Loan Programs FAQ

PSLF forgives the remaining balance on Direct Loans after making 120 qualifying monthly payments while working full-time for a qualifying employer. Qualifying employers include government organizations, 501(c)(3) nonprofit organizations, and certain other public service organizations. You must be on a qualifying repayment plan (typically an income-driven repayment plan) and work full-time (30+ hours/week) throughout the repayment period.

IDR plans cap your monthly payments at a percentage of your discretionary income and forgive remaining balances after 20-25 years. The four plans are: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income-Contingent Repayment (ICR). PAYE and REPAYE typically offer the lowest payments, with REPAYE being available to all borrowers. The best plan depends on your income, family size, loan types, and career goals.

Teacher Loan Forgiveness forgives up to $17,500 on Direct Subsidized and Unsubsidized Loans and Subsidized and Unsubsidized Federal Stafford Loans after five consecutive years of full-time teaching at qualifying low-income schools. Math, science, and special education teachers can receive up to $17,500, while other teachers can receive up to $5,000. You cannot have outstanding balances on FFEL or Perkins loans made before October 1998, and you cannot pursue both Teacher Loan Forgiveness and PSLF for the same period of service.

Military members have several options: Military College Loan Repayment Programs (varies by branch, up to $65,000), PSLF for qualifying military employment, Military Service Deferment with potential interest benefits, and Death/Disability Discharge for total and permanent disability. Active duty service members may qualify for interest rate caps under the Servicemembers Civil Relief Act. National Guard and Reserve members may also qualify for specific state-based programs and federal benefits.

Yes, combining PSLF with IDR is typically the optimal strategy for public service workers. IDR plans usually provide the lowest monthly payments, which means more of your loan balance is forgiven through PSLF after 120 payments (10 years). This combination can save tens of thousands compared to standard repayment. You must be on a qualifying payment plan for PSLF, and most IDR plans qualify except for the older IBR plan in some cases.

Only Direct Loans are eligible for PSLF and most federal forgiveness programs. FFEL loans must be consolidated into a Direct Consolidation Loan to become eligible, but this resets your payment count to zero. Direct Loans include all federal loans disbursed after July 1, 2010, plus any loans consolidated through the Direct Loan program. If you have FFEL loans and want to pursue forgiveness, consolidation is usually necessary, but timing is crucial to maximize benefits.

TPD discharge eliminates federal student loan debt if you're totally and permanently disabled. You can qualify through: VA disability rating of 100% (individual unemployability), SSA disability determination, or physician certification of total and permanent disability. The discharge includes a three-year post-discharge monitoring period where new loans or high earnings could result in reinstatement. As of 2022, forgiven amounts are generally not taxable income.

Closed School Discharge forgives loans if your school closed while you were enrolled or within 120 days of your withdrawal. You must not have completed the program through a teach-out agreement with another school or by transferring credits. You're also eligible if you withdrew more than 120 days before closure but can demonstrate the closure was related to financial difficulties that prevented you from completing your program. This discharge includes a refund of payments already made.

Borrower Defense provides loan forgiveness if your school misled you or engaged in misconduct in violation of state law. This includes false advertising, aggressive recruiting practices, misrepresentation of job placement rates, or failure to provide promised services. You must demonstrate that the school's actions were directly related to your federal student loans and that you suffered financial harm. Successful applications result in full loan discharge and refund of payments made.

Healthcare professionals have multiple options: National Health Service Corps (up to $50,000 for 2-year commitment), Indian Health Service Loan Repayment (up to $40,000), NURSE Corps (up to 85% of loans), and state-specific programs. Many require service in underserved areas. Additionally, healthcare workers at qualifying employers can pursue PSLF. Some programs provide loan repayment rather than forgiveness, which may have different tax implications.

Parent PLUS loans have limited forgiveness options. They're eligible for PSLF if the parent works for a qualifying employer, and TPD discharge if the parent becomes disabled. They can also be consolidated and placed on Income-Contingent Repayment for potential 25-year forgiveness. However, Parent PLUS loans are not eligible for most IDR plans or programs like Teacher Loan Forgiveness. Death discharge applies if either the parent or student dies.

