In my other life as a consumer debt expert I take it for granted that people are aware they can have their federal student loans forgiven if they work for a non-profit 501(c)(3) or in public service.
The program I’m about to share also applies to Town of Wake Forest Employees, paid church administrative employees, seminary staff, local non-profits, etc.
The reality is probably many people are not aware of this tax free forgiveness program. If not, you should be.
The Public Service Loan Forgiveness (PSLF) program allow federal student loans that have been consolidated into a new Direct Loan and enrolled into an income driven repayment plan to be forgiven after 120 payments.
It is a bit of a finicky program because payments only count toward forgiveness only after they are consolidated and in the new qualifying payment program.
There is no charge to consolidate federal student loans into a new Direct Loan and the income driven repayment options can lower your monthly payment as low as zero dollars a month and it still counts towards your 120 on-time payments for forgiveness.
This program is not limited to just police and fire employees. Many other Wake Forest public service employees are eligible for this as well.
You must be employed full-time (in any position) by a public service organization, or must be serving in a fulltime AmeriCorps or Peace Corps position. Here are the types of organizations that meet the definition of “public service organization” for purposes of the PSLF Program:
- A government organization (including a federal, state, local, or tribal organization, agency, or entity; a public child or family service agency; or a tribal college or university)
- A not-for-profit, tax-exempt organization under section 501(c)(3) of the Internal Revenue Code
- A private, not-for-profit organization (that is not a labor union or a partisan political organization) that provides one or more of the following public services:
- Emergency management
- Military service
- Public safety
- Law enforcement
- Public interest law services
- Early childhood education (including licensed or regulated health care, Head Start, and state funded pre-kindergarten)
- Public service for individuals with disabilities and the elderly
- Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations)
- Public education
- Public library services
- School library or other school-based services
The following loans may be consolidated into a Direct Consolidation Loan:
- Federal Family Education Loan (FFEL) Program loans, which include the following:
- Subsidized Federal Stafford Loans
- Unsubsidized Federal Stafford Loans
- Federal PLUS Loans—for parents and graduate or professional students
- Federal Consolidation Loans (excluding joint spousal consolidation loans)
- Federal Perkins Loans
- Certain Health Professions and Nursing Loans
There are some limitations on the program that you need to keep in mind.
- Only payments made while you are working for a qualifying group, count. They payments do not need to be consecutive so if you are working in a job that counts but changes jobs for a while, you don’t lose your qualifying payment history.
- The payments must be made in full and on-time to count after consolidated.
- You must work at least 30 hours per week. For borrowers who are employed by not-for-profit organizations, time spent on religious instruction, worship services, or any form of proselytizing may not be counted toward meeting the full-time employment requirement.
To help you make sure your employments count, the Department of Education has an employment certification form you can complete to confirm you are on track. Click here for the form. In fact the Department of Education will help you track your payments towards forgiveness. To track your progress as you work toward making the 120 qualifying monthly payments for PSLF, send the completed form, with your employer’s certification, to FedLoan Servicing (PHEAA), the U.S. Department of Education’s federal loan servicer for the PSLF Program.
Once the form is received they will take the following actions:
- We will review your Employment Certification form to ensure that it is complete, and to determine whether your employment is qualifying employment for the PSLF Program.
- We will notify you if the form you submitted is incomplete or if we cannot determine, based on the information provided on the form, whether your employment qualifies. We may ask you to provide additional information or documentation to help us determine whether you were employed by a qualifying public service organization.
- If we determine that your employer is not an eligible public service organization, we will notify you that your employment does not qualify. If you believe there is additional information that would establish the eligibility of your employer, you will have the opportunity to provide that information.
- If we determine that your employment qualifies, and if some or all of your federal student loans that are owned by the U.S. Department of Education are not already serviced by FedLoan Servicing (PHEAA), those loans will be transferred to FedLoan Servicing (PHEAA). You will then have a single federal loan servicer for all of your federally held loans. You will receive a notice if your loans are transferred.
- If we determine that your employment qualifies, we will then review your payment history (including any payments you made to another federal loan servicer before your loans were transferred) to determine how many payments made during the period of employment certified on the Employment Certification form are qualifying monthly payments for PSLF. We will then inform you that your employment qualifies and notify you of the total number of qualifying payments you have made, and how many payments you must still make before you can qualify for PSLF.
A huge benefit of the program is the loans are forgiven tax free so there is no more liability for the loans.
The program only applies to federal student loans.
For more details on the program, click here.