Public Student Loan Forgiveness

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Believe it or not, there is a way that you can erase your student loan debt by serving your country and your community. Public Student Loan Forgiveness programs (or PSLFs) allow individuals to get out of some student loans by working for the government or certain non-profit organizations.

The good news is – you can qualify for PSLFs by working at any local, state or federal government job. The bad news is that not every student loan is covered by the program. You will also have to wait 10 years and make 120 qualifying loan payments to achieve total debt forgiveness, so it is not an immediate solution.

But student loan forgiveness programs are still a really good deal for debt-laden students because there is no limit on the amount of debt that can be forgiven. To add extra icing to the cake, waived student loan debts are not considered taxable income. This means the PSLF program will not affect your state or federal income tax bill.

Who Can Qualify For PSLF?

Public Student Loan Forgiveness

Surprisingly, a lot of people who are eligible are not taking advantage of student loan forgiveness because there is a lot of confusion about the program. Only 336,000 people (or 1% of the 33 million people employed by the government and non-profit organizations) were enrolled in it as of September 2015.

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Many employees of charities and other non-profit organizations can also qualify for PSLF. You can apply for the program as long as the organization you work for has been designated a 501(c)(3) by the Internal Revenue Service. Check the Exemption Requirements at the IRS website to see if your employer meets the 501(c)(3) standards.

There are some non-profit organizations that do not meet these IRS standards, including unions and any group that engages in lobbying or political activities. So make sure your employer meets the qualifications before you apply.

Which Student Loans Qualify for PSLF?

Unfortunately, only certain student loans qualify for PSLF. This means the program may not forgive all of your student loan debt.

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Under the current program only direct-subsidized, direct-consolidated, direct unsubsidized, Direct PLUS and Stafford loans qualify. Private student loans and loans that are in default will not qualify for PSLF.

If you qualify for PSLF but your loans do not, you will have to consolidate them before applying. Fortunately, it is possible to convert other kinds of student loans to obligations that are eligible for PSLF by taking advantage of the Direct Loan Consolidation program.

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Qualifying Payments

A final point on the PSLF program – the way you pay your student loans can affect your eligibility for PSLF. Under the current rules you will have to be making payments to an Income Based Repayment Plan, an Income Contingent Repayment or the Pay As You Earn Plan.

If you are not taking advantage of these options you will have to change or consolidate your student loans before you apply.

Need More Advice?

If you’re confused about the PSLF program and need additional advice, the experts at Student Debt Relief are standing by to help you. Student Debt Relief is a private organization that helps students with debt consolidation, debt forgiveness and other related issues. You can talk to one of their experts by calling 844-669-4407.

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