A federal program called Public Service Loan aims to attract students to low-paying jobs like government, teaching, nursing, firefighting, public interest law, etc. According to forgiveness rules, students should perform ten years of service in government or nonprofit organizations. Public Service Loan Forgiveness is an excellent option for students who want to pursue a career in public organizations. However, Kristin Bhaumik, who is the financial aid office director of Michigan University, claimed that ten years is a long time to eliminate student loan debt. However, today, most of the students try to be eligible for this forgiveness program.
Initially, the Public Service Loan Forgiveness program started to operate in 2007. It means first students had benefited from Public Service Loan in 2017. According to the info from the Department of Education, only 1% of students have become eligible for forgiveness. Most of the borrowers got their applications denied because they could not meet the requirements of the program. To qualify for loan forgiveness, you need to follow all the rules. You can eliminate your student loan debt if your loan is part of the Direct Student Loan. If you own a Private Student Loan, you need to search for other ways to lower your student loan balance.
The other way to become eligible for Public Service Debt Forgiveness is to consolidate your other federal student loans. It includes Federal Family Student Loan, Perkins Loans, and several other ones. You need to consolidate your student loans as soon as possible. When you consolidate loans, it will erase all the progress to student forgiveness. We recommend you not to consolidate Perkins Loans. You can get forgiveness after five years of service. Therefore, it is better to pursue public service for five years instead of student debt consolidation.
How to qualify for Public Service Loan Forgiveness?
Your employer plays an essential role than your job in the requirements of Public Service Loan Forgiveness. If you want to be eligible for the Public Loan Forgiveness program, your employers should be government or nonprofit organizations. Also, not-for-profit organizations should have 501(c)(3) status. If it does not contain that status, it should provide public service. Secondly, it should be the Peace Corps or AmeriCorps. While applying for the student loan forgiveness program, you will include the certification form. In that form, you need to confirm that your employer is a government or nonprofit organization. You will send that form to FedLoan Servicing. FedLoan oversees the whole process for the Department of Education.
Additionally, do not forget to send a new form if you change your jobs. It will ensure that you are on the right track for forgiveness. It is not a requirement to submit that form every year. However, if you do, it will make sure that all your records are accurate. You can apply for PSLF once you are sure that your employer is eligible for the program. You need to work full time at one of the qualifying organizations. It makes at least 30 hours a week. Or you can work part-time in two different jobs. But in the end, working hours should not be less than 30 hours per week. In that case, you can also qualify for PSLF.
The next important factor to be eligible for PSLF is about a student loan repayment plan. You need to have ten years standard repayment plan. And it should be income-driven repayment. You will gain a high chance of eligibility if you make your payments income-driven. Extended or graduated federal compensation will not help you to qualify for Public Service Loan Forgiveness. However, according to Temporary Expanded PSLF, you may still be eligible for those repayment plans.
To become eligible for PSLF, you need to make 120 monthly payments. While fulfilling your repayment plan, make sure that you pay for the full amount. Do not pass the deadlines, and be careful about the dates. In order not to face any problems, it is better to pay fifteen days before the due date. Keep in mind that extra payments will not count as qualified ones. You need to make payment only the required amount. Also, if you have made payments during school years or in deferment, those payments will not count as well.
Consecutive payments are not a requirement for you. You may fulfill qualifying payment, then make a pause, and continue your payments. You can switch to another job and still qualify for the PSLF. However, all employers should be eligible for the Public Loan Forgiveness program. Otherwise, your payments will not count as qualified.
Once you know all the requirements mentioned above, you can apply for the Public Service Loan Forgiveness program. During the application process for Public Service Loan Forgiveness, you need to have a full-time job. And your employer should be a public or nonprofit organization. In other words, employers should be eligible for application. The borrower must submit employer certification along with the form. If you have changed your job during the repayment period, you need to provide certification for all employers. The described process may be challenging for borrowers. But the Congress may make some changes to the application process. Do not forget to contact your student loan services if you get any confusing replies or information.
Submitting a certification form once for each employer is enough. It means, if you update your papers regularly, providing certification for your current employer is enough. You will get a notification from FedLoan Servicing when they receive your application. It is not a requirement to make payments during your application process.
What happens when you do not qualify for PSLF?
If you could not meet the requirements of Public Service Loan Forgiveness, do not worry. There are other options for you to erase your student loan. You can search for different ways, and we are sure there will be the best option for your case. Do not forget that PSLF is not the only forgiveness program. But it is the most popular one. Therefore, each year, the Department of Education gets millions of applications. However, only less than 1% of borrowers manage to eliminate their student debt. Be careful about student loan scams while searching for the right student relief program for your case.
Whichever forgiveness program you choose, we recommend you to choose an income-driven payment plan. With the income-driven repayment plan, you will erase your student debt within 20 or 5 years. However, there is one difference between other forgiveness programs and PSLF. Forgiven amount in PSLF is not taxable, but it is payable in other forgiveness programs. Also, you can consider student loan debt refinancing. It will help you to lower the interest rate. You will become debt-free quickly. However, it also contains some drawbacks. Once you refinance your loan, there will be no return. If you apply for refinancing, you will no longer be able to use it for forgiveness programs. At the same time, you will not benefit from the income-driven repayment plan.
Overall, the application process and qualifying for Public Service Loan Forgiveness is long and challenging. But it is real, and there are lots of people who have benefited from that forgiveness. If you plan to apply for PSLF, be ready for both ups and downs.