What is the 10-year rule for student loan forgiveness?

President Biden announced that his administration would cancel up to $20,000 in student loan debt last year. However, that proposal has been held up in court after lawsuits were brought against it. The Supreme Court will decide later this year on the challenges merits and legality of the program. However, eligible student loan borrowers may be able to have their debt forgiven after ten years, including potentially those years during the moratorium even if no payments were made.

Created in 2007, the Public Service Loan Forgiveness (PSLF) program allows certain federal student loan borrowers to have their debt forgiven after 10 years of working full-time for a qualifying employer. The program is designed to encourage people to work in the public sector so only jobs with the government or 501(c)(3) non-profits qualify.

Borrowers must make 120 timely qualifying monthly payments, ten years in total, under an income-driven repayment plan while working for a qualifying employer. The payments don’t need to be consecutive but you must be working for a qualifying employer when you apply for the PSLF program and at the time the remaining balance on your loan is forgiven.

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How to apply for the Public Service Loan Forgiveness program

Borrowers that want to take advantage of the PSLF program should first check that their employer qualifies. Jobs with the federal, state, local or tribal government as well as not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code may make you eligible to benefit from the PSLF program. However, jobs through a contractor that is doing work for a qualifying employer do not count. Federal Student Aid provides an employer search tool that you can use to check if your employer qualifies.

You will need to certify with your employer each year that you are working full-time or at least 30 hours per week, whichever is greater. Your loans must be part of the federal Direct Loan Program, private loans do not qualify. If you have other types of federal loans you may be able to consolidate them into a Direct Consolidation Loan to become eligible.

You will also need to be an income-driven repayment plan before you begin making qualified repayments. You must make the payments for the full amount due according to your bill and payments can be no later than 15 after your due date. And the payments must be made while you are employed by a qualifying employer full-time. Only payments after 1 October 2007 qualify.

Any payments made during periods when you are not required to make them do not count such as in-school status, grace period, deferment or forbearance. However, suspended payments during the covid-19 administrative forbearance will be credited toward PSLF as though you made on-time monthly payments as part of your qualifying repayment plan.

Once you have met all of the above requirements, you can submit a Public Service Loan Forgiveness application. You can fill out the application online using the PSLF Help Tool or download a copy and fill it out by hand to submit your application. Remember that you must be working full-time for a qualifying employer when you apply.