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Basic Facts about 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. Qualifying student loan repayment plans that the loan payments can be made under include Standard Repayment, Income-based Repayment (IBR), Pay As You Earn Repayment (PAYE), Revised Pay As You Earn (REPAYE), and Income-contingent Repayment (ICR).

For most borrowers, an income-based repayment plan is preferable because it allows them to minimize their monthly student loan repayment, and at the same time have a bigger part 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. Thus, if you are enrolled in this plan, there would be no loans to forgive by the end of the repayment period.

Student Loans that May Be Forgiven

Under the Public Service Loan Forgiveness, only two types of student loans are eligible – Direct Loans and Federal Direct Consolidation Loans.

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

Student Loans Not Eligible for Forgiveness

Private Student Loans, Federal Perkins Loans and Federal Family Education Loans (FEEL) are the three types of student loans that will not be eligible under the Public Service Loan Forgiveness Program. However, there are some exceptions to this rule.

Direct Loans & Private Loans

>> If you have a Private Loan as well as a Direct Loan, the Direct portion can be forgiven.

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. All payments made prior to consolidation do 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. Meanwhile (though not necessary), submit the Public Service Loan Forgiveness Employment Certification Form every year or every time you get a new job so you can keep track of your progress in terms of meeting eligibility requirements. This form establishes each year that you have met all employment requirements for the program.

Then you can proceed to submitting the form and employer’s certification to the Department of Education’s FedLoan Servicing. FedLoan Servicing will inform you whether or not you’re eligible, as well as tell you how many payments youv’e made based on their records, and how any more you have to make in order to be eligible for loan forgiveness.

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