Learn About Public Employee Student Loan Forgiveness

This article is about public employee student loan forgiveness.  It’s an important topic to discuss because many people qualify for it but either don’t apply for it or are denied when they should have been approved.  After applying for the program, public employees may remove one-tenth of their student loans every year they work for a non-profit qualifying employer. Many people also talk about federal student aid. So, this includes most medical jobs, religious employers, government jobs, and many employers who offer 403B retirement plans and 501 (c) 3 employers. Here are the forms for the non-nonprofit public employee student loan forgiveness program. Also, use this link to obtain the certification forms.

Public Employee Student Loan Forgiveness

Philip G. Schrag wrote a law review article on this program present as Public Employee Student Loan Forgiveness Program. The critical thing to remember is that many people fail to take advantage of this program because they don’t realize they qualify for it. For instance, doctors and nurses that work for hospitals are often famous because a hospital is a non-profit organization.

Teachers and other government employees also qualify for it—nearly 30% of the population qualify. Soldiers and persons who work for churches and religious organizations prepare. So, if you work for a church or religious organization—your job involves public service work. However, you must work in a non-religious capacity, such as a daycare worker, doctor, or teacher for the church or religious organization.

New Rules for Federal Student Loan Forgiveness

During the Trump administration, the department of education would deny administrative discharges of student loans when the student was often clearly available for a discharge. For instance, dead borrowers or borrowers who had paraplegia had applications denied. This would happen even when the death certificate and records were certified and sent to the department. 

Proof that the person had been recognized as permanently disabled by Social Security and the VA was supposed to certify disability.  But DOE would still deny an applicant for the death or disability discharge. The head of DOE would deny clearances even when a federal judge ruled discharges should be approved.

It changed however in the Biden administration. Now administrative discharges are far more freely approved when the applications are documented. In the early part of this administration, there was substantial talk about the debt cancellation of student debt or forgiving student debt. Loan forgiveness is the debt cancellation of a loan’s remaining balance or portion of the balance. However, loan forgiveness has not been approved, and with mid-term elections, it seems this will not happen.Federal Loan Forgiveness

Who Does Not Benefit from Public Service Student Loan Forgiveness?

First, please understand that most public employees will work for ten years and not have one penny of their federal loans forgiven. Why? Because as of 2020, less than 3% of the applicants are eligible or, I should say, will be approved.

People often start working and then apply for Public Service loan forgiveness. You must make 120 qualifying federal student loan payments into the qualifying repayment plan for loan foregiveness. The chances of doing that are slim—less than 50% complete 120 qualifying loan payments. People change jobs or become temporarily disabled. With this in mind working for public service to end your federal student loans seems a waste of time. The history of this program is littered with broken promises and dreams where the government promised public service forgiveness if the qualifying employer would work for a lower wage.  Many of these employees feel there was never any intention of honoring the promise.

Trump repeatedly proposed to eliminate Public Service Loan Forgiveness. There is no guarantee that applicants will not become ineligible if the program becomes canceled. If the program is canceled, employees will have wasted up to 10 years of service.  President Biden proposed canceling the program before becoming president and has not lived up to pre-election promises of withdrawing part of the student loan debt for students.

Who is Benefited from Public Service Student Loan Forgiveness?

Here is the form for the Public Service Student Loan Forgiveness program. When you think of the public service student debt forgiveness program, you might assume the program only helps those who work for state and government agencies. But police and firefighters are just a minor portion of the people who can benefit from the program. 

To qualify for public service student debt forgiveness, you only need to work for a non-profit organization. This would include almost all hospitals and other businesses organized under a 501C3 as a non-profit organization. Nonprofit corporations pay no income taxes. 

The salaries paid to employees by a non-profit organization can be just as high as the salaries you earn at a for-profit company. But the nonprofit organization was established for a charitable or community purpose. The employees at a church can also qualify for the public service loan program. 
Public Service Loan Forgiveness

The Ten-Year Rule for the Public Service Option

The job description of that religious organization employee must not be spiritual. For instance, a nurse or teacher at a religious school would qualify, but a minister would not. Whereas most federal student loans have a 20-year repayment period, the public service option allows you to complete repayment for 120 months of public service.

To complete these ten years, you have to be approved first. If you work for ten years and then apply, it will not count the prior ten years. If you wait to apply for ten years, you still have ten years to serve. It is essential to apply early.

Other Potential Ways to Get Rid of Student Direct Loans

Many different programs offer administrative discharge of government students and direct loans. When the student for a parent plus loan dies, the parent can be removed from the loan. Here are just a few of the programs that exist or have existed.

