What is the Public Service Loan Forgiveness Program (PSLF)?

The CCRAA added the Public Service Loan Forgiveness Program (PSLF) to the Direct Loan Program. Under PSLF, the Department of Education will forgive any outstanding balance and accrued interest on a borrower's Direct Loan or Direct Consolidation Loan after the borrower makes 120 qualifying payments on the loan (on or after October 1, 2007). For a payment to be qualifying, it must be all of the following:

a. A payment on a Direct Loan or Direct Consolidation Loan that is not in default.

b. Paid under an income-based repayment plan, income-contingent repayment plan, or 10-year standard repayment plan.1

c. A regular payment made within 15 days of the payment's monthly due date, unless the individual has made a lump sum payment with an AmeriCorps Education award or a Peace Corps transition payment.

d. Made while employed full-time by a public service organization or serving in a full-time AmeriCorps or Peace Corps position.

In addition, the individual must be working in a public service job (including full-time AmeriCorps service) and may not be in default on the loan for which forgiveness is requested at the time the individual applies for loan forgiveness and at the time the balance on the loan is forgiven.

The Department of Education has stated that the requirement that the payment be made within 15 days of the payment's monthly due date will not apply in the situation where an individual makes a lump payment on a qualifying loan using an AmeriCorps Education award. In that situation, the Department of Education will consider the individual to have made qualifying payments equal to the lesser of the number of payments resulting after dividing the amount of the lump sum payment by the monthly payment amount the borrower would have made under a repayment plan or twelve payments. (See 34 CFR 685.219(c)(1)(iii)). For more on using the AmeriCorps Education award towards your qualifying loan payments, click here.

Reference: 34 CFR 685.219(c)