The Limited PSLF Waiver (ended October 31, 2022) temporarily expanded PSLF eligibility by counting payments that previously didn't qualify, including those on non-qualifying repayment plans or loan types. While the waiver has ended, its benefits may still apply to approved applications. Current PSLF rules are more flexible than before, and borrowers can still benefit from the waiver's precedents regarding payment counting and employer qualification.

State programs often complement federal options but may have restrictions. Many states offer loan repayment assistance for specific professions (healthcare, legal, education) in underserved areas. These programs typically provide annual payments toward your loans rather than forgiveness. You can often combine state programs with federal programs like PSLF or IDR, but some state programs may affect your federal tax obligations or eligibility for certain federal benefits.

Job changes can significantly impact forgiveness programs. For PSLF, you must maintain qualifying employment throughout the 120-payment period - gaps in qualifying employment pause your progress. For IDR forgiveness, job changes may affect your payment amount but don't reset your forgiveness timeline. Career changes from public service to private sector would end PSLF eligibility but preserve IDR benefits. It's crucial to understand each program's requirements before making career decisions.

Lawyers have several options: PSLF if working for qualifying government or nonprofit employers, state loan repayment programs for public defenders and prosecutors, and specialized programs like the Department of Justice Attorney Student Loan Repayment Program. Many state bar associations and legal aid organizations offer loan assistance programs. Private law firms may also provide loan repayment benefits, though these create taxable income unlike federal forgiveness programs.

Direct Consolidation can make FFEL and Perkins loans eligible for forgiveness programs, but resets your payment count to zero for PSLF. The new consolidated loan gets a weighted average interest rate rounded up. For IDR plans, consolidation may be beneficial for accessing better repayment terms. However, you'll lose credit for previous qualifying payments, so timing is crucial. Sometimes partial consolidation of only non-qualifying loans is the optimal strategy.

PSLF and other qualifying public service forgiveness programs are not taxable. IDR forgiveness after 20-25 years was traditionally taxable, but recent legislation made it tax-free through 2025. Teacher Loan Forgiveness is not taxable. Closed School, Borrower Defense, and TPD discharges are generally not taxable. However, tax laws change, and state tax treatment may differ from federal. It's important to plan for potential tax implications and consult with tax professionals.

Some programs can be combined, others cannot. You can pursue PSLF while on an IDR plan, which is actually recommended. However, you cannot receive both Teacher Loan Forgiveness and PSLF for the same period of service. You can't combine federal forgiveness programs with most employer-based loan repayment programs. Multiple state and federal programs may have compatibility issues. The key is understanding which programs conflict and developing a strategic timeline to maximize benefits.

Grad PLUS loans are eligible for most federal forgiveness programs including PSLF, IDR forgiveness, and TPD discharge. However, Grad PLUS loans are not eligible for most IDR plans directly - they must be consolidated first. The high balances typical of Grad PLUS loans make PSLF particularly valuable for public service workers. Professional school graduates in healthcare, law, and other fields may have access to specialized loan repayment programs specific to their careers.

PSLF requires full-time employment (30+ hours/week on average) at qualifying employers. Employment gaps pause your qualifying payment count but don't reset it - you can resume where you left off. Part-time work under 30 hours doesn't qualify unless you have multiple qualifying part-time positions totaling 30+ hours. Seasonal employment, sabbaticals, and career changes to non-qualifying employers all impact PSLF progress. Maintaining employment certification helps track your qualifying status.

Document all errors immediately and contact your servicer in writing. Common errors include incorrect payment counts, misclassified employment, and processing delays. If your servicer cannot resolve the issue, file complaints with Federal Student Aid, the Department of Education, and the Consumer Financial Protection Bureau. Keep detailed records of all communications, payments, and employment. Consider seeking help from student loan attorneys or nonprofit counseling services for complex cases.

The SAVE plan (Saving on a Valuable Education) replaced REPAYE as the most generous IDR plan, offering lower payments and faster forgiveness for smaller loan balances (10 years for undergraduate loans under $12,000). Recent updates have made PSLF more accessible with relaxed rules and better processing. Congress regularly considers new forgiveness legislation, and the Department of Education continues to refine existing programs. Stay informed through official federal sources and consider professional guidance to navigate changing programs.