PSLF Application Now Available
In 2007, under President George W. Bush the Public Service Loan Forgiveness program (PSLF) was started. Fast forward 10 years and the first wave of people are eligible to apply for forgiveness this fall.
There have been a lot of questions about who will be approved for forgiveness, how it will work, what the application will be? The much anticipated release of the PSLF application last week has at least partially answered some of those questions.
In 2012, the PSLF employment certification form was released to help potential applicants confirm their employer was a qualifying organization and to keep track of their 120 payments necessary for forgiveness. Even though this form was released it was not a guarantee that you’d be approved for forgiveness but it did help clarify things a little.
If you’re one of those people who have planned for student loan forgiveness or are interested in loan forgiveness it is important to know the following details to be eligible to apply:
Qualified Loans
PSLF is for loans received under the William D. Ford Federal Direct Loan Program; other private and federal loans may not qualify for PSLF and some loans such as Perkins loans may have different cancellation programs.
If you have private loans or other federal loans outside of the Direct Loan program you may be able to consolidate them with a Federal Direct Consolidation Loan, in which case they would qualify for PSLF.
Qualified Employment
It isn’t about your specific job; the important thing to look at is if your employer is a government organization or a qualified not-for profit organization. Serving full time for the AmeriCorps or Peace Corps would count as well.
If you’re working for a non-profit hospital that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code your employer most likely would count for this. If you’re working for a private practice that is a for profit organization then this would not count as a qualified employer. Not all people working in medicine will qualify for PSLF, it depends on the tax status of your employer.
Also, you must work full-time during your repayment. Full-time employment is defined as the greater of 30 hours per week or your employer’s definition of full-time employment.
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Qualified Payments
In order to meet the qualifying repayments you would have had to make 120 payments while being full-time employed by a qualifying organization. In order for this to work you need to be on an income-driven repayment plan.
Technically, any payments on the standard repayment plan would count as well, however if you made 120 payments on the standard plan your loan would be payed off. If you started working and were making payments on the standard plan and then switched to an income-driven plan the payments you made on the standard plan would count toward the 120 qualifying payments
The important thing here is the 120 payments. If you have been making payments for 10 years then they would all count but if there were any deferments, forbearance, grace periods or in-school status during those years then your 120 payments would be longer than 10 years.
What’s Next for Loan Forgiveness
If you’ve made the 120 qualifying payments on your direct loans by this October and are working for a qualified organization the next thing to do is to submit your application for forgiveness.
If you’re working for a qualified organization and are currently in repayment make sure you’re on an income-driven repayment plan to lower your monthly payments and be sure to complete the PSLF employment certification form to help you keep track of your progress.
If you feel overwhelmed by your student debt and graduating soon know that there are some options to help you lower your payments but also know that there are risks to these options as well. If you want to pursue PSLF make sure the places you apply are non-profit organization that would qualify for PSLF and know that you’re committing to working for non-profit organizations while you make 120 qualified payments.
A lot of people have made life and career decisions based on plans for forgiveness of their student loans but questions still remain. As more applications are sent in some questions will be answered and hopefully for many people their student loans will be wiped clean. There has been some talk on what the current administration will do with student loans and if the PSLF will remain, but for now, if you qualify, send in your application and hope for the best.
Is anyone sending in their application for forgiveness this fall? Let us know how it works out for you! Don’t forget to comment below the original post, sign up to receive future posts by email and share with your friends!
