The Evolving PSLF Employment Certification Form & Independent Contractors

Through the years, the PSLF Employment Certification Form (ECF) has received further clarification of independent contractors and how exactly they fit within the PSLF rules.

In the earliest PSLF ECF (Exp. Date 11/30/2014), there was little guidance concerning independent contractors, besides what was just in the law. On page 2, it says:

“For purposes of eligibility for PSLF, full-time employment is defined as:

(1) Working in qualifying employment in one or more jobs for the greater of:

(A) An annual average of at least 30 hours per week or, for a contractual or employment period of at least 8 months, an average of 30 hours per

week; or”

On page 3, it also says about the same:

“Full-time means working in qualifying employment in one or more jobs for the greater of:

• An annual average of at least 30 hours per week or, for a contractual or employment period of at least 8 months, an average of 30 hours per week; or”


In the next PSLF ECF (Exp. Date 12/31/2017), which we described in our previous post, there was additional information about a “contracted employee.” This confusing term combines the opposing (under IRS definitions) words “contract” and “employee.” Under PSLF law, employee is defined as: “Employee or employed means an individual who is hired and paid by a public service organization.” So PSLF has a different definition of employee than the IRS. Back to the “contracted employee” term, page 5 of this PSLF ECF version states:

“Employment Eligibility. To qualify for PSLF, you must be an employee of a qualifying organization. An employee is someone who is hired and paid by the organization. You may physically perform your work at a qualifying or non-qualifying organization, so long as your employer is a qualifying organization. If you are a contracted employee, the organization that hired and pays you must qualify, not the organization where you perform your work. The type or nature of employment with the organization does not matter for PSLF purposes.”

Now the most recent PSLF ECF (Exp. Date 05/31/2020), perhaps in response to the confusion surrounding the term “contracted employee,” the Department of Education has trashed that term.  Instead, we have a better idea that they were talking about an independent contractor on page 5: “If you are working at the location of or with an organization under contract with your employer…”. Hooray for clarity! The entire section from page 5 of the ECF is below:

EMPLOYMENT ELIGIBILITY. To qualify for PSLF, you must be an employee of a qualifying employer. An employee is someone who is hired and paid by the employer. You may physically perform your work at a qualifying or non-qualifying organization, as long as you are an employee of a qualifying employer. If you are working at the location of or with an organization under contract with your employer, the organization that hired and pays you must be a qualifying employer, not the organization where you perform your work.”

We’ll keep track of the ECF versions and keep you updated! Let us know your thoughts below.

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  • Carrie Scott

    So to be crystal clear here, my understanding is that if I form a single member LLC and work as a freelancer, and my client organizations are all qualifying employers under the PSLF rules, I should have no problem with the ECF so long as my collective hours exceed 30 hours per week. My wages would still be reported on my annual 1099, so while I am not a direct employee of the organization (the funds pass through my LLC to my personal tax return), the organization counts as an employer under PSLF rules. Is this correct?

    • askhftd

      This sounds a lot like the government contractor issue, where you’re getting paid by the LLC, which is a for-profit organization (see below).

      From website section about qualifying employment (

      “Government contractors: For-profit government contractors are not qualifying employers. You must be directly employed by a qualifying employer for your employment to count toward PSLF. If you are employed by an organization that is doing work under a contract with a government agency or other organization, then it is your employer’s status, not the status of the organization that your employer has a contract with, that determines whether your employment qualifies for PSLF.”

      Also, under PSLF law (, employee is defined as: “Employee or employed means an individual who is hired and paid by a public service organization.” The “individual” term is right in the definition, so that also makes the LLC difficult if not impossible to fit the definition, despite the flow through-taxes under the IRS.

      We recommend you contact FedLoan Servicing for confirmation of this information. Thanks for dropping by and good luck!!

      • Carrie Scott

        I see your point and this has been my concern as well but I do not think it’s an apples to apples comparison.

        A single member LLC is classified as a disregarded entity, for tax purposes which means that it is not technically a “for profit organization.” Profits are reported as income on the sole member’s tax return.

        Your scenario above would apply, I believe, if I classified my LLC as a corporation which I do not plan to do. There is more information below if you’d like to see it.

        I have called FedLoan Servicing and asked and they told me that “under most circumstances” my assessment would be correct. I just don’t trust their word alone because I don’t think I was speaking with an attorney. I will probably get a consultation just to be sure but I am fairly certain I am in the clear under these rules.

        • askhftd

          The “for-profit organization” part is meant to explicitly identify that the organization is NOT a nonprofit (which would be a qualifying organization). The LLC isn’t a nonprofit, meaning it’s a for-profit organization.

          The PSLF rules are their own animal, as can be seen with its own definition of employee (see above comment), so the focus on how the LLC behaves under the IRS may be misplaced. I understand you’re concern is that the LLC acts just like a sole proprietorship for IRS purposes, but if a qualifying employer is contracting with the LLC, then the LLC is the one who is getting hired and paid. It appears that you, as an individual, are hired and paid by the LLC. If FedLoan Servicing took a look at the employment contract, it sounds like the contract would be between the qualifying employer and the LLC.

