Do I Qualify for Public Service Loan Forgiveness (PSLF)?


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By Bruce McClary: 03/05/19

As an independent contractor you would not qualify for Public Service Loan Forgiveness because you do not satisfy the employment eligibility requirement. To be eligible for the PSLF, you have to be directly employed by a qualifying government or nonprofit agency at a full-time capacity. In addition to satisfying employment requirements, you also need to have Direct Loans with an income-based repayment plan, like Pay As You Earn Repayment Plan or Revised Pay As You Earn Repayment Plan, and make 120 on-time, qualifying payments.

Initially, this program was created in 2007 to incentivize borrowers to work in public service positions, and of course, give them the opportunity to have their debts forgiven. The first borrowers who applied saw their debts forgiven just in 2017, and surprisingly, only a small percentage of them were successful. Many of the applications submitted were rejected because borrowers did not meet the employment requirement or were not making qualifying payments. So, it is crucial to determine your eligibility criteria early on and plan accordingly for the next 10 years. Finding out that you are not eligible after you submit your application can put you in a difficult financial position. At that point, it is likely that you’ve accumulated more interest and that your overall student loan debt has increased.

So, if you are considering applying to this program, you’ll need to change your employment status. In fact, to be eligible for any forgiveness programs, you’ll have to be directly employed by a qualifying employer. For instance, the Indian Health Service offers a similar loan forgiveness program–the Indian Health Service Loan Repayment Program. This program awards up to $20,000 per year to borrowers in exchange for working full-time at an Indian health facility with a two-year commitment.

But, if you prefer not to change your employment status to qualify for these specific forgiveness programs, you should explore other federal repayment programs or create a strategy to repay it on your own. I suggest visiting the U.S. Department of Education to review other available programs or talking to an NFCC-certified credit counselor to fully explore all of your student loan repayment options. There’s plenty of information and assistance out there. Just make sure you understand each thoroughly before you make a decision. Good luck!


Michigan license number:   DM-0016282 Available to the public and licensed in Michigan.

Section 13(1)  When a licensee establishes a debt management plan for a debtor, the licensee may charge and receive an initial fee of $50.00

Section 13(2)  A licensee shall attempt to obtain consent to participate in a debt management plan from at least 51%, in number or dollar amount, of the debtor’s creditors within 90 days after establishing the debt management plan. If the required consent is not actually received by the licensee, the licensee shall provide notice to the debtor of the lack of required consent and the debtor may, at its option, close the account. If the debtor decides to close the account, any unexpended funds shall be returned to the debtor or disbursed as directed by the debtor.

Sec. 14. (1) A contract between a licensee and debtor shall include all of the following:

(a) Each creditor to which payments will be made and the amount owed each creditor. A licensee may rely on records of the debtor and other information available to it to determine the amount owed to a creditor.

(b) The total amount of the licensee’s charges.

(c) The beginning and termination dates of the contract.

(d) The principal amount and approximate interest charges of the debtor’s obligations to be paid under the debt management plan.

(e) The name and address of the licensee and of the debtor.

(f) Any other provisions or disclosures that the director determines are necessary for the protection of the debtor and the proper conduct of business by a licensee.

Sec. 18. (1) In addition to the fee described in section 13(1), a licensee may charge a reasonable fee for providing debt management services under a debt management plan. The fee under this subsection shall not exceed 15% of the amount of the debt to be liquidated during the express term of the plan.

(2) A licensee may offer a debtor the option to purchase credit reports or educational materials and products, and charge a fee to the debtor if the debtor elects to purchase any of those items from the licensee.  Fees charged under this subsection are not subject to the 15% limitation on fees described in subsection (1).

(3) Except for a cancellation described in subsection (4), in the event of cancellation of or default in the performance of the contract by the debtor before its successful completion, a licensee may collect $25.00 in addition to any fees and charges of the licensee previously received by the licensee. This $25.00 fee is not subject to the 15% limitation on fees and charges under subsection (1).

(4) A contract is in effect when it is signed by the licensee and the debtor and the debtor has made a payment of any amount to the licensee. The debtor has the right to cancel the contract until 12 midnight of the third business day after the first day the contract is in effect by delivering written notice of cancellation to the licensee. A cancellation described in this section is not subject to, and a licensee shall not collect, the fee described in subsection (3).

(5) If a debtor fails to make a payment of any amount to a licensee within 60 days after the date a payment is due under a contract, the licensee may, in its discretion, cancel the debt management contract if it determines that the plan is no longer suitable for the debtor, the debtor fails to affirmatively communicate to the licensee the debtor’s desire to continue the plan, or the creditors of the debtor refuse to continue accepting payments under the plan.

(6) A licensee shall not contract for, receive, or charge a debtor an amount greater than authorized by this act. A person that violates this subsection, except as the result of an inadvertent clerical or computer error, shall return to the debtor the amount of the payments received from or on behalf of the debtor and not distributed to creditors, and, as a penalty, an amount equal to the amount overcharged.

530 W Allegan Street, 7th Floor
Lansing, MI  48909-7720

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