Community Service Programs Military Programs
Americorp Educational Award Air Force College Loan Repayment Program
Faculty Loan Repayment Program Army Student Loan Repayment
Health Professionals Loan Repayment Program Military Reserve Health professionals Loan Repayment Program
Indian Health Services Loan Repayment Program Navy Loan Repayment program.
National Health Services Corps
National Institutes of Health Loan Forgiveness
Nurse Corps Loan Repayment Options
Perkins Loan Cancelation and Discharge


Administrative Discharges State Programs
Closed School Discharge Kentucky Veterinary Incentive program
9/11 Disaster

Does the Federal Government Forgive Student Loans?

Instead of forgiveness of student loans, the government programs are primarily focused on making direct loans affordable. Most commonly, you can get the loan out of default by either consolidating the loan or rehabilitating the loan. You can consolidate your loans more than once, but you can only rehabilitate your direct loans once.Student Loan Relief

The Problem with Servicers

The problem with services is they are for-profit businesses. Student loan servicers operate the same for mortgage and credit card servicing. Servicers can collect 40% of the late fees for the loan. Your loan payments primarily pays late fees and charges first. When a federal student loan defaults, DOE assigns a 25% late fee. So for a $50,000 student loan,  The servicer assesses a $12,500 dollar one-time late fee when you default.  Your servicer applies your payments to late fees for years.  The principle is rarely touched. 

Often the monthly payment for an income-based loan does not even cover the interest. A student may spend years paying 500 a month, and all the funds are applied to a one-time late fee for a default.

Federal Student loans often do not repay the principle but the loan servicer profits. The structure of the system is not designed to get loans repaid. It can last for 20 years of repayment and profit servicers. Most payments flow into servicers, just not out of them.


A student loan default can be cured by consolidating the loans. You can have multiple different federal student loans and multiple consolidations. It is possible to consolidate loans numerous times. Consolidated loans are up to date. These are, however, new loans. About nine different loan programs offer income-based repayment. Only six are commonly used. Depending on the program, you may or may not have to include spousal income. It is almost impossible to choose which program is proper without resorting to software like studentloanify to calculate which program is best for you. 

A loan servicer will typically only offer students the programs which profit them the most. To avoid this, you can use the Studentloanify.com software to help input your information and select which program is best for you.   When Navient was sued for misleading students into the worst loan programs their response was we don’t work for students we work for the department of education. 

Bankruptcy software such as best case will also help plan and manage student loans in bankruptcy. Similarly, people who want a mortgage modification use best case to process a request to reduce their interest rates or monthly payments. You must at least compare the options.  The best options are often not presented to you against the options the bankruptcy software or student loan offers.


You can rehabilitate your student loans one time only. However, you are not obtaining a new loan. You are simply rehabilitating the existing loans and bringing them up to date . The advantage to rehabilitating their loans is that your credit records will show a history of several years of on-time payments if you rehabilitate the loan.  The program requires a series of on-time payments to have the loan rehabilitated.

People sometimes use this option to quickly qualify for a home mortgage when they otherwise would never qualify due to student loans that were in default.

Income-based Repayment and Other Discharge Programs

Interestingly, you also qualify to use this if you are already in an income-based repayment (IBR) program. However, you must apply for the program for a 10% reduction per year. Unfortunately, it won’t wipe out the student loan debt for your past years as a public employee and does not start until you apply for it and it goes into effect.

You have to apply, and then it goes into effect from that application date. This is one of 10 different administrative programs that reduce, forgive, or eliminate your student loan debt.

Many programs make student loans affordable with reduced or zero payments. Student Access Loan-Technical(SALT) Request for Loan Discharge Benefit lists nearly 100 different programs.

I invite you to continue reading our other pages about student loan forgiveness, including the undue hardship discharge, so that you can eliminate your debts. Also, below, you will find a convenient list of forms and resources from this article.

Contact Us to Learn More About Salt Student Loan Forgiveness! 

We often work with debtors filing bankruptcy to manage their student loans. The goal is always to make them affordable or uncollectible. Please contact us if you have this problem and need your loans collected.

Free Bankruptcy Manual Nick Thompson Bankruptcy by Nick Thompson, Bankruptcy AttorneyForms for Public Service Employees Loan Forgiveness Program

Public Service Employee Certification Forms

Non-Nonprofit Public Employee Student Loan Forgiveness Program

Student Access Loan-Technical(SALT) Request for Loan Discharge Benefit

Foreclosure Mortgage Forgiveness Debt Relief Act

Student Loan Forgiveness Programs

Student Loan Discharge Through Bankruptcy

Bankrupt or Discharge Student Loans in Bankruptcy

Do you need help managing your student loans? Contact my office right away to start the conversation. Nick C. Thompson, Attorney: 502-625-0905

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