November 7, 2023

Public Service Loan Forgiveness: Myths vs. Reality


After a series of court orders and political promises, student loan payments were reinstated in October. With the typical borrower shouldering between $37,000 to approximately $55,000 per borrower in loans and the average student loan payment of $500 a month, more Americans are making tough financial choices to stay afloat and are seeking relief. Given the stakes and the restart's impact on individuals’ financial health, borrowers must be armed with the right information to take action.

Our research shows that under the Public Service Loan Forgiveness (PSLF) program, 90% of first responders could have their debt forgiven, and more than half of educators could see their debt eliminated.

We have helped our members qualify for more than $250 million in student loan forgiveness and are committed to dispelling myths about the PSLF to encourage more borrowers to apply.

Yet, with so many changes to debt cancellation and forgiveness plans, and the difficulties borrowers are facing when trying to get answers from servicers, it can seem impossible to know if you’re on a path to forgiveness with PSLF. Here are some of the most commonly held misconceptions about PSLF eligibility:

MYTH: "I will never get PSLF due to past denials."

REALITY: Rejection is disheartening, but is usually a specific reason for denial that Chipper can help you identify and correct.

The PSLF application process demands meticulous attention, from furnishing the Employment Certification form for every relevant employer to precise employer identification. Even seemingly trivial errors, such as spelling, can be the cause for rejection. The Chipper app guides borrowers through the process, ensuring their applications are filled out correctly.

MYTH: "I'm ineligible for PSLF since I'm not a Doctor, Nurse, Teacher or Government Official."

REALITY: It’s not your title or role that matters but the organization.

Any payments made while working at a qualifying employer counts towards PSLF forgiveness. You are eligible if you are employed by a public institution such as a school, hospital, fire department, or any local, state, or federal government agency. Borrowers with military service, or who are employed by certain non-profit organizations are also eligible.

MYTH: "I must work 40 hours per week to qualify."

REALITY: The "full-time definition is somewhat flexible.

You must meet your employer's definition of “full-time” OR work at least 30 hours per week, whichever is greater.

MYTH: "My affiliation with a non-profit assures loan forgiveness upon application."

REALITY: Not necessarily.

Though employment with a non-profit or a government organization qualifies an applicant for forgiveness, it's not an immediate ticket to debt elimination. Borrowers must make 120 payments at a qualifying employer (the equivalent of 10 years) to be eligible for forgiveness.

MYTH: “Once my 10 years are up, I automatically get my loans forgiven.”

REALITY: After 10 years of making your student loan payments, you’re required to apply for forgiveness to have your loans eliminated.

Borrower beware: the process of enrolling into PSLF can be confusing. It requires thoroughly filing out an Employer Certification Form (ECF) with all of your previous employers, their Federal Employer Identification Numbers, tax status, and other details. It also requires getting a signature by an “authorized official” of each organization, which can be a challenge.

Once it’s filed, it takes 8-12 weeks for the application to be processed and it may not be reflected in your account for a few months. We suggest starting the ECF application immediately and using resources to handle the ECF submissions and collect signatures from your employer on your behalf.

MYTH: “Because I’ve been denied in the past means I don’t qualify for PSLF.”

REALITY: The likelihood of approval has significantly increased with the new changes, and Chipper assists borrowers in avoiding common application errors.

One out of every four applicants is denied due to incomplete paperwork. Getting the right support is key. Before the PSLF program was overhauled in the last two years, only 2.7% of applicants were approved for PSLF. Borrowers may be denied for several reasons such as not having the correct type of student loans, specifically Direct Loans, not being enrolled in a qualifying income-driven repayment plan, or failing to make all 120 qualifying payments.

The recent overhaul of the PSLF program enabled borrowers to receive credit toward PSLF on payments that are made late, in installments, or in a lump sum. The new rules also allow borrowers to count late or partial payments and to count certain periods of forbearance or payment suspension toward PSLF.

At Chipper, we simplify the PSLF application process. We have assisted our members in qualifying for over $250 million in student loan forgiveness, and we're constantly refining our tools to make the process even smoother. While achieving forgiveness through PSLF is a journey, it doesn't have to be a difficult one. Chipper members are able to quickly confirm that they're on the path to PSLF eligibility and complete application requirements all in the Chipper app.

Use Chipper for Lower Payments

Chipper can help you find a student loan repayment plan that actually fits into your budget. You simply fill out your information and link your student loan account for us to generate your options in seconds. We help the average student loan borrower save over $300 a month off their student loan monthly payment. Lowering your monthly payment plan can game changing for your personal finance and can be done in minutes! Sign up for Chipper today to get on track with your student loans.

Use Chipper for The Best Path to Forgiveness

Finding your path to student loan forgiveness is easier than ever before. Chipper helps members find better Income-Driven Repayment (IDR) plans every day. Once enrolled in an eligible repayment plan, we can help you explore your forgiveness options and understand your path towards forgiveness. Sign up with Chipper today and get on track with your student loans.

Use Chipper for Round-Ups

Paying off your student loans doesn’t have to be a long and painful journey. Round-Ups are a way to directly pay off your loans with your everyday spending! By tracking your linked spending account(s), we will calculate the rounded up amount from each transaction in a week (IE spending $4.28 would add $0.72 to the weekly amount). We then initiate a payment towards your student loan for the weekly amount. Get chipping away on your student loans with Chipper today.

Use Chipper for Public Service Loan Forgiveness (PSLF)

The Public Service Loan Forgiveness (PSLF) program was created to provide relief to borrowers aiding the public sector. Unfortunately, 30% of applicants are denied due to incorrect paperwork. We can help! Chipper was created to solve this issue by assisting borrowers in understanding their options as well as allowing forgiveness eligible users enroll into the best forgiveness program available. Sign up for Chipper today to see your student loan forgiveness options and get the forgiveness you deserve.

Use Chipper for Teacher Loan Forgiveness (TLF)

The Teacher Loan Forgiveness (TLF) program was created to enable teachers working in Title 1 schools to receive student loan forgiveness of up to $17,500 (depending on their teaching subject). Chipper has helped teachers from all over the country qualify for TLF program and can help you get the forgiveness you deserve today. Find out if you qualify for forgiveness in minutes with our employer search tool.

Don't worry.
Be Chipper.
Get Started