          Here’s an old version of the PSLF Q&A (February 3, 2010):

          “Q30: I am employed full-time by a private company, doing work under contract with a state government agency. Does this employment qualify for PSLF?

          A30: No. You must be directly employed by the public service organization.”

          Of course you will need to ultimately consult with FedLoan Servicing and other professionals to be more certain about your situation/hypothetical.

          • Carrie Scott

            OK thanks for the discussion. I have emailed Fedloan Servicing for a written response and will let you know what I hear back! If the LLC arrangement does not work, I suppose I could simply operate as a sole proprietorship with a DBA and that would solve the problem. Would you agree with that?

          • askhftd

            Great, please update us when you hear back! Written response will be better evidence (than phone call) should it ever be needed. This example seems to walk that fine line of qualifying.

            A sole proprietorship should work just fine (where the qualifying organization hires and pays you). Again, a good way to verify is to look at the employment contract terms to see who are the contracting parties.

            Good luck!

          • yanita11

            thanks carrie for doing this legwork. i too am a contract worker with govt / county hospital – i basically just contract directly with them, am neither a proprietor nor incorporated, just a person getting paid and paying quarterly taxes… i’m almost 7 years in paying off loans and at greater than 7% interest rate barely keeping up with the interest, so very much hoping/planning that this job qualifies….

          • Carrie W.

            Yanita I am still waiting on an official answer to this question from my Congressman’s office. They have been very helpful so far in helping navigate the labyrinthine processes set up by the DOE and FedLoan. That said, I’m fairly confident at this point in the guidance that Hold Fast To Dreams has offered. As you can see it’s very well researched. I can see from your previous posts that you’ve been getting certified all along so I would hope that you are in a good spot.

          • yanita11

            Ha I just read my prior posts and see that I am perseverating…. hopefully at the end of all of this we are all in a good spot? Agree on the guidance of HFTD! And am generally thankful for the internet… educational and community building. We’re all just trying to do the right thing…. 🙂

      • Carrie Scott

        Here is some additional information from the IRS. Given that I will not have additional employees or have any excise tax liability, I believe I would be using my SSN as the LLC’s EIN, which makes it even more clear that the employer would be paying me directly.

  • Carrie Scott

    Hi again: I thought it might be useful to provide an update to my ongoing discussions with FedLoan Servicing on this matter. So far I have called them twice and emailed once, and each time I have received different information regarding an independent contractor’s eligibility. This is very frustrating given that I can’t move forward with various professional engagements until I get a clear answer, and I’m sure it’s equally frustrating to other readers of this blog. I am continuing to research and will be consulting with a student loan attorney soon but in the meantime you may find it useful to know:

    I received a written communication from FedLoan Servicing this morning suggesting that independent contractors would *never* be eligible for PSLF. Their exact statement was this:
    “To qualify based on employment merit, you must be employed by the qualified
    entity: Contract employees, Per Diem employees, Part-Time employees, or
    Temp Employees do not qualify. You must be employed full-time (in any
    position) by a public service organization, or must be serving in a full-time
    AmeriCorps or Peace Corps position at the time you make each qualifying

    We know that the above statement is not accurate, at least in part, as the current ECF states:
    “If you are employed in more than one qualifying part-time job simultaneously,
    you may meet the full-time employment requirement if you work a combined
    average of at least 30 hours per week with your employers.”

    Regardless of its accuracy, however, the statement is disconcerting as it comes directly from the loan servicer. While the ECF is very clear that multiple part-time jobs can be combined to meet the full-time requirement it is less clear (in my opinion) as to whether independent contracting qualifies if the contractors income is reported as self-employment through a 1099.

    If you have any guidance as to what steps a borrower can take when they know they are receiving inaccurate information from the servicer, I’d love to have it! As you know the Dept of Ed refers all questions regarding PSLF to the servicer and there doesn’t appear to be a clear method for getting clarification beyond that.

    • askhftd

      Thank you for the update! Since it sounds like you’re getting conflicting information from FedLoan Servicing, you could try to contact the Federal Student Aid Ombudsman Group (see below). They are a part of the Department of Education, so it should be as close to a final answer as possible (without legal resolutions). Please keep us updated on their response! It will help the readers tremendously.

      Postal Mail

      U.S. Department of Education
      FSA Ombudsman Group
      P.O. Box 1843
      Monticello, KY 42633





      • Carrie Scott

        Thank you! I will most certainly do this as I know I am not alone in my confusion. I already reached out to my congressman’s office this morning to see if they can assist as they have a mechanism for “assisting with a federal agency.” Maybe that inquiry will help expedite the process. I’ll keep you updated!

  • Joshua R.I. Cohen

    Independent contractors do not qualify. The non-profit that pays you as an independent contractor is not your employer, they are your client. You are not employed by them. You are a 1099 contractor, not a W-2 employee. Perhaps you should review the IRS code. I think many folks will be disappointed to learn they don’t qualify when they apply for PSLF.