Public Service Loan Forgiveness (PSLF) is, in my opinion, one of the best federal loan programs out there for borrowers. It provides a huge incentive for borrowers with high federal loan debt burdens to enter public service, since it allows them to get their loans forgiven after 10 years of working in qualifying public service employment.

Except, it’s actually a little more complicated than that.

First of all, it’s important to understand that the technical requirement to obtain PSLF is not 10 years of public service; it’s 120 individually qualifying payments while you work in public service (which, if consecutive, totals 10 years). With that in mind:

• Grace periods don’t count towards your 10 years. If you started working in eligible public service employment right after you graduated, but didn’t start making qualifying payments on your loans until a few months later (when your grace periods expired), those first few months of employment won’t count towards your 10 years.
• Were your loans transferred to a different federal loan servicer last year, like so many federal loan borrowers? If so, there was probably a gap of at least a month or two where no qualifying payments were made during the transfer, even if you were in qualifying employment.
• Have you had trouble re-certifying your income for Income-Based Repayment (IBR)? If so, you may have been put into forbearance for a month or two (or more) while your loan servicer processed your application. Those months don’t count towards your 10 years, even if you were in qualifying employment.

That last point about IBR re-certification could be a compounding problem. If there are problems with IBR re-certification each year (you are required to submit updated income documentation annually to remain in the program), and processing problems cause you to miss a payment or two each year, those months add up over time. Obviously we’re hoping that federal loan servicers correct their IBR processing problems (and it looks like they are improving), but a month here, a month there… it adds up.

Now for the kicker.

According to the Dept. of Education, you cannot even apply for PSLF until you have made your 120th qualifying payment. Then, the Dept. of Education says you have to remain in your qualifying public service employment while your application is reviewed, until your loans are actually officially forgiven and you are instructed to no longer make payments. There’s no timeframe or deadline specified for the Dept. of Education to act. Anyone have a guess as to how long it will take? I don’t, but I bet it won’t be quick.

Do I think all of this is some deliberate and sinister ploy by the Dept. of Education to deprive student borrowers of obtaining PSLF? No. I don’t think the Dept. of Education is actually that smart, that sinister, or that organized. I think the Dept. of Education is grossly inept and incompetent, but I’m sure that they will wind up granting borrowers forgiveness under the PSLF program. There’s just no way it’s going to happen in “10 years.”