The Ultimate Guide To Student Loan Forgiveness

Jessica Martinsen

Two of the most popular student loan forgiveness programs are the Public Service Loan Forgiveness and Teacher Loan Forgiveness programs. Below is a guide for each program and how to apply! 😇

Public Service Loan Forgiveness Program:

The Public Service Loan Forgiveness (PSLF) program is a student loan forgiveness program for full-time public service employees that have federal direct loans. Borrowers must be enrolled in an Income-Driven Repayment (IDR) Plan and make 120 qualifying payments. If these requirements are met, the remaining student loan balance will be completely forgiven.

Below is a detailed list of the requirements to qualify for PSLF:

You must work full-time (at least 30 hours/week) for an eligible employer

It’s important to make sure your place of employment is actually eligible for PSLF. If you work full-time for the below organizations, you are good to go:

-Government organizations at the local, state, tribal or federal level

-Tax exempt not-for-profits under Section 501(c)(3) of the Internal Revenue Code

-AmeriCorps or Peace Corps

-Other not-for-profit organizations that are not tax-exempt under Section 502(c)(3) of the Internal Revenue Code, so long as the organization provides at least one of the following services:

-Emergency management

-Military service

-Public safety

-Law enforcement

-Public interest law services

-Early childhood education

-Public service for individuals with disabilities

-Public service for the elderly

-Public health

-Public education

-Public library services

-Other school-based services

 

IMPORTANT: Employment under the below organizations are NOT eligible for PSLF:

-Labor Unions

-Partisan political organizations

-For-profit organizations (even for-profit government contractors)

Note: for every year (10 years total) of full-time work for a qualifying employer, you’ll need to submit an Employment Certification Form. This certification will be required for every employer for which you will claim qualifying payments when you apply for PSLF; it’s simpler to send these in annually or each time you change employers.

2. You must have the right student loan(s)

Any non-defaulted federal direct loan accepted after 2010 (when the William D. Ford Federal Direct Loan Program was initiated) qualifies for PSLF. Examples of these loans are:

-Direct Subsidized Loans

-Unsubsidized Loans

-Direct PLUS Loans (Parent Plus)

-Direct Consolidation Loans

Not sure what kind of loans you have? You can check for free at Chipper.

If you accepted loans before 2010, under the Federal Family Education Loan (FFEL) program, you can become eligible for PSLF if you consolidate these loans into a Direct Consolidation loan first. But don’t wait! Only monthly payments made after consolidating count to the total 120 needed to receive PSLF. The best time to consolidate your student loans is at the beginning of the loan forgiveness process or as soon as you finish school. Read our How To Consolidate Your Student Loans blog here. 

3. You must be on a qualifying repayment plan

Any Income-Driven Repayment plan is a qualifying repayment plan. If you are seeking PSLF and are not already on an IDR, you must switch to one to qualify for PSLF. Federal loan borrowers are free to change their repayment plans at any time. 

What is an Income-Driven Repayment (IDR) Plan? An IDR is a repayment plan for federal student loan borrowers to pay back their debt in amounts that are proportionate to their income, family size, and state of residence. These plans include:

-Income-Based Repayment (IBR) 2009 Plan

-Income-Based Repayment (IBR) 2014 Plan

-PAYE Plan

-REPAYE Plan

-Income-Contingent Repayment Plan

Click here to learn more about each IDR plan. Note: if your income decreases at any time through your repayment period, you can adjust your repayment plan accordingly.

Not sure which repayment plan you have or need to enroll in one? You can check for free and we can help you enroll in the repayment plan that is right for you. Two minutes of your time could save you $298 per month!

You must make 120 qualifying payments

120 qualifying payments must be made to your direct loans in order for you to receive PSLF. 

Qualifying payments mean that they:

-Were made after October 1st, 2007

-While on an IDR Plan

-For the entire amount that was due

-On time or no later than 15 days after the due date

-During full-time employment with (an) eligible employer(s)

Note: your payments do not need to be consecutive. Meaning if you work for a qualifying employer now and switch to a non-eligible employer, you don’t lose the payments you’ve made and can continue to add to them if you switch back to an eligible employer in the future.

