If you have a lot of student debt, the thought of having a chunk of it suddenly disappear one day is pretty exciting. That’s the appeal of the Public Service Loan Forgiveness program (PSLF).
Created a decade ago, it offers full-time government employees, some nonprofit workers and those serving in AmeriCorps or the Peace Corps the chance to get their loans forgiven—without incurring a big tax bill—after making 120 qualifying monthly payments. (That’s 10 years’ worth.)
Nearly 670,000 borrowers are now enrolled in the program. And this month, the first successful PSLF applicants will cross the finish line—though, according to Department of Education data, there won’t be many of them. Less than .01 percent of those on track to receive forgiveness will actually qualify this month. That’s thanks, in part, to confusing details and strict requirements that experts have long worried could throw eligible borrowers off course.
If you’re enrolled—or plan to be—here’s what you need to know to make sure you qualify.
1. Be sure you have a federal Direct Loan.
You must have a federal Direct Loan. Private loans, as well as federal Perkins Loans and a Federal Family Education Loans (FFEL) aren’t eligible—though you can roll FFEL and Perkins Loans into a Direct Consolidation Loan. Just keep in mind that only payments you make after consolidating count toward the 120 needed.
2. Sign up for the right repayment plan.
All of the income-based repayment plans are PSLF-approved, as well as the Standard Repayment plan. But given that the Standard Repayment plan has a 10-year repayment schedule, you’ll want to switch to an income-driven option in order to actually have a balance left over to forgive.
3. Understand what counts as a “qualifying payment.”
Qualified payments are submitted under an eligible repayment plan (see above) for the full amount no later than 15 days after the deadline, and while you’re employed full-time by a qualifying employer. Unfortunately, you don’t get extra credit for submitting more than the minimum—though you will have the satisfaction of whittling down your balance even faster.
Also worth noting: The 120 payments do not need to be made consecutively, so you won’t lose credit if you switch to a non-qualifying employer for a time. (Find out how many qualifying payments you’ve made by logging into your myfedloan.org account.)
4. Submit your certification documents every year.
The best way to confirm you’re on the right track is to submit your PSLF Employment Certification Form every year and whenever you switch gigs. Having that assurance upfront could speed up the length of time it takes to get your loans forgiven once you’ve submitted your 120 payments.