What is Public Service Loan Forgiveness Program?

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The PSLF or the Public Service Loan Forgiveness program was introduced in 2007. Being part of the college cost reduction and access act, people with certain qualifications are allowed to get their student loan’s balance discharged after ten years of timely payments and full time employment in a public service position.

Instead of its great benefits and advantages to any parent or student, in order to get their students loan wiped out, there are certain qualification for this forgiveness program which mostly people misunderstands.

The same thing happened in 2020,

Less than a 1.5% of applications were only approved for this public service loan forgiveness program, where the total number of applications was 150,545. Most of these people totally misunderstood the requirements and the certain qualifications which make them eligible for such program.

That year, with the help of Public Service Loan Forgiveness program only 2,215 borrowers were found eligible and were able to get $146 Million collectively for their loan forgiveness. The average amount of student loan balance they got discharged was $66,066.

Now you must be thinking WHY?

Why they rejected so many applications? Why most of the people who applied for the loan forgiveness were not even considered eligible for the program.

How to Qualify for PSLF?

The Public Service Loan Forgiveness program forgives the remaining balance on your Direct Loans after you have made 120 Qualifying monthly payments under a Qualifying repayment plan while working Full time for a Qualifying employer.

What are Direct Loans?

To ensure that you qualify and can apply for Public Service Loan Forgiveness program, you need to have direct loans. Loans issued through the William d ford federal direct loan program are known as direct loans.

Loans that qualify for the Public Service Loan Forgiveness program :

  • Direct subsidized + unsubsidized loans
  • Direct Plus Loans
  • Direct Consolidation Loans

Loans that do not qualify :

  • FFEL Program Loans
  • Perkins Loans
  • Private Loans

120 Qualifying Monthly Payments :

What is it that makes a payment qualify?

Here are five factors :

  • October 1, 2007, or later
  • Qualifying repayment plan
  • Full amount due
  • Within 15 days of the due date
  • Working for a qualifying employer

What is a Qualifying repayment plan?

There are four plans based on how much you earn :

  • Pay as you earn
  • Revised pay as you earn
  • Income-based repayment
  • Income contingent repayment

What does it mean to be working Full Time?

There are lots of definitions of what constitutes full-time employment status.

For the purposes of the public service loan forgiveness program,  you need to be working for a minimum of 30 hours per week or more if that is what your employer requires.

For a minimum of 30 hours per week, you can also work multiple part-time jobs combined.

Related Post: How to Become a Loan Officer With No Experience?

Who is a Qualifying Employer?

  • Government Organizations
  • 501c3 Non-Profit Organizations
  • AmeriCorps + Peace Corps
  • Other Public Service Non-Profits

How to Receive PSLF

After completing all 120 of your qualifying payments,  the application needs to be filled out and submitted by you for the program.

From the time you will be filling out this application for the public service loan forgiveness program and the time you will be submitting this,  you need to be working for a qualifying employer.

Your application will be rejected if you leave that qualifying employer before your application is selected and approved.

NOTE: There is no tax implied over any public service loan forgiveness program by the federal government as this not counts as a source of income.

New Updates and Changes in Public service loan forgiveness program.

  • More Loans are getting qualified :

The government is planning to include more loans other than just direct loans.

There will be more other loans that will be qualifying under the public service loan forgiveness program, which is estimated that it will be helpful for ten and thousands of Americans in making them eligible for the same.

  • More Payments are becoming eligible :

Previously if you did not make a payment within 15 days of the due date,  it did not count even if you were just a couple of hours late but now those late payments will also be eligible.

Before, if you did not pay the full amount due on your bill, the payment did not count even if you were short by just a penny or two, but after these changes, the payment less than the amount will also be eligible.

Previously, to make your payment count it had to be made under a specific type of repayment plan, but now all repayment plans are eligible.

Before, if you consolidated your student loans with a direct consolidation loan, non of the payments before the consolidation would have counted but now after these changes, they will be counted.

  • PSLF and the Armed Forces :

Previously,  if you were on active duty in the military and you wanted those months of service to be counted towards the public service loan forgiveness program, your student loans had to be in active repayment with you making your payments on time and in full each month.

If you are on active duty you can qualify for deferment or forbearance to help you through periods when your main focus was understandably not your student loans.

A lot of service members took advantage of this without realizing that those months would not count on Public Service Loan Forgiveness Program.

Now, if student loans were on pause during active duty, each month will count toward the 120 required to have student loans discharged.

Furthermore, the federal government will soon begin matching student loan data from the department of education with employment data from other federal agencies to automatically keep track of progress toward public service loan forgiveness programs for the service members and other federal employees.

This will make it easy for the people serving our country in forgiving their student loans .

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