Public Service Loan Forgiveness (PSLF)
The Public Service Loan Forgiveness (PSLF) program is a United States government program that was created under the College Cost Reduction and Access Act of 2007 (CCRAA) to provide indebted professionals a way out of their federal student loan debt burden by working full-time in public service, but only for those who qualify financially.
Qualifying public service jobs
Jobs in a public office (Federal, State or Local) or a non-profit organization as defined by the IRS qualify for PSLF.[1]
Only two types of volunteer work, Americorps and Peace Corps qualify for forgiveness. Any other unpaid volunteer work, regardless of the organization, does not qualify. If you work for a national lab, such as a Department of Energy or National Nuclear Security Administration Lab, your work will not qualify under the PSLF program unless the managing entity of the Lab is a non-profit or not-for-profit entity.
Examples of jobs qualified for the PSLF program
A professional who works full-time with the following organizations may qualify for the PSLF program:
AmeriCorps, Peace Corps, 501(c)(3) non-profit work, public child or family service agency, work for a tribal college or university, emergency management, full-time active duty in military service under 101(d)(1) and (d)(5) of title 10 in the United States Code, public safety, law enforcement, public interest law services, public health, public education, etc.
Ineligible jobs include jobs in partisan politics, labor unions, and religious proselytism.
A bipartisan effort is currently underway by representatives Chris Gibson and Sean Patrick Maloney working together in the House Committee on Agriculture to add young farmers to the list of careers eligible for forgiveness under PSLF.[2][3]
Eligible loans
Subsidized and Unsubsidized Stafford Loans, PLUS Loans, and Federal Direct Consolidation Loans qualify for PSLF. Loans in the FFEL program or Federal Perkins Loans will need to be consolidated into Direct Loans.[4] Private student loans are ineligible to be consolidated into a Direct Loan and thus cannot be discharged under the PSLF program.
Qualifying for forgiveness
Payments made after October 1, 2007 qualify. Loans do not need to be obtained after October 1, 2007 to qualify.
All federal student loans must be direct loans or consolidated into the direct program. Proof of employment and income must be submitted for approval. Before loan forgiveness is achieved, a borrower must make 120 on-time qualified monthly payments. Payments need not be continuous but only a total of 10 years of on-time and qualified payments count and only while borrowers are employed in a qualified job.[5]
Qualifying payment plans
Multiple plans are available to borrowers in the PSLF program. Those wishing to seek forgiveness under the PSLF may make payments under the Income Contingent Repayment, Income Based Repayment, Pay As You Earn, or the Standard 10 Year Plan.[6]
It is not recommended that borrowers choose the Standard 10 Year as the payments are built to have the loan paid off in full in 120 payments leaving nothing to be forgiven at the end.
It is recommended that borrowers apply for IBR or PAYE if they qualify to lower their monthly payments if they are applying for PSLF.
Future reduction proposals
For his 2015 budget proposal to Congress, President Barack Obama proposed capping Public Service Loan Forgiveness at $57,500 for all new borrowers.[7] Analysis at website Educated Risk, however, details the difficulty of modifying PSLF:[8]
- Historically, current beneficiaries will be grandfathered
- As a Federal Statute, PSLF modification undergoes Congressional legislation
- Borrowers have a legal right to a hearing
The 2016 Republican budget resolution proposes to eliminate the PSLF program to all new student loan borrowers. [9][10]
References
- ↑ Qualifying Employment | studentaid.ed.gov
- ↑ Dunne, Alison (2014-12-19). "Part Five Of Student Loan Series Focuses On Young Farmers". WAMC Northeast Public Radio. Archived from the original on 2014-12-29. Retrieved 29 December 2014.
...Republican Congressman Chris Gibson, who represents the 19th District, including New Paltz [...] says he supports adding young farmers to the Public Service Loan Forgiveness Program and intends to introduce a bill in 2015.
- ↑ McColl, Sarah (2015-01-16). "Should Farming Get You out of Paying Your Student Loan Debt?". takepart. Archived from the original on 2015-01-19. Retrieved 2015-01-19.
- ↑ Public Service | finaid.org/loans/publicservice
- ↑ Public Service Loan Forgiveness | myfedloan.org
- ↑ Qualifying Payments | studentaid.ed.gov
- ↑ WH 2015 Budget | blogs.wsj.com/washwire/2014/03/04/2015-budget-white-house-proposes-broader-debt-forgiveness-for-students/
- ↑ "Is Public Service Loan Forgiveness For Real?". Archived from the original on 22 March 2014.
- ↑ Gale, Rebecca (22 April 2015). "Student Loan Forgiveness for Staff on Chopping Block". Roll Call. Archived from the original on 25 April 2015. Retrieved 25 April 2015.
- ↑ "REPORT OF THE COMMITTEE ON THE BUDGET HOUSE OF REPRESENTATIVES TO ACCOMPANY H. Con. Res. 27" (PDF). House of Representatives. 20 March 2015. p. 115. Archived (PDF) from the original on 28 April 2015. Retrieved 28 April 2015.
actions taken by the committee of jurisdic- tion to streamline, reform, and simplify the current system could include ending the Public Service Loan Forgiveness Program.