I know that this is a topic for all of you that are suffering from student loan debt. I wanted to talk about this one just a little bit to enlighten some of you that are inquiring about Public Service Loan Forgiveness. Let’s break away from soap talk for a few minutes. I think this topic is important enough to discuss. Most of you that have tried to apply for a business loan to fund your business may have been pushed by your loan officer to pay down on your student loan debt. My full time job is a Student Loan Coordinator at a Community College and I am familiar with most of the questions you have. Please read the entirety of this post because it contain everything you need to know about Public Service Loan forgiveness. If you have any comments, please add them to the left. Please, let me know if this information was helpful and informative.
Student Loan Debt Statistics
It is estimated that the average amount a person owes in student loan debt is about $30,000 or more. 60% of college students borrow money to help pay for college cost, while half of those take out loans to pay for living expenses and transportation. 14% of outstanding borrowers who have at least one past due loan will go into default. The average student loan debt is increasing while the average salaries for Americans have decreased by 10%. We are in a serious crisis and the only people who cares are the ones who are paying their loans back.
It is nearly impossible to file for bankruptcy on student loans. These debts can continue to grow when a borrower is unable to pay and can even follow borrowers until death. 7% (7 million) borrowers who have defaulted have low credit scores and have jeopardized their credit worthiness. Most employers run credit checks on applicants before hiring or even promoting them which makes it nearly impossible to get a higher paying job to help repay these debts. It is in the borrower’s best interest to educate themselves on how to effectively pay these loans back without going into default.
What is Public Service Student Loan Forgiveness?
There are several ways to lower your student loan debt but one way in particular is getting a lot of attention by public workers. Everyone wants to know about getting their student loan debt erased. Well, let’s discuss what that really mean. Public Service Student Loan Forgiveness is exactly what it state it is, if you are a person that works for a public service company you can apply to have your student loans forgiven after a certain amount of years. You must be employed full-time (in any position) by a public service organization, or must be serving in a fulltime AmeriCorps or Peace Corps position.
Here are the types of organizations that meet the definition of “public service organization” for purposes of the PSLF (Public Service Student Loan Forgiveness) Program:
- A government organization (including a federal, state, local, or tribal organization, agency, or entity; a public child or family service agency; or a tribal college or university)
- A not-for-profit, tax-exempt organization under section 501(c)(3) of the Internal Revenue Code
- A private, not-for-profit organization (that is not a labor union or a partisan political organization) that provides one or more of the following public services:
- Emergency management
- Military service
- Public safety
- Law enforcement
- Public interest law services
- Early childhood education (including licensed or regulated health care, Head Start, and state funded prekindergarten)
- Public service for individuals with disabilities and the elderly
- Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations)
- Public education
- Public library services
- School library or other school-based services
I work for one of these companies, what do I do next?
You must meet your employer’s definition of full-time. However, for PSLF purposes, that definition must be at least an annual average of 30 hours per week. For purposes of the full-time requirement, your qualifying employment at a not-for-profit organization does not include time spent participating in religious instruction, worship services, or any form of proselytizing (advocating or promoting services). If you are a teacher or other public service organization employee who works under contract for at least eight out of 12 months, you meet the full-time standard if you work an average of at least 30 hours per week during the contractual period and receive credit by your employer for a full year’s worth of employment. If you are employed in more than one qualifying part-time job at the same time, you may meet the full-time employment requirement if you work a combined average of at least 30 hours per week with your employers.
Only Direct Loans will qualify for the PSLF program, if you have other loans that are considered non-direct loans like Perkins loans for example, must be consolidated. A loan consolidation is a federal loan made by the U.S. Department of Education that allows you to combine one or more federal student loans into one new loan. As a result of consolidation, you will have to make only one payment each month on your federal loans, and the amount of time you have to repay your loan will be extended. If you are not sure if all of your loans are direct loans, you can log into the www.studentloans.gov website and check your specific loan types. If you do not have a FAFSA username and password to log on, just click Create an FSA ID. Once you create an FSA ID, you can click Tools and Resources, then click My Financial Aid History. All of your loans should say Direct Stafford Loan, if it does not say that then you must consolidate your loans.
Any non-defaulted Direct Loan is eligible for loan forgiveness. The Direct Loan Program includes the following loans:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans—for parents and graduate or professional students
- Direct Consolidation Loans
NOTE: Parents who received a Direct PLUS Loan may qualify for forgiveness of the PLUS loan, if the parent borrower—not the student on whose behalf the loan was obtained—is employed by a public service organization
If you find out that one or more of your loans are in default, STOP NOW!! You must contact your lender immediately to get those loans out of default first before you go any further. If you are not in default, PROCEED. To consolidate your non-direct loans, you must complete a direct loan consolidation form. I will attach all forms at the end of this book for your convenience.
Why do I need to consolidate my loans?
