Public Service Jobs Relieve Student Loan Debt

College is expensive, and tuition rates are only going up. If you want a formal education and a college degree, it’s going to cost you, whether you’re kicking your college career off at a community college or heading straight to the Ivy League. Decreasing the amount of your student loans allows you to get an education without student loan debt that will follow you around for the rest of your life. Grants and scholarships are the best ways to limit the amount of money you have to borrow up front, while the federal government’s Public Service Loan Forgiveness Program limits how much borrowed money you have to pay back.

College Cost Reduction and Access Act of 2007

The public service sector needs employees, but the private sector generally pays higher wages for the same degree-level job titles. That leaves the government at a disadvantage when it comes to getting the best and brightest university graduates to fill available positions.

The cost of college in the United States is also prohibitive to many potential students from lower and middle-income families, forcing people to seek work instead of degrees out of high school.

The government addressed both these issues with the College Cost Reduction and Access Act of 2007. The Act made changes in grant and loan laws to make college more accessible and affordable to individuals who want a college education. It also contained a public repayment plan for public service employees, known as the Public Service Loan Forgiveness Program (PSLF).

Public Service Loan Forgiveness Program

The Public Service Loan Forgiveness Program works to reduce student loan debt owed on student loans by forgiving any debt still owed after 10 years of employment in public service. This loan forgiveness applies only to loans included in the William D. Ford Federal Direct Loan Program, which includes direct subsidized and unsubsidized loans (Stafford loans), direct PLUS loans for graduate students and parents, and direct consolidation loans.

In order for loans to be forgiven, you must work full-time in a qualifying public sector job for a total of 120 months. Employment in the following categories is eligible for loan forgiveness under PSLF:

  • Government
  • Military service
  • Law enforcement/Public safety
  • Emergency management
  • Public health
  • Public education
  • Public social work
  • Public legal service
  • Public library services
  • Tax-exempt organizations
  • Peace Corps
  • AmeriCorps
  • Tribal universities, government, and public service

What is Considered Full-Time Employment?

To be considered a full-time employee eligible for debt forgiveness under the Public Service Loan Forgiveness Program, you must work:

  • A yearly average of at least 30 hours per week
  • An employment period of at least 8 months, working an average of at least 30 hours per week (as in the case of public school teachers)
  • The number of hours per week considered “full-time” by your employer

The thirty hours per week does not have to be worked in a single public service position. You can work two or more jobs in the public service sector in order to qualify for loan forgiveness.

What are the Payment Requirements?

Before you meet the eligibility to have your student loans forgiven, it is up to you to reduce the amount of debt that the government must forgive. The terms of your student loan payments are narrow and you must meet every requirement in order for your loans to retain their eligibility for forgiveness. To keep payments eligible, according to the Public Service Loan Forgiveness Program:

  • All loan payments must be made while employed in your public service job
  • All loan payments must be based on an accepted government payment plan (Standard, Income-Based or Income-Contingent)
  • All payment must be made on-time, according to your payment plan (a federal loan payment is considered late 15 days after the due date)
  • All payments must be made as they come due (you can’t pay all payments up front, for instance)
  • Only payments made after October 1, 2007 qualify toward forgiveness

Direct Consolidation Loans

If your student loans aren’t all in the form of direct loans from the federal government, it’s a good time to consolidate your loans into one. Since direct consolidated loans are eligible for loan forgiveness, consolidating eligible loans into a single loan ensures the balance on all eligible loans will be forgiven once you make the 120 payments required. Loans eligible for consolidation include:

  • Federal Perkins Loans
  • National Defense Student Loans
  • Federal Supplemental Loans for Students
  • Parent Loans for Undergraduate Students
  • Health Professions Student Loans
  • Nursing Student Loans
  • Loans for Disadvantaged Students

Private loans from banking institutions are not guaranteed by the federal government and, therefore, not eligible for consolidation of student loan debt or loan forgiveness. These loans must be separately from your federal government loans until you have paid off the entire balance.

Applying for Loan Forgiveness

Once you have met the criteria for debt forgiveness through your public service employment, you will be required to submit a PSLF form through the U.S. Department of Education’s Office for Federal Student Aid. Since the first loan payment to qualify for eligibility was in October 2007, the first public service workers will not qualify for forgiveness until October 2017, so the Department of Education has not yet created the PSLF application.

All major forms from the Office for Federal Student Aid are available online, though, so you will likely be able to access the form and apply for loan forgiveness directly on the Federal Student Aid website.

Even with grants and scholarships, most people who leave college in the U.S. do so with some student loan debt. Eliminating as much of this debt as possible is imperative to a healthy financial future. By going into public service, you will not only be serving the people of the United States, you will reduce student loan debt to the federal government. If you start working in the public sector directly out of college, you can be free of student loan debt in your early 30s, no matter how much debt you accumulate throughout your college career.

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