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PSLF (Public Service Loan Forgiveness)
Definition
A program forgiving federal student loans after 10 years of payments while working in public service.
Explanation
PSLF forgives remaining Direct Loan balances after 120 qualifying payments (10 years) while employed full-time by a government agency or non-profit organization. Payments must be made under an IDR plan. Annual employment certification is required.
The forgiven amount under PSLF is NOT taxable as income, making it extremely valuable for public service workers.
Example
Social worker earning $50,000 with $70,000 in loans makes 120 IDR payments (~$300/month) for 10 years at a non-profit. Remaining ~$40,000 forgiven tax-free.