Public Service Loan Forgiveness (PSLF) has been a subject of controversy and confusion for student loan borrowers for years. Many borrowers have been confused about what PSLF is, how to qualify for it, and how to get it. Now, I’ll explain the ins and outs of PSLF in layman’s terms.
Being able or not to benefit from Public Service Loan Forgiveness (PSLF) is among the most asked questions from borrowers in the Student Loan Planner community. PSLF is when your federal student loans are forgiven, or made to stop charging interest, after you have stayed in the public sector for 10 years.
If you have student loans, you know that there are programs that will forgive them for qualifying public service work. But what is public service? For some, the idea of getting rid of loans is appealing, even though that means they won’t have any money to pay back. But if they do gain public service forgiveness, they will have to start paying them back again. In this article, we will show you 100+ ways to get and maximize public service loan forgiveness.. Read more about ibr calculator and let us know what you think.If you want to make sure you get Public Service Loan Benefits (PSLB), you’ll love this guide. I have personally advised over half a billion dollars in student loans, and this is 107 of the best advice I have come across in the last five years. Lenders ask me this question all the time: Have you ever met someone who is forgiven? Not only is the answer positive, but I interviewed the first couple in history to enjoy BOTH the benefits of public service. If you apply my advice to your personal situation, you could save five to six thousand dollars more than if you had not read this blog post. Congress created the Public Employees’ Benefit Loan Program in 2007. And as of 2020, 99% of borrowers applying for a PSLF were rejected. While this is a very unreliable statistic, read these tips to be among the 1% of people who do get approved.
Identification of eligible loans
The first step is to make sure your student loans meet the requirements of the PSLF program. To qualify for the program, you must make 120 cumulative monthly payments on an income-driven repayment plan while working full-time in the government or nonprofit sector. In addition, only direct student loans made under the William D. Ford loan program can be forgiven. The good news is that many other types of student loans qualify for PSLF, but they must first be consolidated into a direct loan.
Examples of loans eligible for a government employee loan
Go to nslds.ed.gov to find out if you are in debt for a direct loan. You will see a table of all the loans you owe the Department of Education. All listed loans that meet one of the types below may be eligible for PSLF.
1. Subsidized Direct Loans Stafford. This type of credit is generally awarded for higher education courses.
2. Direct Unsubsidized Loans (Stafford). If you have exhausted your right to subsidized Stafford loans, you may have taken out subsidized Stafford loans. You can get this type of credit for both undergraduate and graduate programs.
3. Grad PLUS Direct Loans. If you went to college after 2010 and needed more than $20,500 per year (or $40,500 for some health professions), you probably took out a direct Grad PLUS loan.
4. Direct consolidation loans. At studentaid.gov, you can combine 17 different types of loans into one consolidated direct loan.
These types of loans are eligible for PSLF even if the loans you are consolidating are not. If you have one of these types of loans, you do not need to change its structure to qualify for the PSLF. All you need to do is submit an employer statement form for the state employee benefit loan.
Types of credit eligible for SLMF
Prior to 2010, the Direct Loan program represented only a small portion of the total federal student loan portfolio. Even after 2010, borrowers will take out loans that are not Federal Direct Student Loans. All of the following types of student loans may qualify for PSLF if you combine them into one consolidated Direct Loan. If your credit is not listed when you request consolidation, you can use the Add Credits button on studentaid.gov and add it manually.
5. Parent PLUS Credits. This type of loan is registered on your parent’s account. You cannot get government assistance for Parent PLUS loans if your parent is not eligible for them themselves. This is because the Parent PLUS debt legally belongs to the parent, not the student. To qualify for PSLF for Parent PLUS loans, your parent must consolidate the loan into a Direct Consolidation Loan and apply for an income-driven repayment (IDR) plan. There are other more complicated strategies for obtaining PSLF for parent PLUS loans, including double consolidation.
6. Federal Family Education Loans (FFEL). Prior to 2010, FFEL loans were the most common type of student loan. You can use it for a license or a master’s degree. They are also usually responsible for ensuring that your student loans do not qualify for public service benefits. The bad news is that the payments you made on your FFEL loans may not qualify for PSLF. The good news is that you can start at month zero by consolidating all of your FFEL loans into one consolidated direct loan. You may not take out any other types of loans to consolidate FFEL loans. In general, it is best not to include direct loans in the consolidation with FFELs unless the direct loan has zero credit to the utility loan.
