To get your student loan forgiven is by no means an easy task. However, the good news is that there are some steps that you can take to go about it the right way.
Launched in 2007, the Public Service and Loan Forgiveness Program is meant for helping public service employees with high student loan remaining and inherently low-income levels to make payments toward their debts for a period of ten (10) years.
The public service employees who qualify under this program include nurses, teachers, police officers, and firefighters; just to mention a few.
Since the inception of the Public Service Loan Forgiveness Program (PSLF), more than 500,000 borrowers have enrolled into the program. For borrowers who are very keen on ensuring their debts are forgiven and totally wiped clean, they must make sure that they stick to the requirements stipulated in the program and make sure to track their progress.
For a borrower to qualify and become eligible for the forgiveness of a loan, there are four requirements that must be fulfilled by them. They are as follows:
- Borrowers need to have loans via this program, being the “William D. Ford Direct Loan Program”.
- Borrowers must make 120 qualified payments.
- Borrowers need be enrolled in a qualified repayment plan.
- Borrowers must be in a full-time job with a certified employer.
Let’s discuss in detail what you must do to qualify for repayment towards forgiveness:
Enroll in the Right Loan Program Under the Services Loan Forgiveness Program, Direct Loans only qualify for repayment towards forgiveness. Any other kind of loans, such as the Federal Family Education Loan Program loans or Perkins Loans, do not qualify for repayment towards forgiveness.
For borrowers to be able to qualify for the forgiveness program, they will have to consolidate the Federal Family Education Loan Program loans or Perkins Loans into a Direct Consolidation Loan.
Take Part in the Right Repayment Scheme
It is very important as a borrower to take part in the right repayment plan towards your forgiveness program. Not all repayment plans will qualify towards your forgiveness program.
There are some repayment plans that could qualify towards your forgiveness program, and there are others that could not. For the Public Service Loan Forgiveness Programme, income-driven repayment plans are eligible to qualify you for it.
The loan repayment programs, such as the extended and graduated repayment plans, are not eligible to qualify you for a Public Service Loan Forgiveness Program.
You must take note of this and enroll in a proper repayment plan that can qualify you towards forgiveness.
Work for an accomplished Employer
Yes, you must work for an employer and an organization that is qualified. Any role you are taking in the organization does not really count. What really counts is who is issuing the paycheck.
Employment in the public service where you need to be qualified includes employment in the federal or state or local, or even tribal governments, or employment in any organization that functions as a non-profit organization and which is exempted from paying tax under Section 501(c)(3) of the IRS code.
Other non-profit organizations, according to the CFPB, could qualify too; non-profit organizations such as the ones that offer education, legal, health, or civil safety services.
Make the appropriate Number of Payments
It is very vital that you make the right number of payments.
Even though you may be required to make 130 or more payments for you to become eligible towards loan forgiveness, you are not in any way required to make these payments consecutively. What this means is that you will not have to begin the payments all over again if you vacate the public sector for a time and/or even lose your employment.
What you must note, however, is that any payment that is eligible towards loan forgiveness has to be done promptly, and of course in full, during the period that you are under the employment of any qualified organization. Also, you must make sure the payments are made on time, and that you duly keep track of the processing too.
Make Sure to Document your Progress
This one does not necessarily count among the 4 requirements discussed above which are necessary for forgiveness of debt; however, it is still as important to consider.
To help in making sure that you are on the appropriate course towards dismissing your debt, the Department of Education does well in encouraging borrowers to ensure they send an Employment Certification Form every year even though this is not mandatory.
Borrowers are encouraged to always keep track of both their Employment Certification Forms and their payments. This is especially important since most employers don’t really keep records for the long-term, as was the case previously.
But What Do You Do If You Encounter Any Problem?
What do you do if you encounter any problem on your way towards the completion of your 10 years of loan forgiveness? One thing you must always remember is that you must strive to pay the minimum amount over that period of time.
Experts recommend that as a borrower, you should make sure to check an online calculator. Available at the Department of Education. This will enable you to see how much you will have to make your payments within each available repayment plan. It is wise to select the payment option that is the least expensive of all.
Also, experts say it is not advisable to quickly quit your job during the moment you get to your 10th year and have applied to get the slate wiped clean.
For you to fully qualify and get your slate wiped clean, you will have to remain with the qualified organization and employer while the application is being reviewed. Usually, it can take as long as 60 days for your application to be reviewed.
Also, if you suddenly find out that you do not qualify for forgiveness after the 10th year, it may not be very wise to start the process all over again.