student loan borrowers, only 139 have completed the program and have had their loans forgiven. This is mostly because the program was so new ten years ago that only a few people knew about it.

The PSLF program debuted under president George W. Bush in 2007. So while signing up for the option isn’t new, the first round of graduates from the program only just now completed their payments. As the years pass, more employees are likely to qualify and receive student loan forgiveness.   

Following the PSLF program isn’t hard, but it does require applicants to follow a dedicated plan and submit their paperwork regularly and thoroughly.

Candidates who are interested in pursuing federal student loan forgiveness need to regularly submit paperwork and check guidelines to make sure they’re not missing payments. As awareness of this campaign increases, more students are likely to qualify and enjoy the benefits of student debt forgiveness.  

If you have questions about the PSLF Program and want to talk more about your particular employment position, loan status, and payment options, talk to a specialist at MyFedBenefits. We can help you find what you need to keep your loan payments balanced and manageable until you’re finally debt free.  Contact us today.