3 Qualifications Needed for the Public Service Loan Forgiveness Program

Flor Carabez
Jun 6, 2022
4 min read

In case you haven't heard, our country has been undergoing a student loan debt crisis of $1.3T as of 2016, according to Consumerreports.org. Having this crisis hyper-focused by media, scammers and myths regarding loan forgiveness have risen.

Just in case you were wondering, the information I am providing on here is coming directly from the Student Aid website, therefore, it is super factual/credible.

One of the reason's why I'm so passionate about financial health is because my financial habits were negatively impacting my mental health, and coming to realize my student loan debt, my independent financial health is at an all-time low.

After earning my Bachelor's and Master's degree, my Federal Loan debt is of $73,555.15.

This amount does not include my private loan debt or the debt that I'm paying from the Parent Plus Loans my dad borrowed for me. This is important to note because, the Public Service Loan Forgiveness program only includes your Direct Loans.

Onto the good stuff.

Employment

You need to be employed full-time by a government agency or a certain type of non-profit organization (NPO). Below are more specifics...

Government organizations at any level (federal, state, local, tribal).

NPOs under the 501(c)(3) section of the Internal Revenue Service code (IRS).

Other NPOs not tax exempt under 501(c)(3) providing a qualifying public service as their primary service, such as:

Emergency management
Military service
Public safety
Law enforcement
Public interest law services
Early childhood education
Public service for individuals with disabilities
Public service for the elderly
Public health
Public education
Public library services
Other school-based services

Loans

If you borrowed before July 1, 2010, some or all of your loans may have been made under an older federal student loan program called the Federal Family Education Loan (FFEL) Program. These loans are not eligible for the PSLF program, unless you consolidate them into a Direct Consolidation loan.

If you're not sure about the type of loan you have, you can contact your lender or check the National Student Loan Data System (NSLDS) by logging in with your Federal Student Aid (FSA) ID and password (Hint: this is the same username and password you use to complete the FAFSA.)

In short, your loans need to be under the Direct Loan program and not in default (you’re considered to be in default if you don’t make your scheduled student loan payments for a period of at least 270 days (about nine months)).

Repayment

Now that you've secured a qualifying employer and have confirmed you have Direct Loans (or consolidated into a Direct Consolidation loan), let's talk about how to pay the funds back. There's two key components to this section:

Income-Driven Repayment Plan
120 Qualifying Payments

We'll start with the income-driven repayment plans.

Income-Driven Repayment Plan Options

Income-driven repayment plans set your monthly loan payment based on your gross income, family size, and the national poverty guidelines. The options you have to choose from are:

Revised Pay As You Earn (REPAYE)
Pay As You Earn (PAYE)
Income-Based Repayment (IBR)
Income-Contingent Repayment (ICR)

Although all four plans are very similar, some differences they may have are:

Spouse's income/loan debt being considered
Proof of financial hardship
The percentage of your discretionary income that is being used to calculate your monthly installments.

If you're unsure of which option to choose, you can use the Repayment Calculator to estimate your monthly payments based on your current situation, or, you can contact your loan servicer to discuss your eligibility and options.

Wooooo! That's a whole lot to process, but we have one more key component to review- 120 qualifying payments.

120 Qualifying Payments

According to the Department of Education, a qualifying payment is one that you make:

after Oct. 1, 2007;
under a qualifying repayment plan;
for the full amount due as shown on your bill;
no later than 15 days after your due date; and
while you are employed full-time by a qualifying employer (which we covered in the Employment section).

Another thing to note meanwhile making your payments is that your payment is considered qualified if you meet the criteria above and, your're making payments because you're required to.

So, if you're making payments and your loans are in deferment, forbearance, grace period, or in an in-school status, your payments will not be considered as "qualifying" for PSLF (so, maybe just put that money in a savings account or use it to clear some other debt).

And there you have it, the PSLF program in a nutshell (or at least in less text than what's on their website LOL).

I'm currently on track to have my loans forgiven in 7 years (unless Bernie Sanders or another politician saves the day first 🤞🏽) using the REPAYE plan, and my monthly installments for this year are $268.85. I emphasize this year because my installments have been increasing every year because my income has been increasing.

AND don't forget that this is only for my Federal Loans.

$724.32 is the total monthly amount I spend on my private, federal, and the Parent Plus Loans my dad took out for me.

My total overall debt with these three types of loans is of $101,282.40.

Dead-ass, that's a house...

I hope you found this useful whether it's for yourself or a loved one. Student loan debt is a huge stress factor among adults and young people, but there are resources out there that can help alleviate some of that stress.

Words of advice:

If you haven't had to borrow loans and can afford a healthy lifestyle without them, don't borrow. In most cases, students need to borrow loans to reduce their out-of-pocket cost, and that's completely understandable. It's when you don't need to borrow but you borrow anyway to 'ball-out' when it becomes a problem.
If you have loans and are just refusing to pay them back, GET. YOUR. LIFE. The government is going to get their money back, one way or another. Not only does delinquency and default negatively impact your credit score, your wages and tax refunds can be garnished, licenses to practice can be revoked, and you can forget about any lines of credit or getting any form of educational aid in the future.
This is a decent program, but don't bank on it. Just like any other federal program, it can be terminated in the blink of an eye.

As always, please leave comments, share, and hit the ❤️.

Successfully,

Flor E. Carabez, M.Ed