NASFAA Report: Continue Public Service Loan Forgiveness Program, With Modifications

Contact: Beth Maglione
VP of Communications
(202) 785-6944 

New Policy Report Recommends Ways to Make PSLF More Sustainable, Effective 


July 30, 2014 -- A new report authored by a broad cross section of the nation’s financial aid administrators makes key recommendations for continuing and improving the Public Service Loan Forgiveness program. 

The Public Service Loan Forgiveness (PSLF) program, established in 2007, encourages student borrowers to work in the public sector. Qualifying borrowers may have their Direct Loans forgiven after 10 years of full-time service in an eligible job. Currently, qualifying employers include federal, state, or local government agencies and tax-exempt 501(c)(3) not-for-profit organizations.

In spring 2014, the Board of Directors of the National Association of Student Financial Aid Administrators (NASFAA) convened a PSLF Task Force to develop recommendations for improvement and to strengthen PSLF’s potential for long-term viability. The task force comprised a geographically diverse group of financial aid professionals from all types of postsecondary institutions, with a particular emphasis on institutions serving graduate and professional students.

“PSLF offers an important incentive for borrowers to enter into lower-paying public service work,” said NASFAA President Justin Draeger. “However, in recent years policymakers have expressed concern about the potential for some borrowers to receive loan forgiveness despite earning a substantial income. It is vital to the program’s long-term sustainability that we take steps to ensure the integrity of the program.”

“NASFAA’s PSLF Task Force was asked to examine the intent and benefits of the program and related consumer disclosures, identify needed data elements to more accurately assess its success, and consider modifications and improvements,” said Task Force Chair Candi Frazier.

In June the NASFAA Board accepted and endorsed the recommendations provided by the task force that are detailed in this report:

  1. Continue the Public Service Loan Forgiveness Program. 
  2. Retain the Eligibility Criteria to Qualify for Public Service Loan Forgiveness. In the absence of good data about the potential participation in PSLF, the definitions of: qualifying full time work, qualifying employment, qualifying monthly payments, qualifying loan types, and length of service should remain unchanged.
  3. Institute Limits on the Amount of Forgiveness. Allow forgiveness of up to 100 percent of a qualifying loan balance that does not exceed the independent undergraduate aggregate Stafford Loan limit (currently $57,500) and allow additional forgiveness of 50 percent of any remaining qualifying loan balance, conditioned that total forgiveness cannot exceed the graduate aggregate Stafford Loan limit (currently $138,500). Additionally, borrowers with a balance remaining after receiving PSLF should be allowed to continue utilizing an income-based repayment plan to pay their remaining balance, and potentially could qualify for additional loan forgiveness under that plan.
  4. Keep Public Service Loan Forgiveness Untaxed. Taxing borrowers on the amount of forgiveness received is counterintuitive, as it both provides a disincentive for high-debt borrowers to take advantage of the program and creates a sudden financial hardship for borrowers receiving forgiveness. 
  5. Make Public Service Loan Forgiveness Program Data Public. The designated PSLF servicer should make public PSLF data, to allow interested constituencies the opportunity to more accurately evaluate the program, its effectiveness as an incentive to pursue public service work, and its cost.
  6. Strongly Encourage Annual Submission of Employment Certification Forms. Annual form completion would ensure that the designated PSLF servicer could monitor an eligible borrower’s repayment and employment.
  7. Increase Communication about Public Service Loan Forgiveness. PSLF should be more widely publicized by the Department of Education and the loan servicers as an incentive for borrowers and those considering enrollment in higher education to enter public service work. 

To request an interview with a NASFAA spokesperson, please email or call (202) 785-6944.


The National Association of Student Financial Aid Administrators (NASFAA) is a nonprofit membership organization that represents nearly 20,000 financial aid professionals at approximately 3,000 colleges, universities, and career schools across the country. NASFAA member institutions serve nine out of every ten undergraduates in the U.S. Based in Washington, DC, NASFAA is the only national association with a primary focus on student aid legislation, regulatory analysis, and training for financial aid administrators. For more information, visit