New Resources Can Help with Student Loan Forgiveness
Just in time for Valentine's Day, the U.S. Department of Education is showing some love for our nation's public employees, many of whom struggle each month with the burden of repaying federal student loans. The department has released a batch of helpful resources to make it easier to take advantage of the Public Service Loan Forgiveness Program. The program cancels the balance of a borrower's federal student loan debt after he or she has served full time in a public service role for at least 10 years, while making on-time qualifying loan payments each month.
Public Service Loan Forgiveness was passed as part of the College Cost Reduction and Access Act of 2007. It applies to people working full time in the public and nonprofit sectors, in careers such as the military, education (early childhood through postsecondary), public health and healthcare support, public libraries and law enforcement, among others that are detailed on the U.S. Department of Education website.
Because the legislation took effect in October 2007, no loans are eligible for forgiveness until 2017. However, the materials recently released include an employment certification form that allows borrowers to keep track of eligible employment and payments. The materials also can help workers figure out if their job and loan payments will qualify them for loan forgiveness in the future as well as how many payments they have left to make.
One important point: The legislation states that the loans eligible are those issued under the federal direct loan program, including Stafford (subsidized and unsubsidized), PLUS and direct consolidation loans. Borrowers can consolidate their federal loans—but not those issued by private lenders—into a direct loan to become eligible for the loan forgiveness, but only payments made under the direct loan payments will count toward the 120 monthly payments.
The Department of Education's website has forms, more details and answers to frequently asked questions. [Barbara McKenna, U.S. Department of Education]
February 2, 2012