04.30.08
Sudent Loan Forgiveness for people working in the public sector
I’ve been asked a LOT of questions about this since the new legislation was passed in October, and I finally have some concrete details to share with you.
You can view a PDF from the Department of Education that explains the changes. Access the PDF here. These are guidelines. Final regulations will be issued in November 2008.
Here are the highlights:
- You MUST make 10 years of payments (120 payments ) after October 2007 before your loans are forgiven – that means loan forgiveness won’t even start until October 2017.
- You MUST be employed in the public sector for all of those 120 payments.
- You MUST be employed in the public sector at the time the loans are forgiven.
- In the case of Parent PLUS loans, it is the parent who must mee the above 2 requirements, not the student.
- Your loans MUST be Direct Loans. Now those of you in the FFELP program, don’t panic – you can consolidate (or re-consolidate) your loans into the Direct Loan program to qualify.
IMPORTANT: As many of you know, the standard repayment period for student loans is 10 years. Essentially, those of you with high balances that you consolidate (ans thus extend the repayment period), or those of you on a reduced-income repayment plan will be eligible.
Here is a list of public-service full-time positions that are eligible:
• Emergency management
• Government
• Military service
• Public safety
• Law enforcement
• Public health
• Public education (including early childhood education)
• Social work in a public child or family service agency
• Public child care
• Public service for individuals with disabilities
• Public interest law services (including prosecution or public defense or legal advocacy in low income communities at a nonprofit organization)
• Public service for the elderly
• Public library sciences
• School-based library sciences and other school-based services
• Certain tax-exempt organizations
• Faculty teaching in high-needs areas, as determined by the Secretary
• Full-time faculty member at a Tribal College or University
True Education said,
April 30, 2008 at 4:01 pm
Excellent resource – I’ll link to it from my blog
Forgive Me... Please!! - True Education said,
April 30, 2008 at 4:51 pm
[...] WOW!! In her recent post she breaks down the recent changes to Student Loan Forgiveness. Check out her post here. It's a great [...]
Ginger Johnson said,
June 20, 2008 at 6:12 am
HELP!!! Was talked into a spousal consolidation by Sallie Mae with my now ex-husband. We both work in the public sector and could be eligible for the 10 year forgiveness program EXCEPT we can’t reconsolidate a spousal consolidation into the Direct Loan program. And, of course, Sallie Mae won’t even consider letting us unconsolidate.
Does anyone have any suggestions?
loans said,
July 16, 2008 at 1:22 pm
nice post moniqueleonard really helpful post thanks and keep it up
James A. McGruder said,
July 29, 2008 at 12:57 pm
I would like to know how to apply for loan forgiveness under a “Public service for individuals with disabilities”. I have been employed for greater than 20 years working with the Division of Vocational Rehabilitation services.
moniqueleonard said,
July 29, 2008 at 1:12 pm
According to this document from th Department of education:
http://studentaid.ed.gov/students/attachments/siteresources/LoanForgivenessMarch18.pdf
“Effective Dates: Borrowers must have made 120 monthly payments after October 1, 2007 in the William D. Ford Federal Direct Loan (Direct Loan) Program. Therefore, the first cancellations of loan balances will not be granted until October 2017 at the earliest.”
So you won’t be able to benefit for another 9 years. If this is still important to you, make sure your loans are Direct Loans. If not, you’ll need to consolidate your federal student loans into a Direct Loan consolidation.
More details will be available in November 2008 and I’ll make sure to post them.
Steve said,
July 30, 2008 at 3:23 pm
Hi Monique, its Steve again,
The Loan Forgivness for Public Service Employees Program says Direct Plus Loans qualify. However the only way to have a balance to forgive after 10 years is to qualify to make payments under an “Income Contigent” (ICR) or “Income Based” (IBR/available next year) payment plan. Neither of these plans are available to parent PLUS loan borrowers.
So it would appear that parent plus loan borrowers are out of luck.
Do I have this this right?
Steve
moniqueleonard said,
July 31, 2008 at 12:27 pm
HI Steve,
At this point I think you know even more about this than I do. If you’re looking for more information I would recommend contacting the Department of Education directly as they’re you’re best source of information becaue they run the loan forgiveness programs.
I’d recommend a phone call as you can keep them on the line until all your questions are answered. Their phone number for general inquiries is:
1-800-USA-LEARN
deepak student loans said,
August 2, 2008 at 3:28 am
Another advantage student loan has over other loans is that the rates and terms are much more lenient. First of all, the interest rates for student mortgages are variable, much lower than other loans and at this moment there is a cap on the maximum interest you will pay. Secondly, depending on the repayment plan you choose, you can also take as much as 30 years to pay back your loans. Additionally, if your financial situation takes a nose-dive, you may also be eligible to defer repayment on your student mortgages up to three years and depending on what you do after school, some of the loan may be forgiven.
James said,
August 4, 2008 at 3:30 pm
I too am curious about the spousal considation question. My wife is a nurse, and respoonsible for a huge chunk of the debt, but I am curious if the loans would be ineligible since it is a spousal. Has anyone heard any info on this. Does anyone know how to reconsolidate a spousal consolidation?
moniqueleonard said,
August 5, 2008 at 7:59 am
James –
I’m really not sure. All these confusing issues is one major reason why spousal consolidations are no longer allowed.
If there’s any hope, contact the Department of Education directly. They’re your best bet as you need a Direct Loan consolidation in order to qualify, plus as Direct Loans is through the federal government, they’re not as, well, unmoving as some other lenders might be.
