Public Service Loan Forgiveness Program

Melissa Luechtefeld, Doctor of Pharmacy Candidate Class of 2015 University of Missouri-Kansas City School of Pharmacy at MU

Melissa Luechtefeld, Doctor of Pharmacy Candidate Class of 2015
University of Missouri-Kansas City School of Pharmacy at MU

Do you have one of the following Direct Loan Program loans?1,2

  • Federal Direct Stafford/Ford Loans (Direct Subsidized Loans)
  • Federal Direct Unsubsidized Stafford/Ford Loans (Direct Unsubsidized Loans)
  • Federal Direct PLUS Loans (Direct PLUS Loans)—for parents and graduate or professional students

o   Parents may qualify for forgiveness of the PLUS loan if the parent borrower is employed by a public service organization, regardless of the student’s employer

  • Federal Direct Consolidation Loans (Direct Consolidation Loans)

Do you work for or plan to work full-time for one of the following public service organizations?1,2

  • Serving in a full-time AmeriCorps or Peace Corps position
  • A government organization, including a federal, state, local, or tribal organization, agency, or entity; a public, child, or family service agency; or a tribal college or university
  • A not-for-profit, tax exempt organization under section 501(c)(3) of the Internal Revenue Code
  • A private, not-for-profit organization (that is not a labor union or a partisan political organization) that provides one or more of the following public services:

o   Emergency management

o   Military service

o   Public safety

o   Law enforcement

o   Public interest law services

o   Early childhood education (including licensed or regulated health care, Head Start, and state-funded pre-kindergarten)

o   Public service for individuals with disabilities and the elderly

o   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)

o   Public education

o   Public library services

o   School library or other school-based services

If you answered yes to the two questions above, you are eligible for the Public Service Loan Forgiveness (PSLF) Program. This program was created to encourage individuals to seek employment full-time in public service jobs.

Facts about PSLF1,2

  • Participants will qualify for loan forgiveness:

o   After making 120 qualifying payments after October 1, 2007 on their loans

  • Since 120 payments must be made, the first forgiveness of loan balances will not be granted until October 2017

o   If employed full-time, as defined by employer and at least an annual average of 30 hours per week, not including time spent participating in religious instruction, worship services, or any form of proselytizing, by one of the above public service employers:

  • When making each of the 120 qualifying payments;
  • At the time of application for loan forgiveness; and
  • At the time the remaining balance on the eligible loans is forgiven
  • Part-time employment in more than one qualifying job simultaneously may meet the full-time requirement if a combined average of at least 30 hours per week are fulfilled

o   As long as loans for which forgiveness is requested are not in default

  • The program is available only for loans made and repaid under the Direct Loan Program. Other loans can become eligible for forgiveness if they are consolidated into a Direct Consolidation Loan, and only payments made on the Direct Consolidation Loan will count toward the 120 qualifying payments. The following loans can be consolidated:

o   Federal Family Education Loan (FFEL) Program loans, which include

  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
  • Federal PLUS Loans—for parents and graduate or professional students
  • FFEL Consolidation Loans (excluding joint spousal consolidation loans)

o   Federal Perkins Loans

o   Certain Health Professions and Nursing Loans

  • Note: “To consolidate a Federal Perkins Loan or Health Professions or Nursing Loan into a Direct Consolidation Loan, you also must consolidate at least one FFEL Program loan or Direct Loan. If you are unsure about what kind of loans you have, check the U.S. Department of Education’s (ED’s) National Student Loan Data System (NSLDS) at www.nslds.ed.gov2

Specific Loan Repayment Requirements for Forgiveness under PSLF1,2

  • Qualifying payments are those made for the full scheduled installment amount no later than 15 days after the scheduled due date; the 120 required payments do not need to be made consecutively.
  • The 120 required payments must be made under one or more of the following Direct Loan Program

Repayment plans:

o   Income-Based Repayment (IBR) Plan (not available for Direct PLUS Loans made to parents or for Direct Consolidation Loans that repaid Direct or FFEL PLUS Loans made to parents)

o   Pay As You Earn Plan (not available for Direct PLUS Loans made to parents or for Direct Consolidation Loans that repaid Direct or FFEL PLUS Loans made to parents)

o   Income Contingent Repayment (ICR) Plan (not available for Direct PLUS Loans made to parents; however, Direct Consolidation Loans that repaid Direct or FFEL PLUS loans made to parents may be repaid under ICR)

o   10-Year Standard Repayment Plan

o   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 10-Year Standard Repayment Plan may be counted toward the required 120 payments

  • Note: Forgiveness of the remaining balance of a borrower’s eligible loans after the borrower has made 120 qualifying payments on these loans will be granted by the PSLF Program. On average, only borrowers making reduced monthly payments through the IBR, Pay As You Earn, or ICR repayment plans will have a remaining balance after the 120 payments are made on a loan.

How to Apply and Keep Track of Eligibility1,2

  • Complete the Employment Certification for Public Service Loan Forgiveness form, including employer’s certification of employment

o   Monitors progress toward making the 120 qualifying payments necessary to apply for PSLF

o   Allows completion of employer’s certification of employment while still working at the organization or shortly after leaving to confirm qualifying employment and Direct Loan payment eligibility

o   A list by state of eligible employers is not available; use this form to verify employment eligibility, or for a preliminary check, inquire with human resources to see if the organization meets the public service requirements previously listed

  • Submit the Employment Certification for Public Service Loan Forgiveness form annually to FedLoan Servicing, the PSLF servicer, at the address listed in Section 6 of the Employment Certification form

o   Submission can be done less frequently than annually to cover more than one year’s employment or for more than one employer

o   Periodic use of this form is not required, but highly suggested to help keep track of progress toward meeting PSLF eligibility requirements

o   If the form is not submitted periodically, submission of a form for each qualifying employer at the time of application for the forgiveness and when forgiveness is granted will be required

  • After the 120th qualifying payment is made, submit the PSLF application to receive loan forgiveness.

o   This application is currently under development, as the first borrowers will become eligible for forgiveness in October 2017

  • For more details on the PSLF Program, click here.

 

Melissa Luechtefeld, Doctor of Pharmacy Candidate Class of 2015
University of Missouri-Kansas City School of Pharmacy at MU

References

  1. Federal Student Aid. Public Service Loan Forgiveness. https://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service. Accessed October 10, 2014.
  2. Federal Student Aid. Public Service Loan Forgiveness Program. https://studentaid.ed.gov/sites/default/files/public-service-loan-forgiveness.pdf. December 2013. Accessed October 10, 2014.

 

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