4 Interesting Facts About The Public Service Loan Forgiveness Program

[dropcap]Y[/dropcap]ou can receive up to 100 percent student loan forgiveness if you use your degree to obtain a career in public service. You must work for qualified employers for at least 10 years while making 120 timely payments in accordance with the selected repayment plan. Upon fulfilling the program requirements, your remaining loan balance is forgiven. Since the IRS does not view the forgiven balance as income, you will not even need to claim that amount on your taxes. Before you sign up for the Public Service Loan Forgiveness, or PSLF, program, here are four important facts you need to know.

Consolidated Loans Qualify

All loans received under the William D. Ford Federal Direct Loan program qualify for the forgiveness plan. If you have additional loans under the Federal Family Education Loan or Federal Perkins Loan programs, you can consolidate to wrap them into the qualifying loan amount. You must complete the loan consolidation process early, and in full, to avoid making additional unnecessary payments. Once you consolidate your loans, the counter for the 120 qualifying payments resets. Therefore, it is of vital importance that you consolidate your loans immediately upon reaching the end of your grace period.

Employment Restrictions Exist

To qualify for the PSLF program, you must work in a career dedicated to serving the public. Throughout the repayment period, you must maintain full time employment or work at least 30 hours a week across multiple part time positions. Certain careers also require employment with an organization dedicated to improving the lives of low income individuals. Teachers, librarians, childcare workers, speech pathologists and attorneys, for example, only qualify if their position serves low income communities. Police officers, firefighters and medical providers, on the other hand, do not have any additional employment restrictions.
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Timely Monthly Payments Required

You can select the 10-year Standard Repayment Plan or apply for one of the income driven options to start working toward 120 qualifying payments. You must make the payments in full and on time to ensure they meet the strict program requirements. You can schedule automatic withdrawals through your bank to ensure your monthly payment arrives on time. If you run into financial difficulties and cannot make your payments, you can place your loans in forbearance or deferment and resume the repayment plan at a later date.

Periodic Form Submission Needed

If you are not sure if you have fulfilled the program requirements, you can submit an Employment Certification for Public Service Loan Forgiveness form. You should also submit this form whenever you start a new job to make sure your employer meets the program restrictions. Once you reach the 120 qualified payment mark, your loan balance is not instantly forgiven. Instead, you must fill out the PSLF application forms and send them to your loan servicer for processing. You will receive a loan forgiveness confirmation upon completion of the verification process.

Preparing Your Loans For The Forgiveness Program

To ensure your student loans are fully prepared for the forgiveness program, talk to a consolidation expert about your unique financial situation. Your loan consolidation professional will find and combine all of your loans to create a single entity that qualifies for participation in the Public Service Loan Forgiveness program. You may also want to receive help selecting an appropriate repayment program for your financial situation. Enlisting a professional in these endeavors ensures you do not leave loans out of the consolidation group, select the wrong repayment program or miss any application steps.

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