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Are you a teacher, nurse, employee of any government agency at the Federal, State or Local level? Are you a firefighter, police officer, or other first responder? Do you work for a non-profit organization? If you are, and you have Federal Student Loans, you may be entitled to Public Service Loan Forgiveness (PSLF) after making 120 qualifying payments under several repayment plans available. Regardless of your income or profession, PSLF is a federal student loan program that can provide you with complete forgiveness of your federal student loan balance if you work for certain non-profit or government organizations.

If you’ve never heard of this or thought it was a scam, that doesn’t surprise me. If you are struggling to make payments and call your federal student loan servicer, they usually only offer options such as forbearance, which can hurt you in the long run. Companies such as Navient, Great Lakes and Nelnet are under no obligation to inform you about these programs. Their only job is to make sure you remain current, usually by offering you a postponement of payment, such as forbearance.

They also don’t exactly make it easy for you to have the lowest payment while tracking you time for PSLF eligibility. To benefit from this program, while at the same time taking advantage of the lowest possible monthly payment, you are required to re-certify under the program every year. Having your employer verify your continuous employment is also not mandatory, but extremely important if you want to prove you qualify after the 10 years.

Qualifying for PSLF requires three conditions:

1. You must have an eligible federal student loan

Currently, only Direct Loans are eligible for PSLF. If your loans originated prior to 2010, you probably do not have Direct Loans. However, there are several ways to convert other federal student loans into Direct Loans. Your servicer will never tell you that. You may have worked for 20 years as a public school teacher, made all of you federal student loan payments on time, and not even have started the clock towards your 10 year forgiveness.

2. You must work for a qualifying employer

To be eligible, you must be employed full-time (however your employer defines that, but no less than 30 hours per week) by a qualifying employer at the time you make each qualifying payment, at the time you apply for the loan forgiveness, and at the time you receive loan forgiveness.

Sounds complicated right? Well, because it is…. by design.

And what is a qualifying employer anyways? Any federal, state, or local government agency is considered a government employer under PSLF. This includes the U.S. military, public elementary and secondary schools, public colleges and universities, public child and family service agencies, and special governmental districts (including public transportation, water, or housing authorities). Other non-profit exempt entities under 501(c)(3) also count under most circumstances. Even entities that are not exempt under 501(c)(3) may qualify if they provide specific public services.

The importance of tracking every payment, every year, and following the right process, along with keeping excellent records, is crucial to succeeding in this program.

3. You must make 120 qualified, timely payments, while working for a qualified employer, with a qualifying loan

Yes, sounds like there are a lot of “qualifications” right? Again…. by design.

120 timely payments means many things. You can’t skip a payment this month, and double pay next month. That only counts as ONE qualifying payment. You can’t pre-pay 6 months at a time; that pre-payment would still be ONE qualifying payment.

However, it isn’t continuous. Which means if you work as an administrator in a county public school for 6 years, then enter the private sector for 2, and decide you want to come back to the public school system, you get to retain the credit for the 6 years you works prior to becoming a private employee… so you only have 4 years left. Assuming you “qualified.”

Yes. It is a complicated program. Further, remember, this all should include re-certification by your employer, and definitely requires recertification by YOU if you want to keep those 120 qualifying payments as low as possible. Remember, the balance of the loans becomes irrelevant if it’s going to be forgiven in 10 years. Complicated or not…. it may be sooooo worth it. 🙂

If you are organized and can stay on top of things, definitely look into this and make sure your clock is already ticking, or get that clock started as soon as possible.

If you need help figuring out whether your loans qualify, your employer would fall under the definition, or assistance in keeping your payment as low as possible while you wait for the forgiveness, feel free to schedule a consultation with me so I can help you get on the right track.