The Public Service Loan Forgiveness Program (PSLF)

Updated: 2/14/2022


On October 6, 2021, the U.S. Department of Education released executive actions to ease the application and approval process for borrowers who want to take advantage of the federal Public Service Loan Forgiveness (PSLF) program, which helps students attend medical school and makes it possible for young physicians to serve in governmental and nonprofit settings.

A new limited waiver will help an estimated 550,000-plus borrowers who previously consolidated their federal student loans see their progress toward forgiveness grow automatically. And of this number, about 22,000 borrowers will be immediately eligible to have their loans worth $1.74 billion discharged without further action on their part.

The PSLF program, created in 2007, forgives the remaining balance on direct loans after the borrower makes 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer such as a 501(c)(3) nonprofit organization, government organization and/or other not-for-profit organization that provides certain types of qualifying public service. Military service also qualifies. In addition, for many, their time in residency counts toward qualified employment, as the majority of training programs are in public or nonprofit 501(c)(3) hospitals.”

But as ACP has highlighted in letters to the Department of Education, Congress and in congressional testimony, the program has been plagued by problems, which has resulted in a high percentage of PSLF applications being outright denied and an astonishingly low number of applicants actually getting their loans forgiven after the required 120 payments (usually 10 years) after the program was established. There have been reports of servicers failing to place borrowers in the right service plans, qualifying payments being miscounted, employment certification being improperly disqualified, misinformation by loan servicers and a general lack of education and awareness by applicants due to inadequate outreach and guidance. Initially, less than 1 percent of the 40,000 applicants were approved. Even in 2021, 98 percent of applications have been rejected for various reasons.

ACP has pushed for several reforms:

  • Despite its flaws, the program must be extended because there's so much potential to encourage physicians to pursue careers working in government service and nonprofits and relieve the financial pressure associated with carrying such high debt. However, they need to be able to count on the program being funded and their applications being approved if they commit 10 years of their careers to public service. It is also an important tool for nonprofit and government facilities to recruit and retain physicians.
  • Ensure borrowers who have indicated interest in the PSLF program will be eligible for loan forgiveness regardless of future changes to the program or eligibility.
  • Ensure all types of federal student loans will qualify for forgiveness, including Federal Family Education Loans, and consolidation to a direct loan should be allowed without losing previously made payments counting toward the overall payments required by the PSLF program.
  • Ensure all federal repayment plans qualify for the program.  There has been confusion about which repayment plans were eligible for the PSLF program which led to the denial of many PSLF applications.
  • Expand eligibility to all physicians practicing at government or nonprofit healthcare settings.
  • Ensure COVID-19–based non-payment months due to the administrative forbearance period are appropriately included towards an individual’s progress in the PSLF.
  • Instruct and certify all loan servicers assist and educate potential PSLF borrowers to reduce confusion and miscommunication.
  • Ensure more education and outreach are available to help applicants determine whether they qualify for the program and make it possible for borrowers to check on their payment status and effectively dispute payment issues.

Through the limited waiver, the Department of Education will be offering a temporary opportunity to give borrowers credit for prior payments they made that would not otherwise count toward the Public Service Loan Forgiveness program. Any prior payments made while working for a qualifying employer will count as a qualifying payment, regardless of loan type or repayment plan. The waiver will run through Oct. 31, 2022, so current applicants should check in with the Department of Education website and make sure their contact information and other information are up to date.  In addition, those who have direct loans but have not yet applied for the program can also submit an application by the Oct. 31, 2022, deadline.

In mid-November 2021, it was reported that the Department of Education had fully canceled the debts of 2,600 borrowers totaling $185 million.

ACP will continue to monitor administrative and legislative action related to the PSLF and advocate for any further improvements necessary to assist qualified borrowers in public service.