How to know if you qualify for student loan forgiveness

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student loan forgiveness
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The Public Service Loan Forgiveness (PSLF) program is pitched as a lifeline for students who emerge with student loan debt from college into careers that may not exactly be the highest paying in the world.

But how well is our system for student loan forgiveness working?

In this article, we’ll look at some of the roadblocks that people are encountering with this program — and how you can give yourself the best chance of pushing through them to get your loans forgiven if you qualify.

RELATED: How to get your student loans cancelled if your college abruptly shuts down

Understanding the Public Service Loan Forgiveness program

The Public Service Loan Forgiveness program (PSLF) was signed into law in 2007 with the basic idea that you could get the remainder of your student loan balance wiped out if you worked in certain fields for 10 years and made timely payments during your tenure.

Here are the exact requirements:

  1. Only federal direct loans qualify for forgiveness.
  2. You must do qualifying full-time work — typically at a government organization (federal, state or local); a 501(c)(3) not-for-profit organization; or some kind of not-for-profit entity that provides public service.
  3. You must make 120 qualifying, on-time monthly payments in an allowed repayment plan.

Seems like simple and straightforward criteria, right?

Yet only 206 people out of more than 41,000 applicants have had their loans forgiven so far ! That’s according to new data released by the U.S. Department of Education.

Of those who didn’t make the cut, approximately 32,000 applications were flagged for not meeting program requirements. Another nearly 12,000 applications were kicked out of the system because they were missing necessary information.

Here’s how to know if you qualify for student loan forgiveness

Let’s take a deeper look at the requirements for Public Service Loan Forgiveness…

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Which kind of students loans qualify for forgiveness, and which don’t?

As mentioned before, only certain types of federal loans are eligible. These include:

  • Federal Direct Subsidized Stafford/Direct Loans
  • Federal Direct Unsubsidized Stafford/Direct Loans
  • Federal Direct PLUS Loans
  • Federal Direct Consolidations Loans

That means these kinds of popular loans do not qualify:

  • Federal Family and Education loans (FFEL)*
  • Private student loans

* You have the option to consolidate your FFEL loans into a direct loan. But that automatically restarts the clock on the 120 months of qualifying on-time payments you must make.

Which repayment plans are eligible for student loan forgiveness? 

In addition to having the right kind of loan and the right kind of job after you graduate, you also need to be in the right kind of federal repayment plan to qualify for PSLF:

  • Income-contingent repayment
  • Income-based repayment
  • Pay-as-you-earn repayment
  • Revised pay-as-you-earn repayment

CNBC notes the standard repayment plan also qualifies, though most people would already have their loan paid off in 10 years under that plan.

Make sure your job stays eligible for forgiveness from year-to-year

This is a very important step that trips a lot of people up!

You don’t want to think you’re working for, say, a legitimate non-profit organization for 10 years only to find out it doesn’t qualify for the PSLF program.

To avoid that messy situation, make sure you fill out an employer certification form annually. It will help establish that your workplace is a qualifying employer.

Ready to file paperwork for student loan forgiveness? Do this first

The U.S. Department of Education has launched a new tool to assist you with filing for public service loan forgiveness when you’re ready.

PSLF tool

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Make this your first stop when you’re ready to file!

What’s next for the Public Service Loan Forgiveness program? 

The White House’s 2020 budget proposal calls for the elimination of the PSLF program.

Now, let’s be perfectly clear: It’s not expected that Congress will pass the budget as written.

But if that were to happen, it would means there would be no path to loan forgiveness for anyone taking out a student loan after July 1, 2020, with an eye toward working in public service.

We’ll keep you up to date with any new developments in this arena.

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