Student loans are the conventional way for those who need the support of covering their educations fees. When grants and scholarships are still not enough to meet your costs federal student loans are an option to help you fill the gap. Earning a degree is a personally fulfilling endeavor. However, after all those long nights and hard work, followed by the joy of graduation from such a university, you know what’s next. It is time to pay back your federal financial aid student loans. Fortunately, the university recruits students and obtains financial aid on their behalf, such as grants, need-based, federal and public service student loan forgiveness programs. Public service student loan forgiveness gives us a large choice of deferment plans with extended repayment terms and makes it less difficult for students to select payment methods. Of course, some federal loan programs recognize students’ financial circumstances, as well.
Choose the right repayment plan
When you first enter repayment, you will be asked by a loan servicer to choose a repayment plan. If you want to change your payment amount for any reason, you can do so by changing your plan. Use the loan calculators or your servicer’s website to see how your monthly payment and the total cost will vary on different payment plans.
In certain situations, your federal student loan can be forgiven, canceled or discharged. To find out if your job status, disability, the closure of your school or other cases, you can get more info in the forgiveness-cancellation section of the Federal Student Aid website. When you think about Student loan forgiveness, you may usually come up with the Public Service Loan Forgiveness Program (PSLF).
What is PSLF?
PSLF is a necessary program while it recognizes that public service is a pursuit of the heart, and is often not lucrative. It enables people to pursue their educations and give back to our society without having to endure the student loan debt for their lifetime.
Public Loan Forgiveness Program, commonly known by its acronym PLFP, was founded on October 1, 2007, to encourage graduates to seek full-time employment in low-income, public service jobs, volunteering for a non-profit organization or even teaching in low-income state schools. Qualifying job for the PSLF Program is not about the specific job that you do for your employer. Instead, it is about who your employer is. Work with the following types of organizations qualifies for PSLF.
The program allows eligible candidates to forgive the remaining balance of their loans after at least ten years of serving full time at a qualifying public service institution and 120 qualifying on-time monthly payments. There is not such a rule that you have to pay all these ten years to receive forgiveness.
This is not all about how many years you have been making payments, but how many payments you have made each month. Therefore, if you haven’t made a payment, or if you switch jobs, your clock is not reset to zero. Your qualifying payments don’t need to be consecutive. Besides all these advantages of the program, people can face difficulties. It is mainly because of the number of people who were able to be qualified. And low approval rates show the fact that the process is too complicated and hard to understand.
Based on a report by the Federal Student Aid office published in Sept. 2018, 70% of Public Service Loan Forgiveness applications were not accepted for not meeting eligibility criteria. Only 0.3% of applicants’ have had the overdue balance of their loans forgiven. Many more applications are still pending.
Will the program be eliminated in the future?
Uncertainty surrounds the future of the Public Service Loan Forgiveness (PSLF) program. You cannot be sure that the PSLF Program will exist by the time you have made your 120 qualifying payments The PSLF Program was created by Congress, and Congress could change or eliminate the PSLF Program. One of President Trump’s suggestions is to get rid of the PSLF program entirely. The forgiveness program is anticipated to cost about $24 billion, and the current budget proposal targets PSLF as a way to cut government costs.
If you’ve worked already a few years in a public service institution and continue making your payments in the hope of loan forgiveness, don’t panic. The Trump Administration claims that current PSLF participants will still be eligible, even if the PSLF is ended as part of the budget reform.
So don’t leave everything, as the Congress hasn’t finalized a budget. Even if that budget proposal is adopted, if you are already in the program and maybe your FedLoan Servicing letter provides you with hope, you may still be eligible for PSLF.
So far, the ambiguity over PSLF comes mainly from the fact that the Department of Education won’t commit to PSLF. However, according to the program’s application, government service, law enforcement, military service, and private not-for-profit jobs qualify. The chances are that if you are employed in these fields, your student loan forgiveness application will be accepted.
Which types of loans are qualified for the Public Service Loan Forgiveness program?
Only 1. Direct Consolidated Loans, 2. Direct Subsidized / Unsubsidized, 3.Direct Stafford Subsidized / Unsubsidized, 3.Direct PLUS loans will be qualified for the Public Service Loan Forgiveness programs. Loans in default not listed above, as well as private and federal loans, do not qualify for PSLF.
To be qualified for this student loan forgiveness program you have to:
- Work in a government institution or for certain types of not-for-profit organization;
- Be a full-time employee, which means that you meet the employer’s definition of full-time or work at least 30 hours per week; you are usually considered to work full-time for the PSLF program, which is greater.
- Work for more than one qualifying part-time job at the same time. You qualify for the full-time work requirement if you work a combined average of at least 30 hours per week.
- Work in a not-for-profit organization, spent time on volunteering in any religious instruction or services may not meet the full-time employment requirement.
- If you have received any non-defaulted loan under William D. Ford Federal Direct Loan (Direct Loan) Program for short Direct Loans, you are qualified for this forgiveness program;
- Qualifying repayment plans involve all of the income-driven repayment plans, which are based on your monthly payment. So, if you repay your loans on an income-driven repayment plan, you can be eligible. These are the loan repayment programs which qualify you for:
- PSLF Income-Contingent Repayment;
- Income-Based Repayment;
- Revised Pay As You Earn;
- Pay As You Earn plans.
If you make qualifying payments, you may be able to receive student loan forgiveness as well. What does it mean? While you make 120 qualifying payments, you may be able to receive loan forgiveness under the PSLF Program.
This kind of payment is a payment that you make under a qualifying repayment plan. You make it for the full amount shown on your bill. You make payment no later than 15 days after your scheduled date. And it is while you work full-time in a qualifying organization, company or agency. You can make these payments only during periods when you should make a payment.