Public Service Loan Forgiveness has been a more popular topic in recent years. The effects of the pandemic have left many people thinking of the possibilities to handle their student loan debt. One of the biggest questions that arise from this conversation is qualification. Since there are many services in the US, it can be confusing to figure out which is under the PSLF program.
What is a Stafford Loan?
Stafford is one of the more popular loans students take. It is a low-interest loan available for students to take for different types of higher education. The loan itself is subsidized by the US government, with borrowers taking directly from the US Department of Education. Stafford itself is considered a Direct Loan program.
To get one, you’d have to qualify and apply to a participating school. You’ll then undergo a payment system, depending on the subsidy. Subsidized loans mean that the government will pay the interest rates for at least half of the time. On the other hand, unsubsidized loans will add up interest after the loan disbursement.
A student can only claim PSLF when they fulfill several conditions. The first is that their loan has to be federal-backed. The Stafford loan is a Direct loan, meaning that it is under a federal government program. It is why students with these loans can opt to get loan forgiveness later on. However, this is not the only requirement for it.
The PSLF intends to help people with low-income public service jobs remove their student debt. To avail of it, the student must make 120 qualifying payments without missing any. That means consistently paying your loan for ten years straight before application. The program began in 2007, and in 2017, many of the first loan forgiveness claims were successful.
Another qualification for the PSLF is that you should be under a qualified employer. There are some exceptions, but this type of work usually falls under:
- Government (local, state, or federal)
- Public schools and universities
- US military jobs
- Public and family service
- Government entities (utility, transport, water, housing)
The organization must not be tax-exempt under the IRS Code. You should inquire if the employer falls under an exemption to ensure that you qualify for PSLF later. You must also maintain employment for an average amount of time during those ten years of payments.
Anyone can begin or continue making their Direct Loan payments with the anticipation of acquiring PSLF in the future. However, people should always account for other scenarios and prepare for them. A backup plan can be helpful as the PSLF often makes amendments depending on the current US situation.
There have also been several attempts at removing the PSLF program. Some government officials believe that it is a very costly service to maintain. Despite that, the PSLF will likely continue for the foreseeable future.