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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
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:
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.
Let’s take a deeper look at the requirements for Public Service Loan Forgiveness…
As mentioned before, only certain types of federal loans are eligible. These include:
That means these kinds of popular loans do not qualify:
* 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.
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:
CNBC notes the standard repayment plan also qualifies, though most people would already have their loan paid off in 10 years under that plan.
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.
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.
Make this your first stop when you’re ready to file!
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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