April 30, 2008

Sudent Loan Forgiveness for people working in the public sector

Posted in Consolidation, Legislation Affecting Students, Parent PLUS Loans, Stafford Loans, Student Loan News at 7:03 AM by Joe From Boston

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


  1. dickrenoud@yahoo.com said,

    I work for minimum wage for a 5013C, I am a single mother of 3 & there is no way to make ends meet – so I am on forebearance or deferrment…at what point am I going to make 120 payments? If I do not make 120 payments & ontinue to work for this charity do I qualify for any forgiveness at any time?

  2. insurance said,

    It’s an remarkable piece of writing in support of all the web viewers; they will obtain advantage from it I am sure.

  3. Henry T said,

    Can anyone please tell me why an organization that is classified as a Public Charity 170(b)(1)(a)(ii) does not qualify for public service loan forgiveness (PSLF)? I work at a private university that is also classified as a 501(c)(3) and was recently informed by them that they do not qualify. I am very disheartened by this and would appreciate any insight that any has as to why the ‘Public Charity’ status disqualifies an organization from PSLF.

  4. les said,

    I work at a water plant for the city of Dayton. Would a city worker be eligible for this program?

    • MsReed said,

      Les, The short answer to your question is, it depends on your income to debt ratio and if you are employed as a W2 employee or a 1099 contractor. Visit IBRinfo.org for FAQs.

  5. MsReed said,

    Glen, Working as staff member counts for public service loan forgiveness at *public* universities but not private universities. You must be directly employed by the university and not independently contracted by another entity.

  6. Glen said,

    Does anyone know if working a colleges or universtiies as a Professional staff counts for this loan forgiveness program? Does it have to be public universities or private universities?

  7. MsReed said,

    Most of your questions can be found at: http://www.ibrinfo.org/

  8. […] Sudent Loan Forgiveness for people working in the public sector «Posted in Consolidation, Legislation Affecting Students, Parent PLUS Loans, Stafford Loans, Student Loan News at 7:03 am by moniqueleonard … In the case of Parent PLUS loans, it is the parent who must mee the above 2 requirements, not the student. […]

  9. chryssi said,

    I am a helthcare professional and qualify as a publice service employee. However, due to financial hardship and being a single parent, I am currently behind on my student loan repayment. If I get back on the right track and then pay steadily for 10 years, could I still be eligible?

  10. L-Methionine said,

    the public schools on our district can really give some good education to young kids. they have high standards .-~

  11. actually public schools can also give great education to your kids, it is also as good as most private schools :

  12. jomo said,

    Does an elementary teacher qualify for the public sector if the school is not low-income.

  13. deaners2010 said,

    Does anyone know if Assistant Principals or Adminstrators in Public School systems that are title I would be considered as public sector?

  14. Samuel said,

    I’ve been searching for a while now through the actual legislation itself, but I still cannot find a definitive answer to my question. I am an American citizen working as full-time faculty in a university overseas. I have substantial student loan debt and considerably low income. However, I can only infer from the definitions of public service that they are only talking about the serving the American “public”, and that I would not qualify. Any feedback would be much appreciated.

    • MsReed said,

      Check with the IRS to see if the university you work at is registered as a 501(c)(3) charitable organization. I found the IRS recognizes 47 Canadian universities as 501(c)(3) institutions. This link will bring you to Publication 78 which identifies 501(c)(3) organizations: http://www.irs.gov/app/pub-78/ Once there, you can search by ORGANIZATION or LOCATION. I used the location pull down window, selected Canada, and pushed search. I was pleasantly surprised to find nearly 400 501(c)(3) organizations in Canada. Good luck.

  15. Walt said,

    Is there a contact number for the loan forgiveness program? If so, who is the point of contact?

  16. 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.

  17. Sarah Cason said,

    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?

  18. Sarah Cason said,

    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.

  19. Yolanda Alonzo said,

    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??


  20. 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.

  21. Joy said,

    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?

  22. 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.

  23. James said,

    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?

    • KRstuart said,

      Has anyone found more information about the spousal loan consolidation forgiveness options? My husband and I both work in the eligible professions, consolidated our loans many years ago out of financial necessity.

      Guidance or direction would be greatly appreciated.

  24. 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.

  25. 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:


  26. Steve said,

    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?


  27. According to this document from th Department of education:


    “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.

  28. James A. McGruder said,

    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.

  29. loans said,

    nice post moniqueleonard really helpful post thanks and keep it up 🙂

  30. Ginger Johnson said,

    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?

  31. […] WOW!!  In her recent post she breaks down the recent changes to Student Loan Forgiveness. Check out her post here.  It's a great […]

  32. Excellent resource – I’ll link to it from my blog

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