October 14, 2021

Do I Need To Consolidate My Student Loans for Public Service Loan Forgiveness (PSLF)?

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Student loans help you to achieve your degree so you can pursue your dream career. Nevertheless, it may be challenging for you to complete your loan payments as a working professional.

Thankfully, loan forgiveness programs make it possible for you to become free from all or a certain portion of your financial responsibilities. Read on to discover what the Public Service Loan Forgiveness (PSLF) is and if you are eligible for it. You’ll also find out whether loan consolidation is necessary before doing so.

What Is Public Service Loan Forgiveness (PSLF)?

The Public Service Loan Forgiveness (PSLF) is a federal student aid program that forgives the remaining balance on your Direct Loans once you complete 120 qualifying monthly payments under a qualifying repayment plan, according to the Federal Student Aid website.

Take note that you must be working in a full-time capacity for a qualifying employer while making the monthly payments. You may be eligible for PSLF if you are an employee of a non-profit organization or a U.S. federal, state, local, or tribal government agency.

PSLF offers debt relief to nurses, teachers, firefighters, and other public service employees, according to the U.S. Department of Education. The program cancels loans after 10 years of public service to motivate more people to become public servants.

Do I Need To Consolidate My Student Loans for Public Service Loan Forgiveness?

The answer to this question depends on the type of loans that you have.

Direct Loans

If you have Direct Loans, you are not required to consolidate your student loans before you apply for PSLF. However, you do have the option to consolidate your other federal student loans into a Direct Loan if you prefer.

Other Student Loans

The Federal Student Aid website recommends consolidation as a viable alternative for you in case you have student loans that do not qualify under the PSLF program. These loans include ones from the Federal Perkins Loan Program and the Federal Family Education Loan (FFEL) Program. Once you consolidate them into a Direct Consolidation Loan, they will become eligible for PSLF.

Keep in mind that consolidation will have an impact on your PSLF application process. Only the qualifying payments that you submit under the new Direct Consolidation Loan will be considered as part of the 120 payments that are necessary for PSLF. As a result, the payments you submitted before the consolidation will no longer be counted.

Nevertheless, you have the opportunity to gain qualifying credit for previous loan payments through the limited PSLF waiver, just in case you are able to consolidate your loans into a Direct Loan before October 31, 2022.

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