The following careers qualify for Federal student loan forgiveness programs.
Public service employees working in the above-listed fields are eligible for loan forgiveness under the Public Service Loan Forgiveness Program (PSLF), passed by Congress in 2007. The Federal government created this program to inspire young people, many of whom carry a high debt burden, to pursue careers in public service. Recognizing that big debts were preventing some of the nation’s best and brightest from giving back, this program provides an incentive for college graduates to build a career in public service.
An incentive for college graduates to work full-time in the public service sector ˆ i.e. police, teachers, nurses, firefighters, etc. ˆ for 10 years to qualify for forgiveness on what‚s left of the student loan debt.
You must be a full-time employee at a qualified public service organization and make 120 separate, on-time loan payments. You also must be in a qualifying repayment program.
Generally speaking, that refers to any city, county, state or federal government office or agency. Working for most non-profit 501 (c)(3) organizations also qualifies, unless it is a labor union, partisan political organization or engaged in religious activity.
No, you could work at multiple places, but you must provide documentation that you were working for a qualified public service organization when you made your 120 loan payments.
No. Private and non-federal loans are not eligible. The PSLF program only applies to Direct Federal Loans and Direct Consolidation Loans.
No. The IRS does not consider amounts forgiven under the PSLF program to be taxable income.
Public service workers with high student loan balances relative to their income can benefit by consolidating and choosing income-based repayment. To learn more about your options, call a student loan counselor today.
Can my loans be forgiven if I declare bankruptcy?
With rare exception, student loans cannot be discharged in bankruptcy court. Many people who complete bankruptcy must continue to pay on their student loans. If your student loan payments are unaffordable, consider consolidating under an income-based repayment plan for a lower monthly payment.
I’m eligible for Teacher Loan Forgiveness ($5000 for teaching in a low-income school, $17,500 for teaching math, science or special education). Can I receive this forgiveness and Public Service Loan Forgiveness?
If you accept loan forgiveness under the Teacher Loan Forgiveness Program ($5000 or $17,5000) after five years of qualifying service, the 10 year clock for Public Service Loan Forgiveness starts after you receive your Teacher Loan Forgiveness award. You cannot be enrolled in both forgiveness programs at the same time. If you have a high balance, it may be a better idea for you to skip the Teacher Loan Forgiveness grant, and have your entire remaining loan balance waived after 10 years (versus 15).
What if I leave my public service employment before 10 years? Can I have part of my remaining loan balance waived?
No. You must complete 10 years of employment as a public servant. These years do not have to be consecutive.
Is the forgiven balance taxable?
Student loan balances that are forgiven under the Public Service Loan Program is not taxable.