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How Does One Qualify for the Public Service Loan Forgiveness Program?

Many people go through debt, especially those who have taken out loans for education purposes. As the price of education grows exponentially each year, the number of people unable to repay their student loans is worrisome. For this purpose, there are student loan forgiveness programs initiated by the government in order to ease the financial burden of individuals who are unable to repay their existing loans.

Generally, the student loan forgiveness initiative can only be availed on federal loans but there are certain private loan providers who also permit these programs. Let us go through a list of the most common forgiveness programs available today.

The Different Student Loan Forgiveness Programs

Pay As You Earn

This federal student loan repayment program, Pay As You Earn (PAYE) is specifically designed to aid borrowers who are facing great difficulty in making their monthly student loan payments. With this program, the monthly loan repayments are set at 10% of the borrower’s monthly income.

The eligibility criteria for PAYE is that the borrower’s existing loan repayment amount has to be lower when compared to a standard 10 year repayment plan. The borrower must also provide documents and proof that they are facing a partial financial hardship period. The types of loans that qualify for the PAYE forgiveness program are listed below.

  • Direct PLUS loans.
  • Direct unsubsidized loans.
  • Direct subsidized loans.
  • Federal Family Education PLUS loans.
  • Federal Perkins loans.
  • Subsidized Federal Family Education Stafford loans.
  • Unsubsidized Federal Family Education Stafford loans.
  • Federal Family Education Consolidation loans.

Revised Pay As You Earn

The Revised Pay As You Earn (REPAYE) loan forgiveness program was a direct initiative of President Obama. SImilar to the PAYE loans, it allows borrowers to set their monthly loan payments at 10% of their monthly income but it does not require the borrower to provide proof of any financial hardship period.

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The eligibility criteria for REPAYE is limited to federal loans. In the case of borrowers who are undergraduates, their loan amounts will be forgiven after a period of 20 years. In this 20 year duration, they will still have to make consecutive payments towards their existing loan.

In the case of borrowers who are graduates, their loan amount will be forgiven after a 25 year period. The types of loans that qualify for the REPAYE forgiveness program are listed below.

  • Direct unsubsidized loans.
  • Direct subsidized loans.
  • Subsidized Federal Family Education Stafford loans.
  • Unsubsidized Federal Family Education Stafford loans.
  • Direct PLUS loans.
  • Federal Perkins loans.
  • Federal Family Education Consolidation loans.
  • Federal Family Education PLUS loans.

Income-Based Repayment

The Income-Based Repayment (IBR) loan forgiveness program enables borrowers who are in debt to set their monthly loan payments at 10 to 15% of their monthly income. Once these payments are made consecutively for 20 to 25 years, their remaining loan amount will be eligible for IBR.

However, the Income-Based Repayment program will only reduce the borrower’s monthly payments but not their interest rate. In the case that a borrower’s income increases during this period, so will their remaining loan balance. Sometimes this could also result in the total repayment amount being higher than what was originally agreed upon before starting the IBR program.

The eligibility criteria for this program is that borrowers should make payments that are lower than a standard 10 year repayment plan. Borrowers must inform their student loan provider in the event that they switch jobs or when there is a change in their monthly income. The types of loans that qualify for the IBR forgiveness program are listed below.

  • Federal Perkins loans.
  • Subsidized Federal Family Education Stafford loans.
  • Unsubsidized Federal Family Education Stafford loans.
  • Federal Family Education Consolidation loans.
  • Direct PLUS loans
  • Direct subsidized loans.
  • Direct unsubsidized loans.
  • Federal Family Education PLUS loans.

Public Service Loan Forgiveness

The Public Service Loan Forgiveness (PSLF) program enables borrowers facing financial hardships to get their loan amount forgiven. However, the candidate will need to hold full time employment in a public service job. After they have made 120 payments, consecutively towards their existing loan, they will be eligible to qualify for the PSLF forgiveness program.

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The individual applying for this program will need to work for 30 hours a week in either a local, state or federal government agency. People who work in a nonprofit can also apply. All direct federal loans qualify for the Public Service Loan Forgiveness program. However, these 120 loan repayments must be done only through the repayment plans listed below.

  • Standard 10 year repayment plan.
  • Revised Pay As You Earn plan.
  • Pay As You Earn plan.
  • Income-Based Repayment plan.
  • Income-Contingent Repayment plan.

Incase You Fail to Qualify For Any of The Above Programs

There are some people who can be rejected from the loan forgiveness programs. In thi case, they can try other methods to acquire forgiveness on their student loans. Certain situations where this applies are as follows.


In the Event of Your School Closing Down

If you have availed a loan to pay for an educational course but the institution closes down before you complete your degree, you can apply for a loan forgiveness program.

In the Event of Bankruptcy

The success rate is immensely low in these situations. This method should only be carried out as a last resort, as many people who file for bankruptcy to avail loan forgiveness end up losing in court.

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