Student Loan Forgiveness: Navigating the Maze
The Department of Education announced a short-term opportunity for expanded loan forgiveness in an effort to remedy the past administrative failures and inaccuracies of the federal forgiveness program. The changes, which will impact the Public Service Loan Forgiveness (PSLF) and Income-Driven Repayment (IDR) or long-term forgiveness programs, are expected to bring millions of borrowers closer to student loan forgiveness. However, deciphering the eligibility requirements can be very confusing for borrowers.
- SEE MORE When Will Student Loans Be Forgiven?
Below is a guide to understanding PSLF and IDR forgiveness, the waivers, next steps for borrowers, and the tax implications of each program.
Public Service Loan Forgiveness (PSLF)
The Public Service Loan Forgiveness (PSLF) Program, established in 2007, is a federal program designed to forgive student loan debt for borrowers who are employed by government (i.e., federal, state, local or tribal) and non-profit organizations (i.e., 501(c)(3)), such as teaching, firefighting, nursing, public interest law, military members and other public service workers.
How does PSLF work?
PSLF erases or forgives the remaining balance on federal Direct Loans after a borrower has made 120 qualifying monthly payments while working full time (or a minimum of 30 hours per week) for a qualifying employer. In addition, borrowers must be on an Income-Driven Repayment (IDR) plan in order to benefit from PSLF (we’ll talk more about this later).
are not eligible for Public Service Loan Forgiveness. Parent PLUS loans are also ineligible unless
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