Public Service Loan Forgiveness (PSLF)

Public Service Loan Forgiveness (PSLF) is the federal program that forgives the remaining balance on your Direct Loans after 120 qualifying monthly payments, as long as you've been working full-time for a qualifying employer during those payments. Forgiveness under PSLF is currently not taxable as federal income.

Who qualifies as an employer

Qualifying employers include the federal government, state governments, local governments, tribal governments, and most U.S. 501(c)(3) nonprofits. Public schools, public hospitals, legal aid organizations, and government agencies typically all qualify. Independent contractors generally do not — even if you work full-time for a qualifying organization.

Qualifying payments

A "qualifying payment" is one made:

• On a Direct Loan (FFEL, Perkins, and private loans don't count)
• Under an income-driven repayment plan or the Standard 10-Year Plan
• While employed full-time by a qualifying employer

You need 120 qualifying payments to be forgiven. They don't have to be consecutive — gaps don't disqualify you, they just don't count.

Why people miss out

The three most common mistakes that delay PSLF by years: not certifying employment annually (months become harder to document over time), having FFEL or Perkins loans you've never consolidated to Direct (the months before consolidation are usually lost), and being on a non-qualifying repayment plan without realizing it.

How to certify employment

You file a PSLF Employment Certification Form (also called a PSLF Form) listing every qualifying employer and the dates you worked there. The Department of Education reviews the form and confirms how many of your payments qualify. We recommend certifying every year, every year — not just at the 10-year mark.

Forgiveness and taxes

Under current law, PSLF forgiveness is not taxable as federal income. This is different from IDR balance forgiveness, which is governed by separate tax rules.