Public Service Loan Forgiveness Review: Rates


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Last updated on July 11th, 2022 at 06:31 pm

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Do Americans Have to Apply for Stud...
Do Americans Have to Apply for Student Loan Forgiveness?
Federal Student Aid

The majority of students in the US who plan to go to college will need some sort of financial aid in order to pay for their education. The cost of education has risen steadily over the past 30 years or so, and it is now nearly impossible for the average family to save the amount of money needed to send 1 student to college, let alone several. An undergraduate degree in the US can cost anywhere from $80,000 to $240,000. It’s possible to defer some of these costs by enrolling in a college or university in the state where you (or your student) live, but this is not always the case. There are a variety of scholarships available, but these are becoming less and less likely to cover the cost of schooling. So what should you do? Many students choose to apply for student loans, hoping to seek public service loan forgiveness once they graduate.

Student Loan Forgiveness Paper

PRODUCT NAME

PRODUCT IMAGE

WHERE TO CHECK RATES

Public Service Loan Forgiveness

Public Service Loan Forgiveness Review

Teacher Loan Forgivenesss

Public Service Loan Forgiveness Review

Perkins Loan Cancellation

Public Service Loan Forgiveness Review

Student Loan Forgiveness for Nurses

Nursing Loan Forgiveness

What Is Public Service Loan Forgiveness?

Public Loan Forgiveness

Loan forgiveness is the practice of forgiving debt in exchange for someone working in a certain job or sector. Some life events or circumstances can qualify you for loan forgiveness. Public Service Loan Forgiveness is a program offered to students who accept a qualifying nonprofit and government jobs and have student loans. The balance of your student loan can be forgiven after you make 120 qualifying payments. In order for your payments to qualify, you have to make them while you’re enrolled in an income-driven repayment plan. This is important because a standard plan would have the loan paid off before you become eligible. Public Loan Service Forgiveness seems like a good idea in theory, but let’s see if it works in practice.

Specifics of Public Service Loan Forgiveness

 The Public Service Loan Forgiveness plan was created in 2007, meaning the first set of students eligible for Public Service Loan Forgiveness became eligible in 2017. The concept is that, after working for a nonprofit or government agency for 10 years, the remainder of your student loan balances will be forgiven. Unfortunately, the required income-driven repayment plan was not available in the early years of the program. Therefore, many who would have qualified didn’t get the chance to reap the benefits of loan forgiveness.

woman looking at desk

The program has been rife with problems, including the fact that you have to verify 10 years of employment to qualify, but the forms needed to verify your employment each year have only been available since 2012. People who started work in 2007 will have a harder time getting the government to verify their employment.

Another issue is that only Direct Loans are eligible for Public Service Loan Forgiveness. Since only about 25% of all student loans were Direct Loans, this creates a problem. You can consolidate your loans into 1 Direct Loan that will count, but it resets the clock on the 120 payment requirement.

Because of these problems, complaints about the Public Service Loan Forgiveness program has been on the rise. The current administration is considering phasing out the program by allowing those who currently qualify to finish their term and apply, but no new graduates would be eligible. Even those who qualify have been questioning whether the program is worth it. Essentially, Public Service Loan Forgiveness means staying at a low-paying job for 10 years so your debts will be forgiven, when you might be a better place financially if you took a higher paying job and paid off the loans earlier.

Average Loan Amounts

Student loan debt is the second-highest consumer debt category in the US. The only category with a higher amount of debt is mortgage debt. Student loan debt has surpassed credit card debt and auto loans. Americans currently owe $1.5 trillion in student loans, with the average student graduating with $37,000 in debt. A full 10% of borrowers are delinquent in default of their loans.

How It Compares

We picked a few other loans to see how they compare with Public Service Loan Forgiveness. 

  • Teacher Loan Forgiveness
  • Perkins Loan Cancellation
  • Student Loan Forgiveness for Nurses

Public Service Loan Forgiveness

Public Service Loan Forgiveness Review

Average Loan Amounts

It is estimated that between 5.2 and 7.7 million borrowers may qualify for Public Service Loan Forgiveness.

How Much Debt Can Be Forgiven?

There is no limit to the amount of debt that can be forgiven.

How Do You Qualify?

To qualify for Public Service Loan Forgiveness, you must have been paying on Direct Loans for at least 10 years, or 120 payments. You also must be working full-time for a nonprofit or government agency. You will need to verify your employment and payments made during part-time or unemployment won’t count. Your payments must be made while under the Income Driven Repayment Plan.

Public Opinion

Public opinion about Public Service Loan Forgiveness has become more and more negative over the last few years. When the program was announced, it seemed like a great way to go to school. You could take out loans that would be forgiven if you worked in a specific job sector for 10 years. However, the program has been riddled with loopholes and bureaucracy. Only about 1,000 of 7,500 applicants are expected to see loan forgiveness.

The government is also disenchanted with the plan, and may scrap it altogether. Hopefully, for those who are still banking on having their loans forgiven, they will be allowed to finish out their payment terms and apply. If this affects you, it’s a good idea to keep up with policy changes in Congress that are relevant to the program.

Jobs That Qualify

The following types of jobs would qualify you for the Public Service Loan Forgiveness program if you meet all other requirements:

  • Federal, State, Local, or other Tribal government organizations
  • AmeriCorps
  • The Peace Corps
  • A 501(c)3
  • Another type of not-for-profit com

PROS

  • All of your debt can be forgiven
  • Lots of jobs qualify
  • You pay very little along the way

CONS

  • Direct loans were available until 2012
  • Proving your employment is very difficult
  • There’s lots of red tape and few qualify

Teacher Loan Forgiveness

Teacher Loan Forgiveness

Teachers in the US qualify for more than one loan forgiveness program. They are eligible for Public Service Loan Forgiveness under the same terms as anyone who applies. Teachers are also eligible for a specific Teacher Loan Forgiveness program.

