Students attending public colleges graduate with an average of $25,550 in student loan debt; their peers at private, for-profit schools walk away with a degree and an average debt of nearly $40,000. The financial burden of repaying these loans affects a new graduate’s career decisions, often steering them away from lower-paying public service jobs. The federal Public Service Loan Forgiveness Program (PSLF) is an incentive for these graduates to consider taking jobs in public service areas.
What types of jobs qualifies?
To be eligible for loan forgiveness, borrowers must be employed full-time by a non-profit public service organization. This includes federal, state, local and tribal organizations as well as AmeriCorps and Peace Corps. The organization must be tax exempt under IRS section 501(c)(3) code. Employment in private non-profits also qualifies borrowers for loan forgiveness. Specific job areas include public and early childhood education, military service, emergency management service; public health and services for the disabled, law enforcement and public law services.
Special forgiveness programs for teachers
Elementary and secondary school teachers who teach in high-needs school districts (those serving low-income families) may qualify for student loan forgiveness after five years. The borrower must have taught full-time for five consecutive academic years at a qualifying school. Teachers who began their service after Oct. 30, 2004 may have up to $5,000 of loan debt discharged. Highly qualified science, math and special education teachers may have up to $17,500 discharged. Borrowers may search the Department of Education’s database of qualifying schools to determine if they are eligible for teacher loan forgiveness.
What loans qualify?
Federal student loans made under the Direct Loan Program, subsidized and unsubsidized, parent and graduate Direct PLUS loans and direct consolidated loans are eligible for the PSLF program. Federal student loans that do not qualify may be consolidated into a direct consolidation loan to qualify for the program. A borrower must be current with student loans payments at time of application to be eligible.
What are the repayment requirements?
Borrowers who are employed in an eligible public service position must make the equivalent of 10 years of payments (120 payments). The outstanding balance of qualified loans will then be forgiven. Graduates who are repaying loans under the standard 10-year repayment plan will have their loans paid in full after 120 payments and will not be able to take advantage of the loan forgiveness program. While most loans are initially set up on the standard repayment plan, borrowers may change to an extended repayment plan pushing the life of their loans beyond 10 years.
How to apply for loan forgiveness
It will take a borrower 10 years to qualify for loan forgiveness. During that time, borrowers may track their qualifying employment by filing an annual Employment Certification form. Teachers may apply for loan forgiveness after five years of teaching in a qualified school by filing a Teacher Loan Forgiveness Application.
Gillian Burdett is a freelance writer covering all things home and living. Her work can be found on Examiner.com.
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