Basic Facts about the Public Service Loan Forgiveness Program

The Public Service Loan Forgiveness Program of the Federal government, which started in 2007, is for borrowers working more than 30 hours weekly in an eligible job and has made 120 eligible on-time and in-full payments within a period of to years. Standard Repayment, Income-based Repayment (IBR), Pay As You Earn Repayment (PAYE), Revised Pay As You Earn (REPAYE), and Income-contingent Repayment (ICR) are the five qualifying student loan repayment plans under which payments can fall under.

Most borrowers choose an income-based repayment plan because they are able to lessen their student loan repayment, as well as have a larger percentage of their loan forgiven. On the other hand, it is assumed by the Standard Repaymetn plan that all student loans will be paid off over a span of 10 years. In other words, if you chose this plan, you will have no loans needing forgiveness when the repayment period ends.

Forgiveness-Eligible Student Loans

Only two types of student loans are eligible for Public Service Loan Forgiveness, and they are Direct Loans and Federal Direct Consolidation Loan.

The four types of Eligible Direct Loans are Federal Direct Subsidized Stafford/Direct Loans, Federal Direct Unsubsidized Stafford/Direct Loans, Federal Direct PLUS Loans, and Federal Direct Consolidation Loans.

Student Loans Not Eligible for Forgiveness

Three types of student loans are not eligible under the Public Service Loan Forgiveness program, and these include Private Student Loans, Federal Family Education Loans (FFEL) and Federal Perkins Loans. But this rule makes a few exceptions.

Direct Loans & Private Loans

>> If you have both a Private Loan and a Direct Loan, the Direct portion is eligible.

Federal Perkins & FFEL

Consolidation of these two loans makes them eligible, but only payments made to your Consolidated Loan will count into the 120 payments. Any payment made before the consolidation will not count.

Applying for Public Service Loan Forgiveness

To apply, you have to submit a Public Service Loan Forgiveness Application after you have made 120 qualifying monthly payments. In the meantime (while unnecessary), submit the Public Service Loan Forgiveness Employment Certification Form every year or each time you have a new job so you can keep a tab on your progress as far as meeting eligibility requirements is concerned. This form verifies that you have complied yearly with all the employment requirements for the program.

Next, submit the form and employer’s certification to FedLoan Servicing of the Department of Education. FedLoan Servicing will tell you whether you are eligible, the number of qualifying payments you’ve made, and how many more loan payments you need to qualify for loan forgiveness.

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