In October, 2017 the very first student loan borrowers became
eligible to have their balances discharged under the
Public Service Loan Forgiveness (“P.S.L.F.“) program announced
by the Department of Education.
Chances are, no one qualified.
Why?
First, it is important to realize that Public Service
Loan Forgiveness is really a pro-active program,
and not a retroactive one. No one is giving you
credit for being a teacher, for example, for the last
twenty years.
In order to get credit towards PSLF forgiveness in
ten years, there are three basic requirements, all
of which must be met.
First, you must have a qualifying employer. Any non-profit, government, or military employer counts, but you must
be working for them a minimum of 30 hours per week.
Notice that the type of job isn’t critical, but the employer’s
status is. So for example, anyone working 30 hours or
more a week for a school district, from janitor to
teacher to superintendent, can count that work toward
PSLF.
Second, you must be making payments toward your studentloans. This is why merely “being a teacher,”or being a cop”
won’t work. You need to be sending in a payment every
month. A reduced payment issued under one of the
income based repayment plans counts, but putting
your loans into determent or forbearance doesn’t count.
Third, you need to be making paymnents on the right
type of loan. The right type of loan is a consolidated
federal direct student loan, which needs to be placed
on either the standard 10 year repayment plan, or
on one of the federal income-based repayment plans
(ICR,IBR, PAYE or REPAYE, for example).
Recent graduates may just “have” the right type of loan
out-of-school, but older folks may have to apply to
“get” the right type of loan if they want PSLF.
Putting the three elements together, forgiveness happens
once you have made 120 payments toward a direct student loan on a qualified payment plan, while you are working 30 hours plus for a qualified employer.
Do all that, and your loans are forgiven. While it might
sound like a lot of hoops to jump through, PLSF is a
worthy goal to shoot for, for long term employees in
the public and non-profit sectors.