Loan Forgiveness for Public Service? Some Graduates Qualify

Posted By Eliana Osborn on September 7, 2016 at 5:24 pm
Loan Forgiveness for Public Service? Some Graduates Qualify

For college graduates who spend lives in careers that help the world but aren’t as lucrative as they hoped, student loan debt can seem insurmountable. But in October 2007, the Public Service Loan Forgiveness Plan was inaugurated just for those people. Direct Loan holders who make on-time payments for 10 years can have their remaining student loan balance forgiven – if they work full-time for certain types of employers.

Data released this month by the federal Department of Education show 950,000 applications filed for PLSF as of the end of June. About two-thirds have been approved. Applications became available in 2012 so loan holders could check and track eligibility. Not all student loans are can be forgiven – for example, Perkins or FFEL do not qualify – and jobs working for unions or for-profit businesses also are not eligible.

Many students take breaks in repayment, such as when they return to college for graduate school. Their loans are not due (though interest accrues) and they are not penalized. For loan-forgiveness purposes, their 120 on-time payments do not have to be consecutive.

When public service loan forgiveness is useful

A standard repayment plan for student loans splits the balance up so that nothing is left after 10 years. For PLSF to be of value, a borrower must spend at least some time enrolled in income based repayment. Such a plan accounts for how much money is being earned, lowering monthly payments accordingly so that they only take up a certain portion of the income. PLSF is a continuation of income-based repayment, erasing the debt that remains when a person has given 10 years of employment in lower earning roles.

Income-based repayment plans are a hallmark of the Obama administration focus for managing student loan debt. Without solving the issue of higher education costs, they make costs more manageable – especially for new graduates. The application process for such plans continues, with calls for automatic enrollment.

One of the prime complaints the Consumer Financial Protection Bureau compiles about student loans is about the difficulty of enrolling in these income based repayment plans. Loan servicers each set their own processes and may not adequately advertise that enrollment is freely available. The CFPB’s most recent report focused on these issues.

Secretary of Education John B. King Jr. said, when releasing the latest figures, “We want to ensure that those Americans who have devoted a decade of their careers to public service are not burdened by debt while making invaluable professional contributions to their communities.”

Eliana Osborn
Eliana Osborn is an associate English professor at Arizona Western College, with degrees from Brigham Young University and Northern Arizona University. She’s published widely in forums such as The New York Times, the Washington Post, the Christian Science Monitor, and the Chronicle of Higher Education.

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