March 13, 2009

Student Loan Forgivenes as of Feb. 2009

Posted in Consolidation, Legislation Affecting Students, Parent PLUS Loans, Stafford Loans, Student Loan News, The Financial Aid Process tagged , , , , , at 9:46 AM by Joe From Boston


Last month, the federal Dept. of Education released new guidelines about qualifying for Public Service student loan forgiveness program.

Eligibility Requirements:

  • The borrower must not be in default on the loans for which forgiveness is requested.
  • The borrower must be employed full time by a public service organization –
    • When making the required 120 monthly loan payments (certain repayment conditions apply – see below);
    • At the time the borrower applies for loan forgiveness; and
    • At the time the remaining balance on the borrower’s eligible loans is forgiven.

loan repayment requirements:

  • The borrower must have made 120 separate monthly payments beginning after October 1, 2007 on the Direct Loan Program loans for which forgiveness is requested. Earlier payments do not count toward meeting this requirement.  Each of the 120 monthly payments must be made for the full scheduled installment amount within 15 days of the due date
  • The 120 required payments must be made under one or more of the following Direct Loan Program repayment plans–
    • Income Based Repayment (IBR) Plan (not available to parent Direct PLUS Loan borrowers)
    • Income Contingent Repayment Plan (not available to parent Direct PLUS Loan borrowers)
    • Standard Repayment Plan with a 10-year repayment period
    • Any other Direct Loan Program repayment plan, but only payments that are at least equal to the monthly payment amount that would have been required under the Standard Repayment Plan with a 10-year repayment period may be counted toward the required 120 payments.

Eligible jobs:

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 anduniversities);
  • 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 practioners, nurses in a clinical setting, and full-time professionals engaged in health care practioner occupations and health care support occupations);
    • Public education;
    • Public library services; and
    • School library or other school-based services.
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14 Comments »

  1. Nikki said,

    Is there any income requirement on the repayment? I haven’t seen it noted here and wonder if you are at a certain pay scale whether you can take advantage of this benefit in 2017.
    Thanks!

  2. Jeremy said,

    I am in complete agreement with Sandra and forgiving our student loans or at the very least the accrued interest would be a small start. The “needy” class as it were has more money than I do for the grocery store a month, also I was filling out forms for my daughter’s school and you don’t even have to be a U.S. Citizen to qualify for free or reduced meals —- WTF —
    Let’s just pay their part of the taxes and give them free public education, food and what the hey throw in college too. Meanwhile the hard working college educated U.S. Citizens . . . deal with it.

  3. Sandra Clute said,

    Once again our government is “teasing” the american public that college education is the most important thing one can do to further the greatness and world competiveness.

    I attended President Obama’s commencement address at ASU in May of this year. He went on and on about how the graduates were going to allow the our country to acheive the above statements.

    Our government continues to help the “needy” in this country get a break and a leg up, that if you are illigal, on welfare or public assistance in any way there would be government assistance available. Once again those of us who make more than a certain amount we will get $0.00, without any consideration to the unbelievable burden that places on us. We have 3 college age students and are drowning in dept. from student loans. We are following the notion that education is key. We are never helped with loans, we do not qualify for the tax deductions like the Life Time Earing Credit or other similar credits. Our tax obligations are SO large that when we finish our yearly 1040 forms we too are “poor”. Is it fair that we are being penalized for following the American Dream, scrimping, saving, and not living beyond our meager means so that strangers, not our own children, get all the breaks?

    We truely are sick and tired of not getting ahead because we get no public assistance and end up paying for everyone else.

