Work in Public Service and Get the Chance to Have Your Student Loans Forgiven

Student Loans

Many students resort to getting student loans in order to successfully finish college. After graduation, they face the challenge of having to repay their debts. If you are a student who applied for a student loan from the federal government or you have already graduated and you are in the process of paying your loans, you might be interested about the Public Service Loan Forgiveness Program or PSLF that’s backed by the government.

What is PSLF?

PSLF is a government program that may forgive part of your student loans if you meet certain requirements. This is only for those who have federal direct loans. If you have debts from the Federal Perkins Loan or Federal Family Education Loan Program, you may not be eligible for PSLF. However, if you have a federal direct loan, you may consolidate your other federal loans into one payment, including Perkins and Family Education Loan, so that they can be included in the PSLF program. Private loans or loans made that are not from the federal government cannot be consolidated.

Eligibility for PSLF Program

One of the requirements for you to be eligible for the program and have your remaining balance possibly forgiven is to work in a government agency or an organization that is exempted from tax by the IRS. You must work full time on any of the said employments. Full time means that you should complete at least 30 hours of work per week.

You must also make at least 120 monthly loan payments that are full and on time. Only payments made from October 2, 2007 will be counted. This means that the first ones to be granted this forgiveness, if qualified, will be determined in 2017.

Available Repayment Plans

There are four types of repayment plans available for repaying your student loans. Determine which one would be the most convenient for you.

Standard Repayment Plan

Repayment Plans

While you have the option to choose on which repayment plan you’ll use for your debts, if you were not able to choose one for some reason, it will be defaulted to the standard repayment plan. In this plan, you will pay at least $50 a month for a 10 year period, if paying for a direct loan. But if you have consolidated loans, the years of payment can be between 10 to 30 years, depending on the amount of your debt.

Since a 10 year repayment plan is shorter, you will be able to pay your debts earlier compared to the other plans. The monthly payment would just be higher, but it would also incur lower interest. However, if you are considering loan forgiveness for your direct loan, you have already paid for your debts within that 10 year period, so there’s no balance to forgive after those years, even if you qualify for it. You may benefit from this if you have a consolidated loan that takes over 10 years to pay.

Income Based Repayment Plan

This is for those that have a partial financial hardship. If you feel that the standard repayment plan is not convenient for you, you may choose this plan as the monthly repayment  depends upon your salary and the size of your family. As long as the monthly payment for this plan is lower than what you would pay on a standard payment plan, then you can choose this one.

The monthly payment is 15% of your income after tax and other essentials. This is called a discretionary income. The payment period is up to 25 years. If you qualify for the loan forgiveness after 10 years of paying your account, your remaining balance will be forgiven. The payment is adjusted per year, again, base on your family size and income.

Pay as You Earn Repayment Plan

Like the income based repayment plan, you will qualify for this if you have a partial financial hardship. Your monthly payment will also depend on your income and the size of your family. You will pay 10% of your discretionary income and it can last for up to 20 years. If you meet certain requirements, remaining debts not paid during that 20 year period may be forgiven. If you qualify for the PSLF, the remaining amount after 10 years of payment will be forgiven.

Income-Contingent Repayment Plan

This is for those who do not qualify for the pay as you earn and income based repayment plan. The repayment can reach up to 25 years and the amount depends on your loan balance, the size of your family and your gross income.

PSLF can help you be free from your student loans. But remember not everyone qualifies for this. If you don’t qualify, you still have to repay all the balance, including the interest. So make sure that you also choose the right repayment option for you.

Photo Attribution:

Featured and 1st image by Sasikiran 10 (Own work) [CC-BY-3.0 (], via Wikimedia Commons

2nd image by ddpavumba /