Public Service Loan Forgiveness: Questions and Answers

By on January 18th, 2018

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There are a lot of public service loan forgiveness (PSLF) programs. That is why it is easy to get mixed when reading the application requirements. Pursuing this program is not a 100% way to get out of debt. But no fears – we have simplified it for you.  We have the most widespread questions dealing with  PSLF and share these answers with you.

Is PSLF the proper decision for you?

Before deciding to dive into this program, check how many student loans might have remained to be forgiven after ten repayment years. The following program is most suitable if your high loan balances are relative to your earnings.  But if your salary is high, you might not be qualified for loan forgiveness. In such case, you will also have to repay big sums of the loan balance in ten years.  Even if you save on household expenses all these ten years, it will not be enough to repay the whole sum.

It is possible to figure out your position calculating how big will you balance be after 120 payments or by comparing various student loan repayment plans.

What is the PSLF Program?

The PSLF Program is a federal program that forgives loan debts of a student if he/she is employed in the non-profit or public sphere. The program is created for student loan debt holders in different areas of work, with various loan types, who make qualifying payments.

What is required for eligible payments?

Without any doubt, you would like to see money in an instant. But there is no such thing as free lunch. To qualify, a student should meet the main criteria: to be enrolled in a qualifying repayment plan and to have 120 monthly payments completed.

The qualifying payment plans are:

  • IBR deciphered as Income-Based Repayment;
  • ICR, that is Income-Contingent Repayment;
  • standard repayment;
  • REPAYE, meaning Revised Pay As You Earn;
  • PAYE, that means Pay As You Earn;
  • any other payment plan, which includes monthly payments that exceed or equal to standard  monthly repayments.

Regardless your plan type, you are ought to have made timely 120 monthly payments to qualify. In addition, the payments can be counted as qualifying only if they were delivered after October 1, 2007.

REPAYE, PAYE, IRB, and ICR are most suitable for debt holders, that want to increase the amount forgiven after the period of 120 months. The following plans are most plausible, as they minimize monthly payments.

If you want to apply for federal student loans and wonder what benefits they offer, check this post about federal student loans advantages.

Which employment plan is suitable for PSLF?

The PSLF Program is suitable only for employees engaged in:

  • local, federal, tribal, or state government organizations;
  • a 501(c)3 nonprofit;
  • a full-time capacity in AmeriCorps, or the Peace Corps;
  • a nonprofit that is not defined as 501(c)3 but meets other public service requirements.

It does not matter what job you perform if the agency or organization is in one of the aforesaid categories. Yet, if your job has a religious nature at qualifying organization, the working hours are not accounted.

Which loans are eligible?

Eligibility for a loan is one more criterion you should take into account. Not every federal student loan is eligible.

PSLF eligible loans are federal Direct Un- and Subsidized Stafford/Direct Loans, PLUS Loans and Consolidations Loans.

Pay attention that neither Federal Family Education Loans (FFEL) nor Federal Perkins Loans are eligible for PSLF. Though, the above loans can become eligible if they have been united into a Direct Consolidation Loan.

What should I do to apply?

This program was launched not that long ago, in 2007. That is why there is still no student whose debts were completely forgiven. PSLF application still does not exist. But you can make a couple of steps towards PSLF Program.

Fill in the Employment Certification for PSLF form each year. The form shows whether you have worked the needed number of hours on the eligible job each year. Your employer should fill in the major part of the form. Your servicer will monitor your eligibility according to this form.

  1. Better make two copies of this form every year, in case it needs repeated verification.
  2. Make sure you work in one of the qualifying organizations stated above.
  3. If your employer is not sure about some program aspect, take advantage of the guide written by Consumer Financial Protection Bureau.

You can use PSLF calculator to count the possible forgiven debt with PSLF. It can estimate how much you could save with the help of PSLF program.

Do not forget, that this calculator doesn’t guarantee your eligibility or debt amount, that could have been forgiven. Visit PSLF calculator web page for more information.

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