In October 2017, something remarkable will happen. Hundreds of thousands of people enrolled in the Public Service Loan Forgiveness program, created in 2007, will begin the process of applying for loan forgiveness. That means their student loan indebtedness will be wiped out–and the forgiven balance will not be counted as taxable income.
But you may be wondering–only hundreds of thousands? When there are, according to a report from the Jobs With Justice Education Fund, more than 33 million Americans employed in public service?
Jobs With Justice states that only an estimated 1% of potentially eligible borrowers are enrolled in the loan forgiveness program. What’s wrong with this picture?
Working in Public Service
On the Federal Student Aid website, one objective of the PSLF program is to encourage full-time work in public service jobs. But Jobs With Justice reports that the vast majority of enrollees work in government. Somehow, the message isn’t getting through to those who work in public service: They qualify to enroll in a program that could significantly affect their financial future.
Loan forgiveness means you would not have to fork over that money that you’re now paying out every month. It means you could save it; you could invest. You could support a charity whose work you believe in. You could increase giving to your church or help pay your nephew’s tuition. Have dreams of entrepreneurship? You could save more for your business idea. You could even go back to school.
But the Department of Education hasn’t effectively marketed this program. It didn’t even produce instructions or a certification form for borrowers until 2012–five years after the program started.
Student Loan Servicers
Student loan servicers contracted by the Education Department to handle student loans are also part of the problem: They do not promote the program to eligible borrowers.
It’s also been reported that when borrowers are informed and ask servicers to enroll their loans in an alternative payment plan, the servicers do not always follow instructions.
Your loan servicer is not your friend. Document every transaction, and follow up to make sure everything you’ve asked for has been done.
How to Seek Loan Forgiveness
If you work in the nonprofit sector, go to the Federal Student Aid website and read the documents Public Service Loan Forgiveness Program and Questions and Answers for Federal Student Loan Borrowers. If your loans are in default, there’s information about getting them out.
You must make 120 consecutive on-time payments before you can request loan forgiveness. And you must remain employed at a qualifying employer when you apply for the program, make your payments, and apply for forgiveness.
It’s not complicated. You can do it. Get going.