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Public Service Loan Consolidation

Public Service (PSLF) could lower your monthly payment if work at a nonprofit, 501(c)(3), organization or have a government job.

What makes PSLF stand out?

Under the Public Service Program, eligible borrowers could have their federal student loans dismissed after 120 qualifying payments (10 years).

Who Qualifies
for Public Service (PSLF)?

Qualifying employment could be any employment with a federal, state, or local government agency, entity, or organization or a non-profit organization that has been designated as tax-exempt by the Internal Revenue Service (IRS) under Section 501(c)(3) of the Internal Revenue Code (IRC). The type or nature of employment with the organization does not matter for Public Student purposes. Additionally, the type of services that these public service organizations provide does not matter for Public Service purposes.

  • Federal, State, Local Government
  • Non-Profit 501(c)(3)
  • Non-Profit in Public Services

A private non-profit employer that is not a tax-exempt organization under Section 501(c)(3) of the IRC may be a qualifying public service organization if it provides certain specified public services. These services include:

  • Emergency management
  • Military service
  • Public safety, or law enforcement services
  • Public health services, public education or public library services
  • School library and other school-based services
  • Public interest law services
  • Early childhood education
  • Public service for individuals with disabilities and the elderly.

The organization cannot be a labor union or a partisan political organization. Generally, the type or nature of employment with the organization does not matter for Public Service purposes. However, when determining full-time public service employment at a not-for-profit organization, you may not include time spent participating in religious instruction, worship services, or any form of proselytizing.

What Types of Loans Could Qualify
for Public Service (PSLF)?

  • Direct Subsidized / Unsubsidized
  • Direct Consolidated Loans
  • Direct PLUS
  • Direct Stafford Subsidized / Unsubsidized

Unfortunately, private loans do not qualify under any circumstance, as well as other federal loan types. Loans in default also do not qualify.

Many borrowers do not have Direct Loans and thus would not qualify for the program in their current scenario, but fortunately there is a way you can convert your federal loans into Direct Loans. The Direct Loan Consolidation program will take all of your federal loans, and consolidate them into one new Direct Loan. If you do not have Direct Loans but want to apply for Public Service, you will need to consolidate your loans. You can attempt that yourself, or Student Debt Relief is a private company that can help you through this process for a fee.

Have Federal Loans that Don’t Qualify?

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Qualifying Payments

For your 120 payments to count towards the Public Service program, once you have Direct Loans you must also:

  1. Be employed full time at a qualifying public service organization when payments are made, and on an Income Driven Repayment plan or Standard 10-year plan. These plans will give you a payment that is calculated based on your income and family size.
  2. Make your payment on time. On time is defined as being within 15 days of the scheduled payment date. Payments that are made in a lump sum, or in advanced for future months are not counted as qualifying payments.

Please note, the 120 payments do not have to be consecutive.

What happens if the government eliminates PSLF? What should I do?

New developments show that President Trump and the Secretary of Education, Betsy DeVos, want to eliminate Public Service Loan Forgiveness. While it is unclear whether or not that will happen at this point, that same report shows that some borrowers will still be allowed to continue their current plan. To increase the chances of enrolling and taking advantage of PSLF, borrowers that are eligible for the program should act immediately by following these steps:

  1. Borrowers that are eligible for PSLF: Immediately ensure that your loans are in the Direct Loan Program (consolidate your loans if necessary).
  2. If you’re in the Direct loan program already and eligible for PSLF: Immediately enroll into the Income Driven Repayment plans and certify your employment.

We are here help you with this process if you are unsure of the right steps, and even if PSLF ended in the future it will certainly be harder to take this benefit away from those already enrolled, than those not currently enrolled in the program.

How many people are eligible for Public Service Loan Forgiveness?

As of October 2016, there were over 23 million people employed in the government. In 2013 there were over 14 million non-profit sector employees. Any of these people who have student loans could benefit from public service. However, it is unsure how many people are not taking advantage of this program yet.

It’s extremely important to understand that certain steps need to be taken to qualify for this program. Many borrowers wrongfully believe that by just working in the public sector, their loans will be expunged in ten years. This is unfortunately not the case, as many borrowers do not have the right loan types, or are not in the correct repayment plan. Make sure you take the necessary steps to make your payments count!

Is Public Service Taxable?

Amounts forgiven under this program are NOT considered taxable income (this is one of the benefits of using PSLF).

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Submitting your applications correctly and in a timely manner could result in lower monthly payments so give us a call today!