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Tackle the Public Service Loan Forgiveness Form

By U.S. News & World Report

Public Service Loan Forgiveness comes up a lot on the Student Loan Ranger blog — but it’s necessary. This is an important program that borrowers ask us about on a daily basis.

Based on these questions and the data we’ve seen, more work is critical to ensure that all eligible borrowers are aware of how PSLF works.

[Read more about the fate of public service loan forgiveness.]

Recently, the Department of Education published the PSLF forgiveness form. Borrowers who have completed 120 eligible payments on direct loans while working full time for a qualifying employer may now return this form to the address listed on it to apply for forgiveness.

If you believe you have met all the PSLF requirements, review these statements, which you must attest to on the form, as well as a few additional criteria before you apply.

— ” To qualify for PSLF, I must have made 120 qualifying payments on my Direct Loans while employed full-time by a qualifying employer or employers.”

Before you submit this form, ensure you’ve submitted proof to your loan holder for all 10 years of eligible employment. And be fairly certain you’ve made all required qualifying payments, since not doing so could cost you financially, as we explain further below.

[Learn to prepare wisely for Public Service Loan Forgiveness.]

— “To qualify for PSLF, I must be employed full-time by a qualifying employer when I apply for and receive PSLF.”

This is important — you have to be working for an eligible employer at the time you made each of the 120 required payments and when you submit the forgiveness application.

Further, you must still be working full time for this employer when the Department of Education processes your forgiveness application. When processing your application, the Department of Education may check with your employer to confirm you are still employed full time.

— “If I am eligible for forgiveness, the amount forgiven will be the principal and interest that was due on my eligible Direct Loans when I made my final qualifying payment. Any amount that I pay on those loans after I have made my final qualifying payment will be treated as an overpayment. I must continue to make payments on any of my other loans.”

Not all of your loans may qualify for forgiveness at the same time. This tends to happen if you take out loans, start pursuing PSLF, then go back to school and take out new loans.

You must make 120 eligible payments on each individual loan to receive forgiveness for that loan. PSLF is based on each loan, not on the borrower.

It’s OK if all of your loans don’t qualify at the same time. But be sure you don’t drop the ball on loans that aren’t eligible for forgiveness when you submit the PSLF form for another loan.

[Read about student loan repayment myths that are debunked.]

— “If I am not eligible for forgiveness, I will be notified of the determination and why it was made, my forbearance will end, and unpaid interest may be capitalized (added to my loan’s principal balance).”

The takeaway here is not to apply unless you are fairly certain it’s time to do so. Otherwise, you could lose valuable months of qualifying payments and gain some extra interest while you wait for the determination.

If you aren’t sure where you stand, talk with your loan holder. Your servicer can confirm the number of eligible payments you have made and that you’ve submitted your employment verification forms annually.

Finally, as you pursue PSLF, here is additional information to remember — overlooking these key details could undermine your progress toward PSLF , which we’ve seen happen to a number of borrowers.

First, you must have a direct loan to qualify. Parent PLUS loans are also eligible for PSLF ; however, the best way to take advantage of the program is by consolidating and enrolling your Parent PLUS loans in the income-contingent repayment plan.

You must also consolidate Federal Family Education Loan program loans under the direct loan program to gain access to PSLF. You may have these if you borrowed prior to June 30, 2010. Keep in mind that if you are a student loan borrower pursuing PSLF and consolidate your loans, you will most likely need to apply for an income-driven repayment plan.

Understand, too, that consolidation resets the PSLF clock — no payments made prior to consolidation can count toward the program .

Finally, the only employment that counts for PSLF is that of the borrower listed on the loan, regardless of who actually makes the loan payments. You can’t change the name of the borrower listed on the loan.

Be sure to review all the PSLF eligibility requirements. And if you are currently eligible for PSLF, we’d love to hear from you about your experience with the process. Email us at studentloanranger@usnews.com.

More from U.S. News

Stay Informed to Make Wise Student Debt Choices

File FAFSA Early to Minimize Borrowing

5 Ways to Handle a Student Loan Shortfall

Tackle the Public Service Loan Forgiveness Form originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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