With the average student loan debt in the U.S. hovering around $25,000, it’s safe to say many people are interested in how to pay off their student loan debt. To that end, we thought we’d explain how you can apply for the Public Service Loan Forgiveness Program (and describe how exactly the program works):
The Public Service Loan Forgiveness Program (PSLF) is one of the more interesting and exciting programs approved by Congress in recent years. This program is designed to allow those who work for eligible public service organizations to get something of a break on their student loans. With student loans now the largest collective debt we have, it makes sense to look for ways to reduce the costs.
If you are interested in getting something of a break on your student loans, you can consider working for a qualifying public service organization. After you have made on-time payments on your student loans for 10 years, you can apply to have the balance forgiven under the PSLF program.
Who is Eligible for the Public Service Loan Forgiveness Program?
As you might imagine, student loan forgiveness isn’t available to just anyone. You have to meet certain requirements in order to qualify for the Public Service Loan Forgiveness program:
- Only the loans that you receive under the Direct Loan program from the government are eligible. Perkins Loans and Federal Family Education Loans are not considered eligible for this program, nor are private student loans.
- You have to use one of the government’s qualified repayment plans to make your 120 on-time, full monthly payments. These plans include the Income-Based and Income-Contingent plans, as well as the standard repayment plans offered by the government.
- Payments have to be made after October 1, 2007 to qualify.
- All of your payments have to be made while you work full-time at a public service organization that qualifies as such. These organizations include local, state, and federal government agencies, as well as non-profit organizations that have a 501(c)(3) designation from the IRS. However, the time you spend in receiving religious instruction, attending worship services, or proselytizing does not count as “full-time employment” activities.
You don’t have to be working at the same organization the whole 10 years, though. If you change to another qualified place of employment, and you keep making your payments, you can still be eligible for the PLSF.
Tracking Your Public Service Loan Forgiveness Eligibility
Your best bet, since you will have to justify your qualifications for the PLSF program over the course of 10 years and 120 loan payments, is to track your eligibility over time. The government offers a handy certification form. The Employment Certification for Public Service Loan Forgiveness (PDF) can be filled out regularly and submitted. You can submit it each year to FedLoan Servicing, or just submit one for each organization you work for as you change jobs.
Submitting the form allows you to see whether you qualify on a regular basis. Additionally, it can give you a heads up if you are missing some information. Submitting this form also ensures that you have good records of your qualifying, since FedLoan Servicing will also help you tally up the number of qualifying payments you have made, and keep you up to date so that you aren’t scrambling at the end of 10 years to try and verify your payments.
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While you can submit your Employment Certification for Public Service Loan Forgiveness form now, the actual application for forgiveness under the PSLF program is still being developed. Since it takes 10 years from 2007 for the first batch of graduates to be eligible, there is no need for the form until 2017.
But, until then, you can keep track of your payments now, and work on ensuring that you eligible when the time comes. Let us know if you have further questions about how to apply to the Public Service Loan Forgiveness Program, and if you’re worried about making your student loan payments try reading our blog post on what to do if you can’t pay your student loans.
Also, don’t forget to try ReadyForZero, a free tool that lets you manage all your debt accounts in one place and helps you stay motivated on your debt-payoff journey!
Image credit: lightpoet