7. Perkins loans. The Perkins program has been discontinued for new borrowers, but many borrowers still have Perkins loans outstanding from previous years. You can only consolidate a Perkins loan if you include at least one other FFEL or direct loan. In general, consolidating Perkins loans for the PSLF only makes sense if you do it in the first year of the program.
8. Health Education Assistance Loan (HEAL). The program, founded in 1978, was discontinued more than 20 years ago. A HEAL loan is extremely rare, but if you have one, you can consolidate it into a consolidated direct loan.
9. Medical Student Credit (HPSL). This loan, which is probably the most common type of Department of Health student loan, usually has an interest rate of 5% and is often administered by Heartland ECSI Servicing. Many dental and medical school borrowers mistakenly think that HPSLs are private student loans. This is not the case, and you can consolidate an HPSL with at least one FFEL loan or direct loan to get the utility loan forgiven on each HPSL balance. Forgetting to consolidate HPAs is a common mistake made by borrowers with incomes in the five-figure range.
10. Loans for Students with Disabilities (LDS). Loans for students with disabilities are another type of loan provided by the Department of Health and Human Services. To qualify for the PSLF, you must consolidate your credit.
11. Credit for nursing students or teachers. This type of loan is available to undergraduate and graduate nursing students. It is based on financial need and is awarded based on the results of the FAFSA form submitted by the borrower. It may be consolidated and eligible for PSLF.
12. Other less common types of credit. These loans are also not covered by the PSLF program unless they are consolidated: Guaranteed student loans (granted before 1992), National Direct Student Loans, National Defence Student Loans, Student Assistance Loans and Supplementary Student Loans. The Department of Education has a student loan program that looks like an endless sandwich. Sometimes old programs are abandoned, but it takes decades to get rid of them. If you have one of these rare types of student loans from previous years, you can also combine them into a Federal Direct Consolidated Loan that qualifies for the FSLP.
Loans not eligible for SLMF
Unfortunately, if you have any of the following types of student loans, you will not be able to remit them under the PSLF program.
13. Private student loans. A private loan often has a high interest rate. If studentaid.gov doesn’t allow you to include student loans in your consolidation, they are probably private loans. Private student loans are never covered by the PSLF. Therefore, we strongly encourage borrowers to look into federal student loans if they have any chance of getting their student loans forgiven.
14. Refinanced loans. When you refinance your student loan, you create a new private loan that is owned by a private company. This new loan is not eligible for the PSLF even though the qualified Federal Direct Loan has been repaid. Therefore, we never recommend refinancing unless you are confident that you will not benefit from a loan cancellation program.
15. Family student loans. In our work on thousands of student loans, we have seen students take out small loans from the bank time and time again. Unfortunately, this type of loan is not suitable for PSLF. Therefore, we generally do not recommend taking out a loan from parents to pay for a degree.
Choose an appropriate payment method
You found out if you have any loans that can be forgiven. You now need to decide which payment plan to choose to 1) take advantage of the PSLF and 2) pay as little as possible. Most plans that qualify for the PSLF require a payment of 10-20% of your discretionary disposable income (i.e. adjusted gross income minus 100-150% of the federal poverty line).
16. Income-based repayment (IBR). There are two forms of repayment based on income. One requires you to put in 15% of your discretionary income and the other 10%. A new RIB is only possible if you have a new RIB before 1. July 2014 had no loans yet. You can exclude your spouse’s income by filing a separate tax return under this plan. IBR is generally not the best payment option for PSLFs.
17. Pay As You Earn (PAYE). PAYE is generally the best payment arrangement for utility loans. You only have to pay 10% of your discretionary income, there is a payment limit (no more than the standard 10-year plan), and you can exclude your spouse’s income when filing your separate tax return. You are only entitled to PAYE if you received it before your first birthday. October 2007 had no student debt and took out at least one loan after 1. October 2011.