  4. DEBORAH RICHARDSON said,

    IF A PERSON WANT TO APPLY FOR LOAN FORGIVENESS AND DONT MEET THOSE REQUIREMENTS WHAT CAN THEY DO? I KNOW PEOPLE WHO ARE DAM NEAR OUT ON THE STREET BECAUSE THEY LOST THEIR JOB AND CANT FIND ANOTHER JOB WITH THIS ECONOMY MESS, AND STUDENT LOAN IS BUGGING THE HELL OUT OF THE US, WE CANT EVEN FEED OUR DAM KID AND THEY BUGGING US TO PAY THE MONEY BACK . GARNISHING OUR CHECKS, TAKING OUR TAXES. WE KNOW WE OWE THE MONEY.ANYONE WHO BORROWED MONEY FOR SCHOOL WITHIN THE PASS 10 YEARS SHOULD BE FORGIVEN FROM THEIR LOANS. THE GOVERNMENT IS HELPING EVERYONE BUT US.PEOPLE WITH BACHLORS, AND MASTERS DEGREE CANT FIND JOBS. IF THE GOVERNMENT IS PAYING THE BANKS BACK WHY CANT OUR LOAN BE DISREGARDED. BANKS ARE JUST GREEDY THEY WANT TO BE PAID TWICE WHILE PEOPLE ARE STRUGGLING BANKS ARE SWEATING THEM FOR MONEY THAT THE GOVERNMENT ALREADY PAID THEM BACK.

  5. dan said,

    Very useful post.

    http://www.AdvicesOfStudentLoan.blogspot.com

  6. Kelley said,

    join the peace core, it forgives part of your loan, it use to be up to 70%.
    check it ou

  7. Donna – I’m not sure what you’re asking – which point has you confused?

    Because your loans are in default, you are generally required to make a certain amount of payments before anyone else will lend to you. That’s common, even with other loans like mortgages and car loans.

    Look at it from their point of view – you’re not paying back the money you promised to, so they’re not going to lend you any more.

    The reason your loans are growing is because you’re not paying it back, so the interest accrues and fees are added to the loan.

    I would call your lender and explain that you’ve lost your job and cannot make payments now. The fact that you have not paid in a while is definitely going to hurt you a bit. They may not want to work with you until you’ve paid a payment or two as a show of good-faith. But then again they might.

    You’ll never know till you call.

  8. Donna Hardaway said,

    I have not been able to pay my student loan for sum time now. I am a single parent with two daughters. One in college and there father died and we where not married. I have been terminated from my job and now have NO means of income and can not go back to finish my education, because I am not eligable for a student loan because I have to pay back over $5,000. of my loan in order to get a loan. I don’t understand, I am confused. My loans are from 1977 & 1986. It is now up to $30,000.00. I feel I will never be able to pay this back and complete my educatio at 52 years old now.

    Please advise and direct how my loan can be forgiven during this economic hardship.

  9. debtprisoner said,

    Jason and Monique,

    For more information on lobbying Congress to change the current draconian student debt laws, which offer no standard consumer protections to student loans, check out my new blog: http://studentloancrisis.wordpress.com/

  10. Jason,
    It’s obvious you feel passionately about this. Why not contact your Congressional representatives and let them know how you feel. You may find my comment “it takes an act of congress to fix something” ironic, but it is accurate. You need to speak louder than the banking representatives. Have your family and friends call.

    Some comments – phone calls and letters are weighted heavier than emails, because it takes that much more effort. So call you congreessmen and women today!

  11. Jason said,

    The private loan industry has to be the largest “undetected by main stream media” corrupt organization in this country. Our friendly government will pay illegal aliens to work and give them all kinds of benefits but honest hard working American taxpayers (with large school loans) get NO help.
    This ‘updated change’ is BS! It doesn’t even begin until 2017. Why does Congress repeatedly turn a blind eye to the private sector……$$$ regardless of them saying they don’t take it. Lets allow people to stay on welfare, food stamps, allow illegal’s to freely work here (b/c it’s cheaper for the employer and his taxes) but again nothing for college educated persons who come into this poor economy with loans soo high that the salary will never match. And the government portrays college as “great” and ‘you will go further with an education’…well, what they don’t say is how much trouble you’re getting yourself into.
    It’s kind of ironic that the quote “it takes an act of congress to fix something”….well, not in this case!

  12. Bl1y – I think that’s the point. After all, this is the government essentially erasing debt. I don’t think they plan on erasing $15,000 per person.

  13. bl1y said,

    Work in a public interest job AND make payments for 120 months (10 years!)? By the time your loan can be forgiven, it will be almost entirely paid off. The amount that will be forgiven will be tiny, especially in light of the money given by working in the public sector instead of private.

    • Masterblaster said,

      I owe $157,000 after law school. I know that I couldn’t pay that off in 30 years time because I don’t make very much money. The ten year cap is freaking awesome in my opinion. The amount of money forgiven is NOT always tiny.


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