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If you made a word cloud of 2017’s most-searched student loan topics, Public Service Loan Forgiveness (PSLF) would have to be prominent.
In fact, during the week this column was being prepared, about 40 percent of the 195 reader questions we received contained the phrases “Public Service Loan Forgiveness” or “PSLF.”
That popularity is partly because PSLF promises so much. It could wipe out the student loan debt of many public and nonprofit employees.
5 common questions about Public Service Loan Forgiveness
There’s a second reason for the flood of questions about PSLF. The program — although pretty black and white in its requirements — leaves some gray area for borrowers. For example, you must work in public service to qualify for PSLF, but only the loan payments you make while working full time help you achieve it.
The first PSLF applications just became available in September. It’s still a relatively new program, leaving many potential applicants wondering if it’s a fit for them.
Due to the heightened interest, we’re focusing our latest Dear Student Loan Hero column on not one question but five of them. They’re more common than they might sound.
1. Am I on track for PSLF?
The majority of PSLF questions are from readers who don’t yet qualify. That’s because PSLF was created in 2007 and requires 10 years (or 120 months) of timely loan payments.
Some borrowers are just learning about it now. One wrote to us, “I have worked as a school nurse in a public school system for chronic children for the last two years. I was wondering if this setting would qualify for loan forgiveness.”
Provided you meet other requirements, government employees of all sorts are eligible for PSLF. After all, public schools are government entities.
But don’t take my word for it. No matter how far along you are in repayment, fill out the PSLF Employment Certification form. Only then will you know whether your employer could eventually earn you loan forgiveness.
2. Do older payments count toward PSLF?
Relatively new student loan borrowers aren’t alone in wondering if they’ll one day receive forgiveness. There are also borrowers in their 50s and 60s with the same sorts of questions.
One woman wrote to us about her situation: “I work at a nonprofit school. I have for 17 years. My loan [has] doubled over 25 years even though I’ve paid off the $29,000 principal because I put the loan in [forbearance] when I worked part time. I need help finding out how to get info on loan forgiveness given the nonprofit status of my workplace. Please help.”
Unfortunately, only payments made after Oct. 1, 2007, are eligible for PSLF. Also, you must work full time for your eligible employer during repayment.
To this reader, I’d say to complete the PSLF Employment Certification form. In fact, fill it out for each year that you were both employed full time by your nonprofit school and made timely payments on your loan. That will give you the best sense of how much further you’d have to go to achieve PSLF.
It’s also possible that PSLF isn’t the best route to forgiveness. You mentioned that you have been in repayment for over 25 years but were interrupted by a forbearance. If you’re on an Income-Based Repayment plan, you could qualify for forgiveness after 25 years of payments.
3. Is my repayment plan eligible for PSLF?
When you took out your federal student loans, you received a 10-year Standard Repayment Plan. You could have switched to an income-driven repayment (IDR) plan to lower your monthly payments to a percentage of your discretionary income.
Fortunately, IDR plans are PSLF eligible. But that hasn’t stopped confusion.
One mother of a borrower messaged us about her son. He has worked for a nonprofit for five years, she said, but he’s been told he wasn’t eligible for PSLF because he was under the Standard Repayment Plan. The mother asked about receiving “credit” for his half-decade of payments and switching to an eligible plan.
A Standard Repayment Plan is eligible for PSLF. But if it’s the 10-year plan you were assigned as a student, you might not have a balance left to forgive. After all, PSLF requires making 10 years of timely payments.
That means our concerned mother is likely referring to the Standard Repayment Plan associated with Direct Consolidation Loans. Unfortunately, payments made via that Standard Repayment Plan don’t qualify for PSLF.
To echo the Department of Education (DOE), you should switch to an IDR plan as soon as possible if you’re seeking PSLF. You can learn more about applying at StudentLoans.gov.
4. Is my career eligible for PSLF?
One of the surprising requirements of PSLF is that it’s your employer (not your job) that has to gain eligibility.
The school nurse who asked if her workplace qualified for forgiveness isn’t unique. Our customer support team often receives questions about workplace eligibility. Recent graduates message us wondering if they should switch employers. Older readers think about leveraging their past work experience.
Less frequently, something like this happens: A woman read our post about unusual careers that qualify for PSLF, saw call center representative listed, and asked if she too was eligible for PSLF.
“I work in customer service for an utility company and do emergency calls, electric and gas leaks, etc.,” she wrote. “Can I qualify for student loan forgiveness?”
For this reader, the employee-employer distinction is worth pointing out. For her to receive forgiveness, her utility company would have to be a government or nonprofit organization.
The DOE also clarifies that volunteering full time (as a call center rep or in another role) for Americorps or Peace Corps qualifies. But working full time for for-profit organizations, including for-profit government contractors, doesn’t qualify.
5. Is PSLF going away?
For readers who learn they could be eligible for PSLF, the next natural question is whether the program will be around long enough to benefit them.
One reader put it best: “Is PSLF still in effect? I’m hearing conflicting information that’s it’s being cut out.”
There were over half a million borrowers on track to receive forgiveness when the Trump administration first proposed ending PSLF in May, according to The Washington Post. That sounded alarm bells initially.
Fortunately, it became clear the PSLF program’s potential closure would only affect new borrowers. Simply put: If you borrowed a federal loan before July 1, 2018, you’ll remain eligible to apply for PSLF.
Keep seeking clarity on Public Service Loan Forgiveness
PSLF could do a whole lot of good for your student loan situation. But it’s not the right path for every borrower. As you consider how the program fits your situation, assume nothing.
The PSLF requirements are clear, but they don’t always apply seamlessly to borrowers’ situations. Hopefully, these answers helped you figure out what’s best in your case.
If you have a student loan question you’ve been waiting for an answer to, contact our customer support team. Your question might end up in this column.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|