18. Income-related remuneration (REPAYE). REPAYE requires 10% of your disposable income. There is no benefit limit, and you cannot exclude your spouse’s income even if you file separate tax returns. Sometimes you can pay less with REPAYE than with IBR (because 10% is less than 15% of income). Nevertheless, we recommend the PAYE plan as the first choice.
19. Income-based repayment (ICR). In general, the only borrowers who must use an ICR under the PSLF program are parents who have outstanding Parent PLUS loans. You should consolidate this type of debt into a direct consolidated loan. The ICR requires 20% of your income, with a deduction of 100% of the poverty line (instead of the usual 150%). The ICR is not the best income-contingent repayment plan, although it is suitable for the PSLF. You can also circumvent the RCM by using the double consolidation clause.
20. Standard repayment over 10 years. This plan is exactly what you would have to pay to get rid of your original student loan balance in 10 years. As a general rule, this monthly payment represents about 1% of the loan balance. For a $30,000 student loan, the standard payment over a 10-year plan would be about $300 per month. If you don’t qualify for one of the income-driven repayment plans, a standard 10-year plan may be a way to get significant loan forgiveness. Note that there is no standard 10-year plan for direct consolidation loans.
Reimbursement schedules not in accordance with PSLF
Some bills, such as. B. What You Can Do for Your Country Act, these payment plans would be eligible for the PSLF program. However, you are currently out of luck if you use any of the following payment plans.
21. High school diploma. Your payment starts at a low level and gradually increases. This payment option will eventually lead to the full repayment of your loans. However, it is not eligible for the PSLF program.
22. Enhanced. You pay the same monthly payments for 25 years, but the amount is much lower than the standard 10-year plan. Perhaps this is why Congress excluded the comprehensive plan from PSLF qualification.
23. Standard repayment schedule for consolidated direct loans. When you consolidate your student loans, the usual 10-year repayment option is dropped. The new standard repayment plan for consolidated loans provides for a repayment period of 10 to 30 years and is not eligible for the PSLF.
Entities eligible for SLMF
You have chosen the right loans and payment plan. In order to reach the 120 monthly payments required to discharge the student loan, you must be working full time for an eligible employer. You must work at least 30 hours per week, or full-time as determined by your employer, and receive a W-2 paycheck from one of the types of employers listed below.
24. A government organization. A governmental entity is a federal, state, local, or tribal government; an organization, agency, or instrumentality; a state child or family services agency; a tribal college or university; a Peace Corps or AmeriCorps. This category is quite broad.
25. 501(c)(3). If your employer qualifies for an IRS deductible donation (university, charity, non-profit hospital, etc.) and you find them on the list of 501 (c) (3) organizations, then you have the right job.
26. Other 501(c)(3) nonprofit organizations. This is a difficult category to define. By definition, the employer must provide one of the following:
- Emergency Management
- Military service
- Public Safety
- Enforcement of the law
- Legal services in the public interest
- Education for young children
- Community services for disabled and elderly people
- Public Health
- Public education
- Public library services
- Library services at school
- Other school-based services.
Most borrowers participating in the PSLF program will meet the requirements of the previous two categories.
Jobs not subject to credit deduction for government employees
Although it is estimated that about 25% of jobs in America qualify for the PSLF program, these types of employers are not covered by the program.
27. Political organization of the party. Do you work at the Democratic or Republican National Convention? This is not the responsibility of the PSLF. This type of employer has a slightly broader definition than you might think. A recent ruling held that employees of a Vietnam veterans’ advocacy organization did not meet this criterion because their work technically involved lobbying, but only for a sympathetic group.
28. Union. Any form of union is expressly not covered by the PSLF terms and conditions.
29. Profitable employers. Private sector employment is the largest category in America. While many private sector employees certainly provide services to the public, you may not be eligible for the PSLF if your employer is a for-profit employer.
30. Working on a religious basis. If the main purpose of your work is conversion, you are not eligible for PSLF. However, if you are employed by a religious nonprofit and the primary purpose of your work is non-religious, you may qualify. Pastors are not eligible, but the vice president of fundraising for a Catholic charity is.
31. Contractor 1099. Many workers are not legal employees. Uber and Lyft drivers are common examples of 1099 contractors. You may receive a salary from a certain organization, but you are not an employee. A contractor receiving a 1099 salary is not eligible for the PSLF, regardless of your assignment.
