What is the public service student loan forgiveness program?
You might have heard of the Federal Student Loan Forgiveness Program by now. This programs allows loan borrowers to choose a repayment option best for their situation, and allows them forgiveness after 20-25 years of payments. Did you know that there is a part of the program specifically designed for those in public service jobs? If you think that you might fall into this category, then read on.
Public Service jobs are defined as a job that works toward to betterment of the community and country as a whole. This includes nurses, teachers, social workers, government jobs, and non-profit positions. The purpose of this portion of the program is to encourage students going into college to pursue public service jobs, specifically nursing and teaching careers. As predicted by a study, these two fields will decrease over the next decade, leaving the United States in a position where we have about one million less qualified nurses than we need.
Under this program, borrowers would be eligible for forgiveness of their loans after 10 years of on-time payments, as opposed to the usual 20-25 years that is needed for borrowers who hold other positions.
There are several restrictions that have to be met in order to qualify for this portion of the program. Forgiveness can only occur after 120 payments have been made on a federal direct loan, and any payments made before October 2007 would not count toward the 120 payments required.
For the entirety of the 120 payments required, the borrower must be employed full time in a public service position.
The types of loans that are eligible for the forgiveness program include Federal Direct Stafford Loans, Federal Direct PLUS loans, and Federal Direct Consolidation Loans. Perkins loans are not eligible as a part of the public service forgiveness program unless previously consolidated with any of the accepted loans.
Only the income based repayment plan, income contingent, and standard payment plans are eligible to be used if a borrower is looking to use the public service loan forgiveness program.
Lastly, public service student loan forgiveness is not eligible to be taxed.
The United States Department of Education released an employment certification form that should be filled out by the borrower and submitted to ensure that the position held meets the requirements of a public service position. This way, the borrower can also track their progress in the program. A new form should be submitted when the borrower changes employers or positions to verify the position still qualifies and is considered a public service position.