Average Loan Amounts

Teachers graduate with an average debt of $30,000.

How Much Debt Can Be Forgiven?

Teachers can qualify for up to $17,500 in debt forgiveness.

How Do You Qualify?

In order to qualify, you must have been employed in a qualifying school as a full-time teacher for 5 complete, consecutive years. At least one year must have been after 1997-1998. You can qualify for anywhere from $5,000 to $17,500 in forgiveness. If you taught to receive AmeriCorps benefits, those years don’t qualify. PLUS and Perkins loans are not eligible for this type of forgiveness. You should put in your application after you’ve met your 5-year requirement.

Public Opinion

Most teachers find that navigating all of the rules and requirements, plus the qualifications and paperwork, makes teacher loan forgiveness very difficult.

Jobs That Qualify

In order to qualify for Teacher Loan Forgiveness, you must be a “Highly Qualified Teacher.” Those requirements are:

  • Earned a bachelor’s degree or higher
  • Received full state certification
  • Had no waivers of certification or licensure

You may also qualify by working for a low-income school or educational service agency. You will need to consult the Annual Directory of Designated Low-Income Schools for Teacher Cancellation Benefits (Low-Income School Directory) in order to know if your school qualifies.

PROS

  • Slightly easier to qualify
  • Great for people who want to teach
  • Positive impact on society

CONS

  • You must be specifically qualified
  • Must teach in certain schools
  • Negates other forgiveness programs

Perkins Loan Cancellation

Perkins Loan

If you have a federal Perkins Loan, you can have up to 100% of that loan forgiven by working a public service job for 5 years. It’s possible to see a portion of your loans forgiven for each year you work. The teacher benefit is for teachers who work full-time in a low-income public school or teach certain subjects like special education, math, science, or foreign language.

Average Loan Amounts

Debts in this category are average, with graduates leaving school with about $31,000 in debt.

How Much Debt Can Be Forgiven?

Perkins loan cancellation is not limited to a certain amount, but can be up to 100% of the loan.

How Do You Qualify?

If you meet any of the qualifications below, including certain teaching positions, you simply fill out the application for forgiveness. You’ll need to go directly through your school to apply.

Public Opinion

LIke other forgiveness plans, most people find the qualification process long and complicated.

Jobs That Qualify

The following the qualifications for non-teacher Perkins Loan Cancellation:

  • School Closure
  • Death
  • Bankruptcy
  • Total and permanent disability
  • Spouse of a victim of 9/11
  • Service-related disability (veterans)

The teacher qualification is for teachers who work at certain low-income or other qualifying schools. The qualifying jobs can be found online.

PROS

  • Variety of situations can qualify
  • You can see forgiveness as you work
  • Forgiveness is 100%

CO​NS

  • You must prove your situation
  • Perkins is only 1 kind of loan
  • You have to go through your school

Student Loan Forgiveness for Nurses

Nursing Loan Forgiveness

If you are working as a nurse, you are eligible for Public Service Loan Forgiveness, Perkins Loan CAncellation, and the NURSE Corps Loan Repayment Program. This program pays 85% of your unpaid college debt if it qualifies. It’s a very competitive program. Over 6000 nurses applied in 2015, but only about 600 qualified for loan forgiveness. You are far more likely to qualify if you work in an area that has a shortage of nurses. You can find applications for the program on the program’s website.

Average Loan Amounts

Debt for nursing students was average, at about $30,000 per student.

How Much Debt Can Be Forgiven?

Up to 85% of your debt can be forgiven.

How Do You Qualify?

In order to qualify for these programs, you must meet the requirements for the Public Service Loan Forgiveness or Perkins Loan Cancellation. Otherwise, you can apply for the NURSE Corps Loan Repayment Program. It will pay 60% of your loan balance if you work in a qualifying hospital or clinic for 2 years. If you stay another year, you can get an extra 25% paid.

Public Opinion

Public opinion about these programs is on par, as they are all hard to navigate and often negate each other

Jobs That Qualify

To qualify, you must work in a public service job for 10 years, meet the teacher requirements, or work in a qualifying hospital or clinic for 2 years. Facilities are rated in 3 areas to determine if they qualify.

PROS

  • Encourages nursing students
  • Helps hospitals and clinics
  • Shorter work term

CONS

  • Limited to nurses
  • Few qualify
  • The jobs are difficult

Conclusion

Of all the student loan forgiveness options, Public Service Loan Forgiveness is the hardest to obtain. The requirements are very specific and many people don’t qualify by no fault of their own. It’s difficult to prove your employment and many loans that were paid on don’t qualify. Other loan forgiveness programs have similar problems and pitfalls. Even nurses and teachers have a hard time getting forgiveness for their loans. Although loan forgiveness seems like a great thing, it has been made so complicated and full of bureaucracy, that students considering their loan options would be better off taking out less in loans and planning to pay back what they owe quickly. In an economy where service jobs are becoming more and more valuable, and a 4-year degree is not an immediate ticket to a good job; you would do better to spend less money specializing in an industry with guaranteed jobs and solid wages than taking out lots of debt and hoping for forgiveness. That forgiveness, it seems, is very hard to come by.

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