A job you could ever apply for
At this time, you are probably not eligible for the PSLF program if you work in one of the categories below, but you may be in the future.
32. Nonprofit physician groups. Some states, such as California and Texas, have regulations that require hospitals to employ physicians indirectly rather than as employees. Kaiser Permanente is a common example. Kaiser physicians typically work for a for-profit medical group, even if they work for a non-profit hospital at their practice location. House Democrats want to expand the scope of the PSLF to include doctors who work in similar situations.
33. Found your own nonprofit organization. In theory, you can create your own non-profit association to take advantage of the PSLF. You must be receiving a full-time W-2 salary and the nonprofit must be legal. In practice, this is extremely difficult and there are groups that claim they can help you with the PSLF, which we believe is not legal. However, future decisions may make it easier to run your own nonprofit and qualify for the PSLF.
Restructuring of your loans
Most borrowers who began borrowing after 2010 do not need to restructure their student loans to qualify for the PSLF program. However, there may be situations where student loan consolidation can save you money even if it is not necessary to take out a loan.
34. Consolidate all credits at the end of the program. If you have federal student loans, haven’t made any payments yet and already have your degree in your possession, you are eligible to consolidate your loans at studentaid.gov. The normal grace period after graduation is six months, with consolidation reduced to two months. This loophole can sometimes give you an extra four months of PSLF-compliant payments and makes it easier to certify your loans for PSLF.
35. Do not merge if you have already made payments. If you are already enrolled in any of the IDR repayment plans, you should not combine them unless you have loans that are not direct loans. That’s because every loan you consolidate starts with zero months of payments under a cancellation program. It’s not a big deal if you consolidate undergraduate FFEL, Perkins, or health department credits that are already unqualified. However, if you consolidate direct loans that already have a payment history, you are wasting your money and throwing away a payday loan that could have helped you get forgiven faster.
36. Consider targeted consolidation for loans that do not qualify. Remember, only Federal Direct Loans are eligible for the PSLF program. This means that if you owe any of the above types of loans that are not direct loans, you must consolidate them into one consolidated direct loan.
Frequently Asked Questions
How much will PSLF forgive?
With the possibility of receiving Public Service Loan Forgiveness (PSLF), a program designed to forgive the remaining balance on eligible student loans, many candidates for public service jobs, such as teachers and social workers, are on the lookout for new and innovative ways to pay for school.
Many have found the Public Service Loan Forgiveness (PSLF) Program to be a reward for their dedication to public service, but when compared to other options, such as pursuing an MBA, the cost of the program may be too high for many to consider. In the public service sector, the program most students are familiar with is undergraduate school loan repayment. However, federal student loan repayment plans do not end with graduation or program completion. The Public Service Loan Forgiveness (PSLF) Program allows those who have taken certain loan repayment plans to apply for program forgiveness.
Which repayment plan is best for PSLF?
Here at Student Loan Planner , we help people find a repayment option that works for them. We review student loan repayment plans , which vary based on factors such as the size of your debt, your income and your other financial obligations. Public Service Loan Forgiveness (PSLF) allows qualifying teachers and doctors to have their student loan debt forgiven after 10 years of qualifying payments. It’s a popular benefit offered by the Department of Education, but the rules can be complicated, and there are many different repayment plans. It’s a good idea to know which plan you can use before you commit to taking out a loan, and the Department of Education offers a helpful tool to help students determine which plan will work best for them.
Do $0 payments count for PSLF?
It’s been a while since I last wrote a blog post. So, here’s a quick update on a topic I recently discovered: is $0 payments for Public Service Loan Forgiveness (PSLF) really a good thing? It was brought up by a reader on our forums and, as I dug deeper, the topic appeared to be a hotly debated topic. So, I decided to spend the weekend investigating. Right now, you may be familiar with what PSLF is, but how about $0 payments? The PSLF program allows student loan borrowers to make interest-only payments for up to 20 years before they begin paying back principal. This is in contrast to a standard repayment plan that starts with a large amount of principal and only allows interest to be paid over the years. The PSLF program is popular because of its potential to save borrowers thousands of dollars in interest over the years.