Looking On The Bright Side of Loans

What Is Public Service Loan Forgiveness?

Public Service Loan Forgiveness or simply known as PSLF Program is about forgiving the remaining balance on Direct Loans after you’ve made 120 qualifying monthly payments under the qualifying repayment plan while you’re working full time for qualifying employer.

Well, you might be wondering what is a qualifying employment. Well, the qualifying employment for PSLF Program isn’t about specific job that you are doing for your boss. Rather, it’s more on who your employer is. Employments with government organizations at any level be it tribal, local, state or federal, not-for-profit organizations that are tax exempted of the Internal Revenue Code and other kinds of not-for-profit organizations that offer certain types of qualifying public services are the organizations that are qualified for PSLF Program. As a matter of fact, serving in full time Peace Corps or AmeriCorps position is also counted as a qualifying employment for PSLF Program.

On the other hand, employers who aren’t qualified for PSLF include labor unions, for-profit organizations, partisan political organizations and non-profit organizations that aren’t tax exempted and not providing qualifying service.

But what is considered as full time employment for PSLF? Basically, you will be considered to work full time if you have met your employer’s definition of full time or, has worked at least 3 hours per week or whichever is greater. If you’re employed in more one qualifying part time job at the same time, then you might meet full time employment requirement if you’re working a combined average of at least 30 hours every week with your different employers.

As for borrowers who are still employed by a not-for-profit org, time you spend on worship services, religious instruction or any kind of proselytizing may not be included in meeting full time employment requirement.

Another question that many people are wondering is what is a qualifying payment? Truth is, qualifying monthly payment is the payment that you make under qualifying repayment plan, no later than 15 days after due date, for full amount due as shown on the bill and while you’re employed full time by qualifying employer. You can even make qualifying monthly payments throughout periods when you are required to make the payment. Having said that, you could not make qualifying monthly payments while the loans are in grace period, in-school status, a forbearance, deferment or default. In addition to that, you have to know that your 120 qualifying monthly payments don’t have to be consecutive.

And if you ever make monthly payments for more than the amount that you’re required to pay, you must take into account that you can receive credit only for one payment every month.

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