Dealing with Debt

How Does The Public Service Loan Forgiveness Program Work?

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The Public Service Loan Forgiveness Program has already forgiven around $6.8 billion in student debt. Loan consumption comes in different measures. For example, one can use a federal Stafford Loan to pay for college tuition or private student loans to help with rehabilitation or specific career training. However, many students choose to borrow from the federal government’s subsidized and unsubsidized loan programs. These are generous helpings of funds that cover many expenses, including room and board, and textbooks.

There is one program, in particular, that may be worth investigating as a way to pay off your student loans: The Public Service Loan Forgiveness Program. It is available to undergraduate and graduate students working full time for a government agency, healthcare service, a 501(c)(3) nonprofit organization, or an approved public service organization.

It is important to note that the assistance does not cover private student loans. Those are just loans private lenders have made to students or their families and this assistance doesn’t apply to those loans.

What is the Public Service Loan Forgiveness Program?

The program was passed into law through the College Cost Reduction and Access Act of 2007. Its purpose is to encourage professionals like nurses, teachers, and public defenders to stay in the public service sector. It allows them to pay back their federal education loans at a reduced rate.

It works because you have to maintain full-time employment for the forgiveness period of 10 years. This period starts when you receive your loans or the day after they are transferred to you if you are already employed with your new employer. It ends on the seventh anniversary of your loan’s disbursement date (whichever is later).

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To be eligible, you must have taken out and repaid at least $5,500 worth of federal education loans and entered into a qualifying repayment plan with the Department of Education. Borrowers who have submitted PSLF employment certification forms will have their PSLF payment counts automatically adjusted, resulting in automatic student loan forgiveness for borrowers who reach 120 or more “qualifying payments” following the new changes.

The following are examples of qualifying repayment plans:

Payments are made under the Income-Based Repayment Plan, the Pay As You Earn Repayment Plan, and the Revised Pay As You Earn Repayment Plan.

The first step is to qualify for this program and then research repayment plans. There are numerous loan plans on the market today. You will want to make sure that you choose the right plan and make sure that you will qualify for it.

Another consideration is whether you can also borrow your student loans through other means. If you have taken out student loans and have not repaid them, this might be a good situation to use another loan option instead of the public service loan forgiveness program.

Notably, a student debt relief service will only help you if you have already tried to work with the Department of Education. Otherwise, it will be complicated for you to get an extension or change your loan agreement.

The application process for this program requires that you submit an Employment Certification form after every two years. The department can request more information when it needs more information about your employment history and repayment history.

How Much Will It Cost Me To Get This Program?

The program can be a good deal. If you are eligible for public service employment, your monthly payments can potentially be eliminated; that is a considerable benefit to anyone with student loan debt.

Regardless of how much you owe, it will be cheaper to qualify for the program than to make monthly payments. Therefore, if you have a significant amount of student loan debt, it is well worth your time to research the program and see if you qualify for it.

While there is no upfront cost for the program, the government can take up to five years to process your application and loan forgiveness after you theoretically qualify for it. Therefore, if you want to use the program, you should start the application process as soon as possible, and also be able to make the payments every month while you’re in the application and approval process.

Author: Lauralynn Mangis
Lauralynn is the Online Marketing Specialist for Advantage CCS. She is married and has two young daughters. She enjoys writing, reading, hiking, cooking, video games, sewing, and gardening. Lauralynn has a degree in Multimedia Technologies from Pittsburgh Technical College.