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Know Your Net Worth

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Review Your Employment Contract

Make Plans for Your Estate

Make Good Decisions


The Public Service Loan Forgiveness (PSLF) program offers loan forgiveness for eligible borrowers who work full-time for qualified employers and make an appropriate number of qualifying payments. More specifically, according to,[1] to qualify you must:

  • be employed by a U.S. federal, state, local, or tribal government or not-for-profit organization;
  • work full-time for that agency or organization;
  • have Direct Loans (or consolidate other federal student loans into a Direct Loan);
  • repay your loans under an income-driven repayment plan; and
  • make 120 qualifying payments.

There are some very useful FAQs on the government's Public Service Loan Forgiveness site, addressing employer qualification, loan eligibility, qualifying payments, and the process itself. I strongly recommend reading through all this information. While that may seem like a pain, keep in mind that doing this properly could mean having a massive amount of your loan debt forgiven, so all your learning is time well spent. You don't want to have your PSLF application rejected due to an easily corrected oversight.


PSLF Strategy

If you’re aiming for loan forgiveness, the obvious strategy is to get as much of your loan balances forgiven as possible. The last thing you want to do is to aggressively pay down your loan balances, leaving you with a tiny balance to be forgiven! Instead, go with repayment plan(s) that allow you to make small payments spread out over many years. You don’t care about those later years, because you’re aiming to have them forgiven. 

It is crucial that you abide by all program rules and make thoughtful decisions along the way:

  • Don’t miss any payments
  • Make sure your loans qualify. If some of them don’t, look into consolidating into Direct Loans that do qualify
  • Take special care prior to consolidation, as some consolidation could render earlier payments ineligible [2]
  • Give careful consideration to the repayment plan you choose. Your selection should be made within the context of your household circumstances, including how much debt you have and whether you are married
  • Note that loan repayments made while in a residency program may qualify as PSLF payments—but you must make these payments. Electing forbearance or deferment could be self-defeating, because those years would not qualify and you’d have to spend more time in the program to reach your 120 eligible payments observes that many graduating medical students would be best positioned by selecting REPAYE or PAYE repayment plans if they are interested in PSLF. This does not mean these are automatically the best choices for all graduates, but these are likely to be solid choices for many. I recommend you visit DoctoredMoney’s Student Debt resources, which describe those repayment plans that are advantageous under various circumstances. You may also find useful information in the Financial Aid section at the Association of American Medical Colleges website.


PSLF Has Proven Disappointing for Some Borrowers

On paper, PSLF is a great program and many bloggers tout it as the clever way forward—but reality has proven disappointing for many.

The first cohort of borrowers seeking to qualify for PSLF completed their ten years of service recently. Many were dismayed to discover their applications for loan forgiveness were rejected. The rejection rate was a stunning 99%!

The government responded by creating a Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program. In late 2019 the revised plan still rejected 99% of applicants. According to a January 31, 2020 NPR report, it was discovered that “71% of denials were essentially due to a paperwork technicality. According to the GAO [Government Accountability Office], more than 38,000 applicants were denied relief under the [TEPSLF] expansion ... simply because they hadn’t first applied for and been denied PSLF.”

 There’s been an outcry over the unnecessary complexity of the program and its draconian rejection rates. It’s understandably devastating for doctors who believed they were abiding by program requirements to suddenly discover their sizable loan obligations are not being discharged.

While we all hope the government will make the process more seamless, fair, and transparent, there are no guarantees.

Some commentators argue that the PSLF is completely safe and after ironing out its issues will honor all requests for debt forgiveness. My risk management background forces me to be more cautious. Due to Coronavirus-related bailouts, governments at all levels have taken on massive amounts of debt. Even before these unprecedented obligations, we knew that Social Security and other government programs would likely be insolvent within ten to fifteen years. The bottom line is that the federal government may not be in position to forgive massive amounts of loans. There is precedent for the government cancelling allowances we've taken for granted. For example, the Stretch IRA strategy employed by many families was taken away to fund other government priorities. This is a reminder that no program is untouchable. This doesn’t mean you should not pursue PSLF. It does mean you should not blindly assume all will be well.

Accordingly, if you are on a PSLF path or would like to embark on one, I strongly recommend you prepare—mentally, emotionally, and financially—for PSLF rejection or for some unfavorable changes to the program in the future.

Financial preparation in this context means ear-marking some of your assets or pillars to pay off loans that might not be forgiven. You can set up a separate investment account to cover “unforgiven” loans, or simply recognize that funds in your existing accounts may be needed to cover such liabilities in future. Take this contingent liability into account when calculating your net worth. The most conservative version of this is to subtract your total debt balance from total asset value when determining net worth. I.e., when calculating net worth assume none of your debt will be forgiven.

Periodically look up the latest information from official government sources to ensure you abide by all PSLF requirements.


The PSLF Process and Documentation

Per “There is no application fee to complete any forms associated with PSLF. You may be contacted by private companies that offer to help you apply for PSLF, for a fee. These companies have no affiliation with ED or ED's federal loan servicers, including FedLoan Servicing.”

It’s advisable that you use the PSLF tool to learn about the program, assess eligibility of your loan and employer, and determine which forms to submit.

Be sure to submit the Employment Certification Form (ECF) annually. This helps ensure your ongoing eligibility and avoids nasty surprises after ten years.

If you’re on an income-driven repayment (IDR) plan, make it a habit to submit your form when you renew your IDR plan.

After making your 120th qualifying monthly payment for PSLF, submit the PSLF application to receive loan forgiveness. Note: According to, “You must be working for a qualifying employer at the time you submit the PSLF application and at the time the remaining balance on your loan is forgiven.”

If your PSLF application is denied because some or all of your payments on a Direct Loan (William D. Ford Federal Direct Loan) were not made on a qualifying repayment plan for PSLF, you may be able to receive loan forgiveness under a temporary opportunity known as the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) opportunity. Read the eligibility requirements carefully.


Notice: Automatic Suspension of Monthly Payments as a Result of the COVID-19 Emergency

To provide relief to student loan borrowers during the COVID-19 emergency, federal student loan borrowers were automatically placed in an administrative forbearance, which allows you to temporarily stop making your monthly loan payments. This suspension of payments will last from March 13, 2020, through Dec. 31, 2020, but you can still make payments if you choose.

If you have a Direct Loan and work full-time for a qualifying employer during the suspension, then you will receive credit toward PSLF or Temporary Expanded PSLF for the period of suspension as though you made on-time monthly payments in the correct amount while on a qualifying repayment plan.

Note: In-grace, in-school, and certain deferment, forbearance, and bankruptcy statuses are not eligible for credit toward PSLF.

Source: The Covid-19 notice above is provided verbatim from the site



[2]  I made qualifying PSLF payments on my Direct Loans and then consolidated those loans. Do the payments I made before consolidation still count toward PSLF?

No. If you make qualifying PSLF payments on a Direct Loan and then consolidate that loan, you’ll lose credit for the PSLF payments. You’ll need to start over and make 120 qualifying payments on the new Direct Consolidation Loan. For this reason, if you’ve made qualifying PSLF payments on your Direct Loans and you’re thinking of consolidating those loans into a Direct Consolidation Loan along with loans you received under other federal student loan programs, you should leave your Direct Loans out of the consolidation and consolidate only your loans from other federal student loan programs.

Source: The Covid-19 question and answer above is provided verbatim from the site.


Related Links:

Public Service Loan Forgiveness

Loan Simulator

FedLoan Servicing

What Happens to Student Loans When You Die?

AAMC on financial aid