The Public Service Loan Forgiveness Program: Can It Help With Your Debt?

Last Updated on March 8, 2022

In today’s world, many people acquire a loan to pay for their educational courses at universities in order to expand their career and job prospects. The sad truth is that many of them will end up going into debt as the number of people who fail to make payments on their student loans is only increasing each year.

A quality education is expensive and nowadays, the individual is judged on which institution they studied from rather than what they actually learned. The government has noticed the steady rise of people who are unable to repay their student loans and has set up various programs that can immensely help those who are facing financial hardships.

What are Some of the Student Loan Forgiveness Programs Available?

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The Public Service Loan Forgiveness Program

The Public Service Loan Forgiveness (PSLF) program is widely considered to be the best student loan forgiveness program due to the numerous benefits that are offered with it. With this program, the borrower’s existing loan amount can be completely written off.

To qualify for the PSLF program, the applicant will first have to continue making payments towards their loan. Once they have made 120 monthly loan repayments, the rest of the loan amount they owe will be forgiven. The borrower will need to hold employment in specific public sectors in order to be eligible for this forgiveness program.

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There are certain requirements that need to be done by the individual such as the 120 loan repayments mentioned earlier, but these payments must be done through specific repayment plans which are the Pay As You Earn (PAYE) plan, Revised Pay As You Earn (REPAYE) plan, Income Based Repayment (IBR) plan, Income Contingent Repayment (ICR) plan and the standard 10 year repayment plan.

The borrower will also need to hold full time employment in either a local, state or federal government agency. In case the borrower is employed in a nonprofit organization, they can still apply.

The Income Based Repayment Program

The Income Based Repayment (IBR) loan forgiveness program is designed in such a way where the borrower can set their monthly loan repayment amount at around 10 to 15% of their monthly income. This can drastically ease the burden as they will be more comfortable in making the monthly payments.


After they have made payments towards their loan for over a period of 20 to 25 years, the remaining amount they owe will be forgiven. Keep in mind that only the monthly payment amount will reduce and not the interest rate of the loan. Also, if the borrower gets a hike in salary, their monthly loan amount will increase accordingly.

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It is of utmost importance that the borrowers inform their loan provider in the event of them switching jobs or when there is a change in their monthly income. There are many types of loans that qualify for the Income Based Repayment loan forgiveness program, these are listed below.

  • Direct PLUS loans.
  • Direct subsidized loans.
  • Direct unsubsidized loans.
  • Federal Perkins loans.
  • Federal Family Education PLUS loans.
  • Federal Family Education Consolidation loans.
  • Subsidized Federal Family Education Stafford loans.
  • Unsubsidized Federal Family Education Stafford loans.

What is the Eligibility for Student Loan Forbearance?

Not all people will be able to qualify for the student loan forgiveness programs. For those people who are in debt, they should consider student loan forbearance. In layman’s terms, forbearance is when the loan provider grants the borrower a temporary relief from making loan payments.

Depending on the loan provider, the borrower will either be requested to make smaller payments or no payments at all. However, the borrower will first have to meet the eligibility criteria which is listed as follows.

  • The borrower must have an eligible loan, this includes subsidized and unsubsidized loans.
  • The borrower must prove what event drove them to choose the option of forbearance, this includes situations such as unemployment, unforeseen medical expenses, etc.

What are the Different Types of Forbearance?

Layman's Guide to Different Types of Loans

General Forbearance

General forbearance is also referred to as discretionary forbearance. It is when a borrower requests their loan provider to temporarily put their monthly loan repayments on hold. Generally, these loan repayments can be on hold for upto 12 months and the borrower can ask for discretionary forbearance multiple times. It is still up to the discretion of the loan provider but the borrower cannot exceed a duration of 3 years of not making any payments towards their existing loan.

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Mandatory Forbearance

When it comes to mandatory forbearance, the borrower can request their loan provider to put their monthly loan payments on hold. A single mandatory forbearance period can span for up to 12 months which is similar to general forbearance. However, the borrower will have to meet a certain criteria which is based on the loan provider, in order to apply. The main difference when it comes to mandatory forbearance is that there is no cumulative limit.

If you are an individual who is currently in debt because of your student loan and cannot seem to qualify for any of the forgiveness programs, it is advisable to choose a forbearance program which fits your needs.

Once you have selected which type of forbearance you are eligible for, approach your loan provider and narrow down on the right option. This can help you save time and reduce your debt amount much sooner.