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An Overview of the Public Service Loan Forgiveness Program

The federal government’s Public Service Loan Forgiveness Program, which began in 2007, is a program that forgives federal student loans of borrowers with a full-time eligible job (above 30 hours a week) and has completed 120 eligible in-full and on-time payments within 10 years. The five qualifying student loan repayment plans where loan payments can go are Standard Repayment, Income-based Repayment (IBR), Pay As You Earn Repayment (PAYE), Revised Pay As You Earn (REPAYE), and Income-contingent Repayment (ICR).

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

The Public Service Loan Forgiveness Program will not forgive three types of student loans, namely, the Federal Perkins Loans, Federal Family Education Loans (EFEL) and Private Student Loans. However, there are exceptions.

Direct Loans & Private Loans

>> If you have a Private Loan and a Direct Loan, the Direct part will be eligible.

Federal Perkins & FFEL

Consolidating these two loans make them eligible, but only payment made to your Consolidation Loan will be considered part of your 120 payments. Any previous payments made prior to consolidation do not count.

Applying for Public Service Loan Forgiveness

After you’ve completed 120 qualifying monthly payments, you can submit a Public Service Loan Forgiveness Application. 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 is proof that your yearly employment requirements for the program have been completed.

Your next step is to submit the form and employer’s certification to FedLoan Servicing, which is under 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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