During and After College: Despite What You May Have Heard, Public Service Loan Forgiveness is Still Available!

IMG_5373Hey current and future public servants! Are you hoping the Public Service Loan Forgiveness (PSLF) program will cancel part of your student debt? But do you keep hearing scary things about the program? Well, the PSLF news is both bad and good.

Bad News: Republicans want to kill PSLF. The president’s last two proposed budgets would have eliminated it. So would a Republican bill the House Education and Workforce Committee passed on a party line vote early this year.

Good News: Congress ignored all these proposals. Even if it accepts them in the future, PSLF’s end will probably apply only to those not borrowing qualifying loans (see below) before the following July 1st. If you borrow such loans before that date they’ll likely remain PSLF-eligible.

Keep tabs on PSLF with the U.S. Education Department’s easy to read and very informative PSLF web page.

Bad News: Most who’ve applied for PSLF so far have been disqualified. One problem seems to be that FedLoans, the company administering PSLF for the government, misled many borrowers about PSLF-qualifying repayment plans (again, see below).

Good News: Congress put up $700 million to fund the Temporary Expanded Public Loan Forgiveness program under which PSLF goes on a first-come/first-served basis to borrowers whose PSLF applications were rejected solely because they used the wrong repayment plans.

Bad News: PSLF’s low forgiveness rate is also due to borrower mistakes.

Good News: You can avoid such mistakes. Remember, you must meet four criteria for 120 months to get PSLF. These need not be consecutive months, but they count only if you have:

  1. Qualifying Loans: Only Federal Direct Loan Program (FDLP) loans qualify for IMG_5374PSLF. The National Student Loan Data System will show you other federal college loans you may have. Replacing them with an FDLP Consolidation Loan makes them PSLF-eligible.
  2. Qualifying Employment: Only months in which you work full-time in public service positions count and you must submit PSLF employment certification forms on which your employers confirm the months you had such jobs. It’s best to submit these forms to FedLoans by certified mail every year or when your qualifying employment with a government agency or nonprofit ends, whichever’s first, and to keep copies and your certified mail receipts.
  3. Qualifying Repayment Plan: As indicated above, a month counts only if you’re making payment under the standard repayment plan or one of the four income-driven repayment plans.
  4. Qualifying Payment: A month counts only if you pay the full required amount on-time.

IMG_5375Don’t qualify for PSLF? Don’t give up! The (Almost) Complete Guide to Student Loan Forgiveness from The Institute of Student Loan Advisors is a wonderful resource for information on over 200 other student loan forgiveness programs in the United States. Use it!

Contact College Affordability Solutions for a free consultation about your postsecondary debt if you want to take advantage of its 40 years of experience in the field of college borrowing.

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