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Basic Facts about the Public Service Loan Forgiveness Program

The Public Service Loan Forgiveness Program of the Federal government, which started in 2007, is for borrowers working more than 30 hours weekly in an eligible job and has made 120 eligible on-time and in-full payments within a period of to 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).

In most cases, borrowers prefer an income-based repayment plan a sit lets them reduce their monthly student loan repayment and have a bigger portion of their loan forgiven. On the other hand, the Standard Repayment plan assumes that all student loans will be repaid within 10 years. In other words, if you chose this plan, you will have no loans needing forgiveness when the repayment period ends.

Student Loans that May Be Forgiven

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

Three types of student loans are not eligible under the Public Service Loan Forgiveness program, and these include Private Student Loans, Federal Family Education Loans (FFEL) and Federal Perkins 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

Consolidation of these two loans makes them eligible, but only payments made to your Consolidated Loan will count into the 120 payments. Any payment made before the consolidation will 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. In the meantime, while not required, submit the Public Service Loan Forgiveness Employment Certification Form yearly or each time you switch jobs to help you monitor your progress in meeting the requirements for eligibility. 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 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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