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Recently studies report that strangely enough over 60% of employers and employees have never considered applying for a loan forgiveness scheme. It seems the most integral reason behind this is that people feel uncertain about exactly what the schemes are and if they would be eligible. Here we take a simple look at loan forgiveness and if it could be right for you.
What is loan forgiveness?
Let’s start with a simple explanation of loan forgiveness: if you are a current employee for a government or non profit organisation you could be eligible to have your student loan completely wiped out under the Public Service Loan Forgiveness Program (PSLF).
In practise, this works as the PSLF Program forgive the outstanding balance on your federal loan. However, you must have already made 120 qualifying payments from your monthly salary under a repayment plan. You must also have been in full time employment with a qualifying employer.
How to find out if you are eligible
Unfortunately, not everyone will be eligible for loan forgiveness. To find out more you can contact a service such as Loanforgiveness.org who would be happy to advise on all of the specifics of your personal situation.
If you do not currently meet the requirements it may still be worth looking into the schemes relevant to you as you may be able to apply in the future. However, it is possible you that you may need to take certain steps now to ensure you will qualify. For example, you may need to be currently repaying your loan via a certain scheme or take certain steps to submit adequate information when you change employers.
How to apply for a forgiveness scheme
To be successful with your application, you will need to have made 120 qualifying monthly repayments throughout your career so far. This means that it will be at least 10 years after you make your first qualifying payment that you are able to apply for a forgiveness scheme. Only payments made after October 2007 are considered eligible so this means that the earliest any graduate can claim loan forgiveness is in 2017. If you would like to apply to the scheme you should complete and submit the Employment Certification for Public Service Loan Forgiveness form which can be found online. You can submit this for annually or when you change employers. The PSLF committee will assess the information on your form to see if you have been making qualifying payments and this can help to determine early on if you are on track or not.
It is worth noting that if you do not submit this form on a regular basis whilst working towards your 120 repayments, when you do eventually apply for a PSLF program you will also be required to submit an Employment Certification form for each employer you have worked during the 120 repayments.
Where to find more information:
If you are unsure or confused about if you are eligible for a PSLF program start off by having an informal talk with your workplace. They should have a specialised team member that can talk you through all of the important information.
