Link to an amendment published at 87 FR 66063, Nov. 1, 2022.

1. (a) General. The Public Service Loan Forgiveness Program is intended to encourage individuals to enter and continue in full-time public service employment by forgiving the remaining balance of their Direct loans after they satisfy the public service and loan payment requirements of this section.

2. (b) Definitions. The following definitions apply to this section:

   AmeriCorps position means a position approved by the Corporation for National and Community Service under section 123 of the National and Community Service Act of 1990 (42 U.S.C. 12573).

   Eligible Direct loan means a Direct Subsidized Loan, Direct Unsubsidized Loan, Direct PLUS loan, or a Direct Consolidation loan.

   Employee or employed means an individual who is hired and paid by a public service organization.

   Full-time (1) means working in qualifying employment in one or more jobs for the greater of—

   1. (i)

      1. (A) An annual average of at least 30 hours per week, or
      2. (B) For a contractual or employment period of at least 8 months, an average of 30 hours per week; or
   2. (ii) Unless the qualifying employment is with two or more employers, the number of hours the employer considers full-time.
   3. (2) Vacation or leave time provided by the employer or leave taken for a condition that is a qualifying reason for leave under the Family and Medical Leave Act of 1993, 29 U.S.C. 2612(a)(1) and (3) is not considered in determining the average hours worked on an annual or contract basis.

   Government employee means an individual who is employed by a local, State, Federal, or Tribal government, but does not include a member of the U.S. Congress.

   Law enforcement means service performed by an employee of a public service organization that is publicly funded and whose principal activities pertain to crime prevention, control or reduction of crime, or the enforcement of criminal law.

   Military service, for uniformed members of the U.S. Armed Forces or the National Guard, means “active duty” service or “full-time National Guard duty” as defined in section 101(d)(1) and (d)(5) of title 10 in the United States Code, but does not include active duty for training or attendance at a service school. For civilians, “Military service” means service on behalf of the U.S. Armed Forces or the National Guard performed by an employee of a public service organization.

   Peace Corps position means a full-time assignment under the Peace Corps Act as provided for under 22 U.S.C. 2504.

   Public interest law refers to legal services provided by a public service organization that are funded in whole or in part by a local, State, Federal, or Tribal government.

   Public service organization means:

   1. (i) A Federal, State, local, or Tribal government organization, agency, or entity;
   2. (ii) A public child or family service agency;
   3. (iii) A non-profit organization under section 501(c)(3) of the Internal Revenue Code that is exempt from taxation under section 501(a) of the Internal Revenue Code;
   4. (iv) A Tribal college or university; or

   5. (v)

      1. (A) A private organization that provides the following public services: Emergency management, military service, public safety, law enforcement, public interest law services, early childhood education (including licensed or regulated child care, Head Start, and State funded pre-kindergarten), public service for individuals with disabilities and the elderly, public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations, as such terms are defined by the Bureau of Labor Statistics), public education, public library services, school library or other school-based services; and
      2. (B) Is not a business organized for profit, a labor union, or a partisan political organization.

3. (c) Borrower eligibility.

   1. (1) A borrower may obtain loan forgiveness under this program if he or she—

      1. (i) Is not in default on the loan for which forgiveness is requested;

      2. (ii) Is employed full-time by a public service organization or serving in a full-time AmeriCorps or Peace Corps position—

         1. (A) When the borrower makes the 120 monthly payments described under paragraph (c)(1)(iii) of this section;
         2. (B) At the time of application for loan forgiveness; and
         3. (C) At the time the remaining principal and accrued interest are forgiven.
      3. (iii) Makes 120 separate monthly payments after October 1, 2007, on eligible Direct loans for which forgiveness is sought. Except as provided in paragraph (c)(2) of this section for a borrower in an AmeriCorps or Peace Corps position or who qualifies for partial repayment of his or her loans under the student loan repayment programs under 10 U.S.C. 2171, 2173, 2174, or any other student loan repayment programs administered by the Department of Defense,, the borrower must make the monthly payments within 15 days of the scheduled due date for the full scheduled installment amount; and

      4. (iv) Makes the required 120 monthly payments under one or more of the following repayment plans—

         1. (A) Except for a parent PLUS borrower, an income-based repayment plan, as determined in accordance with § 685.221;
         2. (B) Except for a parent PLUS borrower, an income-contingent repayment plan, as determined in accordance with § 685.209;
         3. (C) A standard repayment plan, as determined in accordance with § 685.208(b); or
         4. (D) Except for the alternative repayment plan, any other repayment plan if the monthly payment amount is not less than what would have been paid under the Direct Loan standard repayment plan described in § 685.208(b).

   2. (2) If a borrower makes a lump sum payment on an eligible loan for which the borrower is seeking forgiveness by using all or part of a Segal Education Award received after a year of AmeriCorps service, or by using all or part of a Peace Corps transition payment if the lump sum payment is made no later than six months after leaving the Peace Corps or if a lump sum payment is made on behalf of the borrower through the student loan repayment programs under 10 U.S.C. 2171, 2173, 2174, or any other student loan repayment programs administered by the Department of Defense,, the Secretary will consider the borrower to have made qualifying payments equal to the lesser of—

      1. (i) The number of payments resulting after dividing the amount of the lump sum payment by the monthly payment amount the borrower would have made under paragraph (c)(1)(iv) of this section; or
      2. (ii) Twelve payments.
   3. (3) The Secretary considers lump sum payments made on behalf of the borrower through the student loan repayment programs under 10 U.S.C. 2171, 2173, 2174, or any other student loan repayment programs administered by the Department of Defense, to be qualifying payments in accordance with paragraph (c)(2) of this section for each year that a lump sum payment is made.
4. (d) Forgiveness Amount. The Secretary forgives the principal and accrued interest that remains on all eligible loans for which loan forgiveness is requested by the borrower. The Secretary forgives this amount after the borrower makes the 120 monthly qualifying payments under paragraph (c) of this section.

5. (e) Application.

   1. (1) After making the 120 monthly qualifying payments on the eligible loans for which loan forgiveness is requested, a borrower may request loan forgiveness on a form provided by the Secretary.

   2. (2) If the Secretary determines that the borrower meets the eligibility requirements for loan forgiveness under this section, the Secretary—

      1. (i) Notifies the borrower of this determination; and
      2. (ii) Forgives the outstanding balance of the eligible loans.

   3. (3) If the Secretary determines that the borrower does not meet the eligibility requirements for loan forgiveness under this section, the Secretary resumes collection of the loan and grants forbearance of payment on both principal and interest for the period in which collection activity was suspended. The Secretary notifies the borrower that the application has been denied, provides the basis for the denial, and informs the borrower that the Secretary will resume collection of the loan. The Secretary may capitalize any interest accrued and not paid during this period.

      (Authority: 20 U.S.C. 1087e(m))

[73 FR 63256, Oct. 23, 2008, as amended at 74 FR 56005, Oct. 29, 2009; 77 FR 76414, Dec. 28, 2012; 80 FR 67242, Oct. 30, 2015; 85 FR 49821, Aug. 14, 2020]