Navigating Money And Education

Qualifying Payments

Definition

Qualifying payments for Public Service Loan Forgiveness (PSLF) are specific monthly payments made by a borrower on a Direct Loan while working full-time for a qualifying employer, under a qualifying repayment plan.

Detailed Explanation

The Public Service Loan Forgiveness (PSLF) program is designed to forgive the remaining balance on Direct Loans after the borrower has made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer, such as government, non-profit organizations, and other public service jobs. 

Qualifying payments must be made after October 1, 2007, and must be for the full amount due as shown on the bill, no later than 15 days after the due date, and while the borrower is employed full-time by a qualifying employer.

Payments made while not employed by a qualifying employer do not count as qualifying payments.

This program encourages individuals to enter and continue to work full-time in public service jobs. Borrowers must also be on one of the income-driven repayment plans to qualify for PSLF, the Standard 10-Year repayment plan, or on a graduated plan but the payment amounts must be higher than the payments on the standard plan.

Example

A teacher with a Direct Loan working full-time in a public school makes monthly payments under the Income-Based Repayment Plan. After making 120 of these payments, the teacher applies for and receives PSLF, forgiving the remaining loan balance.

Key Articles Related To Qualifying Payments

Related Terms

  • Direct Loan: A federal student loan made directly by the U.S. Department of Education to students and parents.

  • Income-Driven Repayment Plan: A repayment plan that bases your monthly payment on your income and family size.

  • Qualifying Employer: An employer that is a government organization, non-profit, or other entities that meet the criteria for PSLF.

    • FAQs

      Do payments have to be consecutive to qualify for PSLF?

      No, the 120 qualifying payments do not need to be consecutive.

      Can I qualify for PSLF if I work for a for-profit company?

      No, PSLF is only available to those working for qualifying non-profit and government employers.

      What happens if I switch jobs to a non-qualifying employer?
      Payments made while working for a non-qualifying employer do not count towards PSLF, but previous qualifying payments remain valid.
      Do lump sum payments count as multiple qualifying payments?
      No, each payment counts as one qualifying payment, regardless of the amount paid.

    Editor: Colin Graves