It’s no secret that millions of American students have availed student loans to pursue higher education. In fact, according to statistics, there are around 43.2 million student loan borrowers who each have an average debt amount of $39,351! To attain a bachelor’s degree at a public university, the typically borrow will total an average of $30,030 in debt.
The good news is that students who want to pursue careers in public service may be able to have their debt forgiven through the Public Service Loan Forgiveness Program (PSLF). As part of the College Cost Reduction and Access Act of 2007, student borrowers who have chosen careers in public service can become eligible for tax-free loan forgiveness under the PSLF program.
But, what is considered public service for student loan forgiveness?
Before defining what constitutes public service, it’s important to understand how the PSLF program works. Simply put, after making 120 qualifying payments, eligible borrowers who work full-time for federal, state, tribal, or local governments, as well as those who work for non-profit organizations, will be released from their obligation to pay the remaining balance on their federal direct student loans. Making qualifying payments can take 10 years, but as of April 2020, an average balance of $66,066 has been forgiven through the PSLF program!
It is important to note that to be considered a full-time employee, you must render at least 30 hours per week with a qualified employer while making the 120 qualifying payments. These payments, however, don’t need to be made consecutively.
Additionally, you’ll be required to submit a Public Service Employment Certification Form in order to prove that you are indeed worked and/or are working for a qualifying employer.
To define what makes up public service employment, here’s a list of qualifying common job sectors by category:
This includes organizations that are exempt from paying taxes under Section 501(c)(3) of the Internal Revenue Code. Also included are organizations that are not exempt from paying taxes under that code, but do provide qualifying services, which include the following:
Full-time volunteers for the AmeriCorps or Peace Corps are also recognized as qualified employment for the PSFL.
If you’re working for the following employers, you probably aren’t eligible for the PSLF:
While PSLF isn’t a perfect program, and it may take a long time before you can apply, it still pays to know whether or not you could be eligible! Take note of the requirements, as well as the eligible careers that can help you get tax-free relief from your federal direct student loans!