Public Service Loan Forgiveness: What it is and How It Works

You may have heard that some borrowers who have careers in the nonprofit sector after graduation can retire their student loan debt through the Public Service Loan Forgiveness (PSLF) program after meeting certain eligibility requirements. This program is designed to encourage borrowers of any discipline and degree program (including dentistry) to enter and remain in the nonprofit sector for at least 10 years, with the promise to forgive any remaining federal student loan debt at that time completely tax-free—meaning the forgiveness amount is not considered taxable income.

PSLF may be of great interest to health professions students interested in the nonprofit sector, such as the government or nonprofit community-based health clinics. It may also be of interest to dental school graduates who enter academic dentistry after they graduate.

The program is still very new, as it was only enacted in 2007, and it takes borrowers at least 10 years to qualify, hence the number of borrowers qualifying to date has been quite small. In addition, there have been several proposals to change the program since its inception, including proposals to completely eliminate PSLF. Also, the percentage of borrowers whose PSLF applications were denied this past year was extremely high. All of this has led to all sorts of inaccurate and incomplete information, or “noise,” about PSLF. 

Since there is a good chance you may have to borrow to help finance your dental education, we suggest you consider the following if you think you may be interested in PSLF to help retire your debt:

  1. Remember to always borrow responsibly and never borrow more than you really need. Your financial aid office can help you determine the best funding sources available for you, including any scholarships and grants they may have. That should help limit what you borrow.

  2. While this may sound obvious, plan to pay back what you borrow, remembering that responsible borrowing leads to responsible repayment. Dental school graduates were paying off their student loans in a timely manner long before this program even began. However, keep up your radar for information on PSLF and work closely with your financial aid office to ensure you get the most accurate and complete information about PSLF to see if this might be a program of interest to you.

  3. Be careful where you get your information about PSLF. The eligibility requirements are actually straightforward, and you can even track your eligibility every year when you enter your repayment. That way, you always know exactly how many qualifying payments you have made to date—and how many more you need to make before you can submit your PSLF and know you will be approved.   

  4. Lastly, changes to loan programs tend to not go into effect immediately and, when they do, usually they only impact first-time borrowers—yet another reason to work closely with your financial aid office to find out up-to-date information about PSLF.