Joy said,
September 30, 2008 at 7:12 am
I’m confused! Above it says:
IMPORTANT: As many of you know, the standard repayment period for student loans is 10 years. Essentially, those of you with high balances that you consolidate (ans thus extend the repayment period), or those of you on a reduced-income repayment plan will be eligible.
In the PDF from the Dept. of Education it says this:
Eligibility Requirements – Repayment Plans: To be eligible to have remaining balances cancelled, the borrower must not be in default on the eligible loans and must –
• Have made 120 monthly payments on the eligible loan(s) beginning after October 1, 2007. Earlier payments do not count toward meeting this requirement. Payments must have been made under any one or a combination of the following Direct Loan Program repayment plans –
o Standard Repayment Plan with a 10-year repayment period.
o Income Contingent Repayment (ICR) Plan – not available to parent Direct PLUS loan borrowers.
o Income Based Repayment (IBR) Plan – not available to parent Direct PLUS loan borrowers.
o Other Direct Loan repayment plans, but only payments that are at least equal to the amount that would be required under the 10-year Standard Repayment Plan may be counted toward the required 120 payments
If the qualifying payment has to be at least as much as required under the Standard Repayment Plan for 10 years, there wouldn’t be anything to forgive!
Am I missing something?
moniqueleonard said,
September 30, 2008 at 7:17 am
Joy,
you’ve captured the important part, what I was trying to point out in my “IMPORTANT” paragraph.
People with small balances will NOT benefit. They will repay all their loans in 10 years (mind you, $10,000 can be considered small! We’re talking the loan company’s opinion, not yours.)
They way I read it, only those with large balances in their consolidations will have anything forgiven, as they are the ones with 15 and 20 year repayment plans.
Yolanda Alonzo said,
December 19, 2008 at 1:07 am
I have for the four past year worked with victims of domestic violence at Maricopa County Hopsital, in Phoenix Az. Our Patients are low income. Would this qualify for this Student Loan Dedault??
Thanks,
Yolanda
Sarah Cason said,
March 12, 2009 at 10:20 pm
Concerning consolidating loans that previously consolidated the debts of spouses, I believe it may be possible to consolidate this debt again as long as you have an additional qualifying student loan to add to it, that is in the name of one of the spouses on the first consolidation loan. Additionally though, the new consolidation loan may end up only in the one name of the spouse whose name is on both debts. Sorry this sounds so confusing.
I have a question about loan forgiveness. What if someone works for a 501c3 public charity full-time, but is not paid? The wording is somewhat confusing on some of the instructions I have read. It refers to someone who is a paid volunteer. This is an oxymoron. If you are paid, then you are not a volunteer. To be a volunteer, you are not paid. Huh? Other places it states simply that you qualify if you “SERVE” a 501c3 charity.
Sarah Cason said,
March 12, 2009 at 10:47 pm
Okay, I did a little reading…www.independentsector.org and http://www.peacecorp.gov. Peace Corp Service is truly volunteer. These volunteers are eligible for a forbearance where they do not pay while serving. It was determined that for them to qualify for loan forgiveness, they would need to forgo this benefit and either continue to make payments while serving or make a lump sum payment when they returned at the end of their tenture. Record keeping seems to be an important issue, but if Peace Corp service qualifies, then other full-time volunteer service should as well. The intent of this benefit was to encourage people to serve in any 501c3 non-profit. Any thoughts?
moniqueleonard said,
March 13, 2009 at 8:12 am
Sarah,
You’re in luck as the federal Department of Education issued a new document last month about the public sector forgiveness program. You can access the PDF file here: http://studentaid.ed.gov/students/attachments/siteresources/LoanForgivenessv4.pdf
Here’s the list of qualifying jobs:
What types of public service jobs will qualify a borrower for loan forgiveness under this program?
The borrower must be employed full time (in any position) by a public service organization, or must be serving in a full-time AmeriCorps or Peace Corps position. For purposes of the Public Service Loan Forgiveness Program, the term “public service organization” means –
A federal, state, local, or Tribal government organization, agency, or entity (includes most public schools, colleges and universities);
A public child or family service agency;
A non-profit organization under section 501(c)(3) of the Internal Revenue Code that is exempt from taxation under section 501(a) of the Internal Revenue Code (includes most not-for-profit private schools, colleges, and universities);
A Tribal college or university; or
A private organization that is not a for-profit business, a labor union, a partisan political organization, or an organization engaged in religious activities (unless the qualifying activities are unrelated to religious instruction, worship services, or any form of proselytizing) and that provides the following public services –
Emergency management;
Military service;
Public safety;
Law enforcement;
Public interest law services;
Early childhood education (including licensed or regulated health care, Head Start, and state-funded pre-kindergarten);
Public service for individuals with disabilities and the elderly;
Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations);
Public education;
Public library services; and
School library or other school-based services.
NOTE: To qualify for forgiveness of a parent PLUS loan the parent borrower, not the student on whose behalf the loan was obtained,
must be employed by a public service organization.
Walt said,
August 6, 2009 at 12:39 pm
Is there a contact number for the loan forgiveness program? If so, who is the point of contact?
moniqueleonard said,
August 6, 2009 at 12:41 pm
Walt,
I know of no specific contact, but try visiting the government’s website for student loans:
http://studentaid.ed.gov/PORTALSWebApp/students/english/repaying.jsp