 

IMPORTANT: Your payments do NOT qualify if they are made during the following times: 

-Grace period

-Deferment 

-In-school status

-Forbearance (except the administrative forbearance from March 2020-September 2020)

This is because payments are only eligible during times when payment is required. Note: You must make payments to cover 120 separate monthly obligations (10 years). Paying extra won’t help you qualify for PSLF sooner. But, we can help you track your progress and remind you when your next monthly payment is due!

Once you’ve reached 120 payments, you can apply for student loan forgiveness.

How to apply for PSLF:

You can apply for PSLF after you have completed the 120 eligible payments. You will also be required to submit an ECF (Employment Certification Form) for every employer you worked for over the time span in which the 120 qualifying payments were made. We can help you fill out the PSLF application, employment certification forms, and send them in for you! Or, you can complete and mail the application for PSLF and your all 10 of your ECFs to The U.S. Department of Education at:

U.S. Department of Education

FedLoan Servicing

P.O. Box 69184

Harrisburg, PA 17106-9184

After you submit these forms, FedLoan Servicing will become your loan servicer. They will let you know that your application is approved. 

Note: PSLF is not taxable. You will not be taxed on the interest accrued nor the amount forgiven! 🥳

Teacher Loan Forgiveness Program:

Teacher Loan Forgiveness (TLF) is a program for full-time teachers who have completed five consecutive academic years at a Title 1 school. Depending on the subject taught, eligible borrowers may have $5,000 or $17,500 of their loans forgiven.

You may receive up to $17,500 in loan forgiveness if you were:

a highly qualified full-time mathematics or science teacher who taught students at the secondary school level; or

a highly qualified special education teacher at either the elementary or secondary level

If you did not teach mathematics, science, or special education at these grade levels, you could still have $5,000 forgiven if you taught full-time at a Title 1 elementary or secondary school in any other subject.

Below is a list of requirements to qualify for TLF:

You must work full-time (at least 30 hours/week) as a highly qualified teacher

A highly qualified teacher means you have:

-Attained at least a bachelor’s degree;

-Received full state certification as a teacher; and

-Not had certification or licensure requirements waived on an emergency, temporary, or provisional basis

You must have worked for five complete and consecutive academic years

Unlike the PSLF Program, you must work for five years back-to-back, and at least one of those years must have been after the 1997–98 academic year. If you work for a qualifying employer for less than five years and switch to a non-eligible employer, you will lose the previous qualifying years. Additionally, the loan(s) for which you are seeking forgiveness must have been made before the end of your five academic years of qualifying teaching service.

You must have Direct or FFEL Loans

Any non-defaulted Direct or FFEL Loans as of Oct. 1, 1998, count toward TLF. Examples of these loans are:

-Direct Subsidized Loans

-Unsubsidized Loans

-Direct PLUS Loans (Parent Plus)

-Direct Consolidation Loans

-Federal Family Education Loans (FFEL)

Not sure what kind of loans you have? We can check for you for free!

You must have been employed at an elementary school, secondary school, or educational service agency that serves Title 1 (low-income) students

The school or educational service agency must be listed in the Teacher Cancellation Low Income (TCLI) Directory. 

If you meet the above criteria, you can apply for Teacher Loan Forgiveness!

You must complete a Teacher Loan Forgiveness Application. Both you and your school’s chief administrative officer (usually your human resources official, principal, assistant principal, district superintendent, or other school or educational service agency official) must complete the form. Submit your application to your current servicer.

You may qualify for both forgiveness programs! 

If you’re a Title school teacher at a public school, you could qualify for both programs! If you have a very high debt load and already qualify for the Teacher Loan Forgiveness program right now, meaning you have already worked for a Title 1 school for five complete and consecutive years, you can go ahead and apply for either the $17,500 or $5,000 (depending on the subject and grade level you teach). Once you’re approved, you can then pursue the Public Service Loan Forgiveness to have the rest of your debt forgiven! 

Chipper can help you decide which forgiveness program is right for you, as well as which repayment plans (if applicable) you may want to consider. We can help you enroll and apply in your chosen plans and programs!