If you are wondering, do I really need to consolidate my loans? The answer is simply yes if you want to apply for the PSLF program. Loans made under other federal student loan programs may become eligible for PSLF if they are consolidated into a Direct Consolidation Loan. However, only payments made on the Direct Consolidation Loan will count toward the required 120 qualifying payments. The following loans may be consolidated into a Direct Consolidation Loan:
- Federal Family Education Loan (FFEL) Program loans, which include the following:
- Subsidized Federal Stafford Loans
- Unsubsidized Federal Stafford Loans
- Federal PLUS Loans—for parents and graduate or professional students
- Federal Consolidation Loans (excluding joint spousal consolidation loans)
- Federal Perkins Loans
- Certain Health Professions and Nursing Loans
NOTE: To consolidate a Federal Perkins Loan or Health Professions or Nursing Loan into a Direct Consolidation Loan, you also must consolidate at least one FFEL Program loan or Direct Loan. If you are unsure about what kind of loans you have, you can find that information at StudentAid.gov/login.
As part of your loan consolidation application process, you must pick a repayment plan. I would suggest to pick the income based repayment plan because your payments are simply based on your yearly salary. For those of you that have low income, this is a win-win. Your payments could be as low as $0 – $50 a month depending on how much you make. This is also good because if your income change because you changed jobs or got demoted, you can just simply report the income change and they will recalculate it.
There are several others to choose from, make sure you read through all options and pick the one that best fit your particular situation. Best practice is to pick a plan, if you do not pick one you would be placed in the regular plan by default. Don’t be upset when you receive your first payment that’s about $300 because you didn’t choose a repayment plan. If this happens, just call your lender and let them know that you want to change your repayment plan. The worst thing that you want to do is ignore it, your loans will go into default if you do this. Then you will have a big headache on your hands.
Ok, I Got All My Loans Consolidated, What do I Do Next?
After you have received confirmation from your lender that your loan consolidation application has been approved. Your next step is to print the Employer Certification Form and complete it. You must fill out the first page and then take the second page to your human resource office and let them fill it out. You may have to give them information on why they have to complete the form. It may take several days for them to complete, so you may want to drop it off like on a Monday so you can get it back by Wednesday. After you receive the form from your employer, double check to make sure everything has been completed correctly before you send it in. You can either fax it or mail it in. I faxed mine and got a response back within 10 days. You will receive an email or letter depending on how you set up to receive correspondence from your lender.
What Is Required of Me Under the PSLF Program?
You must have made 120 separate monthly payments on the Direct Loans for which you are requesting forgiveness. Payments made before this date do not count toward meeting this requirement. Each of the 120 qualifying payments must be made for the full scheduled installment amount and no later than 15 days after the scheduled payment due date. The 120 required payments do not need to be made consecutively. The 120 required payments must be made under one or more of the following Direct Loan Program repayment plans:
- Revised Pay As You Earn Repayment Plan (REPAYE Plan)
- Pay As You Earn Repayment Plan (PAYE Plan)
- Income-Based Repayment Plan (IBR Plan)
- Income-Contingent Repayment Plan (ICR Plan)
- 10-year Standard Repayment Plan
- Any other Direct Loan Program repayment plan; but only payments that are at least equal to the monthly payment amount that would have been required under the 10-year Standard Repayment Plan may be counted toward the required 120 payments The REPAYE, PAYE, and IBR plans are not available for Direct PLUS Loans made to parents or for Direct Consolidation Loans that repaid Direct or FFEL PLUS Loans made to parents. The ICR Plan is not available for Direct PLUS Loans made to parents. However, Direct PLUS Loans that repaid Direct or FFEL PLUS Loans made to parents may be repaid under the ICR Plan. For more information about the repayment plans available in the Direct Loan Program, please visit StudentAid.gov/repay.
IMPORTANT NOTE: The PSLF Program provides for forgiveness of the remaining balance of your eligible loans after you have made 120 qualifying payments on those loans. In general, you will have a remaining balance on a loan after making 120 payments only if you are making reduced monthly payments under the REPAYE, PAYE, IBR, or ICR repayment plans.
What do I Need to Do after I Make My 120 Payments?
Once you have made all of your 120 monthly payments, you will need to submit the PSLF application to receive loan forgiveness. You may log onto www.studentloans.gov to print the application. Don’t forget, you must be working for a qualified public service organization during all 120 monthly payments. If you change jobs and work for another qualified service organization, you must submit an Employer Certification Form for them also. This must be done every time you switch employers. You will not be required to pay taxes on the portion of the loan amount that is forgiven.
I hope this guide has assisted you in completing the necessary steps to completing the PSLF application. Everything in this book is factual and is backed up on www.studentloans.gov. If you receive emails or messages from companies promising to offer PSLF, you may want to do your research first. This service is free and you should not have to pay a fee to get the services listed above. Be wary of advertisement on Facebook, Twitter, and YouTube that solicit your personal information. Read between the lines first, and always go to the www.studentloans.gov website to verify what is said. If it doesn’t line up with the website, do not give your personal information. You can complete these forms yourself and submit them for free. There is not charge for the Department of Education to assist you in filling out these forms.
I would love to hear how everything is going with you, please leave a comment on or email me at anchorsbathandbody1.com to let me know how things are going. As always, do your own personal research, verify what you are told, and take action on your student loan debt. Do whatever you can to keep from going into default
Click here to print the loan consolidation application. You must log in with your FSA user name and password to complete the application online. If you do not have one, you may click Create FSA ID.
Click here to print the employer certification form.
Click http://www.studentloans.gov to get the frequent asked questions from the student loan website