Student Loan Forgiveness Program

One of my coworkers forwarded an email to me last week and I thought it might be of interest to those of you out there with student loans. You may qualify, or maybe you know of someone else who could benefit.

The following is from the email that was forwarded to me:

The College Cost Reduction and Access Act of 2007 established a new public service loan forgiveness program. This program discharges any remaining debt after 10 years of full-time employment in public service.

Starting July 1st, individuals with student loans will also be able to enter into an Income-Based Repayment (IBR) plan that will lower their monthly payments based on a debt to income ratio.

More information at: http://www.ibrinfo.org/

Public Service Loan Forgiveness is a new program for federal student loan borrowers who work in certain kinds of jobs. It will forgive remaining debt after 10 years of eligible employment and qualifying loan payments. (During those 10 years, the Income-Based Repayment (IBR) plan can help keep your loan payments affordable.)

Who can get Public Service Loan Forgiveness? This program is for people with federal student loans who work in a wide range of “public service” jobs, including jobs in government and nonprofit 501(c)(3) organizations.

What are eligible jobs? In most cases, eligibility is based on whether you work for an eligible employer. Your job is eligible if you:

  • are employed by any nonprofit, tax-exempt 501(c)(3) organization;
  • are employed by the federal government, a state government, local government, or tribal government (this includes the military and public schools and colleges); or
  • serve in a full-time AmeriCorps or Peace Corps position.

If you don’t meet these criteria, the Department of Education’s regulations create a two-part test of other circumstances under which you may still be eligible:

  1. your employer is not “a business organized for profit, a labor union, a partisan political organization, or an organization engaged in religious activities, unless the qualifying activities are unrelated to religious instruction, worship services, or any form of proselytizing;” and,
  2. your employer provides any of the following public services: emergency management; military service; public safety; law enforcement; public interest law services; early childhood education; public service for individuals with disabilities and the elderly; public health; public education; public library services; and school library or other school-based services.

These definitions of eligible jobs reflect the Department of Education’s final regulations for PSLF, as posted in the Federal Register on October 23, 2008.

What kinds of loans does it cover? It covers federal Stafford, Grad PLUS, or consolidation loans as long as they are in the Direct Loan program. Borrowers with loans in the Guaranteed (or FFEL) loan program must switch to the Direct Loan program to get this benefit.

When does the 10-year clock start, and which payments count? Only payments made after October 1, 2007 count towards the 10 years (120 monthly payments, not necessarily consecutive) required for Public Service Loan Forgiveness. Qualifying payments are payments made through the William D. Ford Direct Loan Program in any of the following three repayment plans: the Income Contingent Repayment plan, the Standard (10-year) Repayment plan, and the Income-Based Repayment plan. To count, these payments must be made while you’re working full-time in an eligible job. “Full-time,” according to the final regulations issued by the Department of Education, means an annual average of 30 hours per week or the standard for full-time used by the employer, whichever is greater. For people working part-time at two or more qualifying jobs, “full-time” means an annual average of 30 hours across all jobs held. In professions such as teaching, annual contracts that include at least eight months of full-time work will be treated as the equivalent of a full year’s employment. If you meet all the criteria, the earliest your remaining debt could be forgiven is October 2017.

What if I’ve already paid off my loans by then? This loan forgiveness program will only benefit people who still owe money on their federal loans after 10 years of eligible payments and employment. If your income is low relative to your debt, and you qualify for reduced payments under IBR (or Income Contingent Repayment) at any time during those 10 years, you will likely have debt left to forgive.

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Yours Truly,

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1 thought on “Student Loan Forgiveness Program

  1. I’ve heard about that program, and have been considering seriously looking into it due to the fact I work in healthcare, and could most likely qualify for such a program. I have an enormous amount of student loan debt, and any kind of forgiveness would be greatly appreciated. Nice article, cheers.

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