Student loan indebtedness is one of the most discussed political and financial issues in the country. The total amount exceeds the total amount of indebtedness of all credit cards combined. It is a huge problem for the public and the individual students, so finding a way to reduce the student loan debt has both a short and long term benefit for all.
Now there is the Public Service Loan Forgiveness Program that offers students who qualify a way to have their entire student loan debt forgiven by the government. However, this does not apply to private loans taken out by students, such as those from banks, credit unions, and other private institutions. The program has been in existence since 2007, yet many parents and students still remain unaware of this option.
The first thing you need to know is that being eligible does not mean you can relax. There are additional requirements that you need to meet to continue your eligibility. The Department of Education will be the ones who have the final say, and any and all question are to be directed to them.
There are only four types of loans that are covered under this program:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans for graduate or professional students
- Direct Consolidation Loans
You can have non-eligible loans that will not be covered, but having those loans will not disqualify you from applying for the program.
Like the types of loans, there are a restricted number of employment types you can use in connection with the program:
- An AmeriCorps or Peace Corps volunteer
- Employment by any recognized government employer at a local, state, federal, or tribal level
- A tax-exempt 501(c)(3) nonprofit organization
- A non-501(c)(3) private nonprofit organization that is engaged in public service activities
The key here is that the reemployment must be full time as defined by the Department of Education. The minimum number of hours required regardless of where you work is 30 per week. One good piece of news is that if you can’t get enough hours at one qualifying employer you can combine multiple jobs to get to the minimum of 30 per week. Religious activities are excluded from the weekly total, but if you are a teacher that enjoys extended summer breaks your work still qualifies as long as you are working a minimum of 8 months out of the year.
Once again, the number 4 reappears. This time, it is the number of choices you have for a qualifying repayment plan:
- Pay As You Earn Repayment (PAYE)
- Revised Pay As You Earn Repayment (REPAYE)
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
You will be required to make monthly payments, but the amount will depend on the type of repayment plan you choose, so look closely at the options and their terms. PAYE, REPAYE, and IBR will generally not exceed 10 percent of your monthly discretionary income, so be sure to get your budget in order. When it comes to ICR plans the amount can be higher, as much as 20 percent of your monthly discretionary income or the monthly payment you would have to pay on a 12 year fixed payment plan after adjusting for income. The general advice is to consult with a program counselor and find out what your best options are.
Finally, there is a separate group of jobs that you can get and apply to your student loan forgiveness program. These include qualifying public service activities, a short list which is presented here. If you are not certain if a particular opportunity meets the qualifications, contact the Department of Education.
- Civilian support services for the U.S. Armed Forces or National Guard (but not for-profit military contractors)
- Emergency management services
- Public safety positions
- Public interest legal services that are funded in part by a recognized government agency
- Early childhood education, which includes working for licensed child care providers
- Public health practice positions
- Public service that help the elderly or people with disabilities
- Public or school library services
These are the basics of the program. If you are interested in pursuing the Public Service Student Loan Forgiveness Program you should first do your homework and find out what your student loan portfolio looks like. If you have not yet entered college, having this information can go a long way to planning the next 4 or 6 years of your post-secondary education. It is possible to go to college and come out the other end debt free, so this is definitely an option that you will be glad you took advantage of years down the road.