Public-Service

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Public Service Loan Forgiveness

In 2007, Congress created the Public Service Loan Forgiveness Program to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, borrowers may qualify for forgiveness of the remaining balance due on their eligible federal student loans after they have made 120 payments on those loans under certain repayment plans while employed full time by certain public service employers. Student Debt Relief is here to assist those who work in a public sector and can qualify for early forgiveness. To see if you qualify in five easy steps click here. Here is some information on the program:

What must I do to have any remaining balances on my Direct Loansforgiven under the PSLF Program?

  • You must make 120 on-time, full, scheduled, monthly payments on your Direct Loans. Only payments made after October 1, 2007 qualify.
  • You must make those payments under a qualifying repayment plan.
  • When you make each of those payments, you must be working full-time at a qualifying public service organization.

What loans are eligible for forgiveness?

Only loans you received under the William D. Ford Federal Direct Loan (Direct Loan) Program are eligible for Public Service Loan Forgiveness. Loans you received under the Federal Family Education Loan (FFEL) Program, the Perkins Loan Program, or any other student loan program are not eligible for Public Service Loan Forgiveness. If you have FFEL and/or Perkins loans, you may consolidate them into a Direct Consolidation Loan to take advantage of PSLF. However, only payments you make on the new Direct Consolidation Loan will count toward the 120-month payment requirement for Public Service Loan Forgiveness. Payments made on your FFEL or Perkins loans, even if they were made under a qualifying repayment plan, do not count as qualifying Public Service Loan Forgiveness payments.

What are on-time, full, scheduled, monthly payments?

On-time payments are those that are received for your consolidated student loan no later than 15 days after the scheduled payment due date. Full payments are payments on your consolidated student loan in an amount that equals or exceeds the amount you are required to pay each month under your repayment schedule. If you make a payment for a month that is less than what you are required to pay for that month, that month’s payment will not count as one of the required 120 monthly payments. If you make multiple, partial payments in a month and the total of those partial payments equals or exceeds the required full monthly payment amount, those payments will count as only one qualifying payment. Scheduled payments are those that are made under a qualifying repayment plan after your servicer has billed you for the month’s payment. They do not include payments made while your loans are in an in-school or grace status or in a deferment or forbearance period. You must make separate monthly payments. Lump sum payments or payments you make as advance payments for future months are not qualifying payments. There are special rules on lump sum payments for borrowers whose public service employment is with AmeriCorps or the Peace Corps.

What is a qualifying repayment plan?

To maximize your PSLF benefit, you should repay your loans on the Income-Based Repayment (IBR) Plan or the Income-Contingent Repayment (ICR) Plan, which are two of the repayment plans that qualify for PSLF. Other Public Service Loan Forgiveness qualifying repayment plans are the 10-year Standard Repayment Plan or any other repayment plan where your monthly payment amount equals or exceeds what you would pay under a 10-year Standard Repayment Plan. Before deciding which repayment plan you want to use to repay your Direct Loans, it is important that you understand the implications and costs of that decision. The longer you make Public Service Loan Forgiveness qualifying payments under a 10-Year Standard Repayment Plan, the lower the remaining balance on your loans will be when you meet all of the Public Service Loan Forgiveness Program’s eligibility requirements. In fact, if you make all of the required 120 monthly payments under the 10-Year Standard Repayment Plan, there will be no balance left on your loans to be forgiven. Under the IBR and ICR plans, your monthly payment amount will likely be lower than under any of the other Public Service Loan Forgiveness qualifying repayment plans and your repayment period will likely be longer. Because of the longer repayment period, additional interest that will accrue on your loan, and the smaller monthly payment amount, you will be left with a higher loan balance that could be forgiven. However, if you ultimately do not meet the eligibility requirements for Public Service Loan Forgiveness, you will be responsible for repaying the entire balance of your loan, including all accrued interest.

What kinds of employment qualify?

Qualifying employment is any employment with a federal, state, or local government agency, entity, or organization or a non-profit organization that has been designated as tax-exempt by the Internal Revenue Service (IRS) under Section 501(c)(3) of the Internal Revenue Code (IRC). The type or nature of employment with the organization does not matter for Public Student Loan Forgiveness purposes. Additionally, the type of services that these public service organizations provide does not matter for Public Service Loan Forgiveness purposes. A private non-profit employer that is not a tax-exempt organization under Section 501(c)(3) of the IRC may be a qualifying public service organization if it provides certain specified public services. These services include emergency management, military service, public safety, or law enforcement services; public health services; public education or public library services; school library and other school-based services; public interest law services; early childhood education; public service for insectioniduals with disabilities and the elderly. The organization must not be a labor union or a partisan political organization. Generally, the type or nature of employment with the organization does not matter for Public Service Loan Forgiveness purposes. However, when determining full-time public service employment at a not-for-profit organization you may not include time spent participating in religious instruction, worship services, or any form of proselytizing.

What is full-time employment?

You must meet your employer’s definition of full-time. However, for Public Service Loan Forgiveness 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. If you are a teacher, or other employee of a public service organization, 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 simultaneously, you may meet the full-time employment requirement if you work a combined average of at least 30 hours per week with your employers.

What does it mean that my 120 Direct Loan payments must be made while I am working full-time at certain public service organizations?

For a payment to count as one of the required 120 qualifying monthly payments, you must be a full-time employee at a qualifying public service organization on the date that your Direct Loan servicer receives your monthly Direct Loan payment. In addition, you must be a full-time employee at a qualifying public service organization at the time you apply for the Public Service Loan Forgiveness Program and at the time forgiveness is granted.

How do I apply For Public Student Loan Forgiveness?

If you believe you qualify, then please give us a call at (866) 921-8053 so we can assist you.

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