While all of the Income-Based Repayment plans offer Loan Forgiveness after 20 - 25 years of making payments, if you decide to work for a government or not-for-profit organization, and you are willing to do a little extra paperwork each year, you can have your loans forgiven much faster through the Public Service Loan Forgiveness (PSLF) program. Not only can your loans forgive significantly faster, PSLF forgiveness does not assess a tax liability for the 'forgiven' amount. This can save you quite a bit of money!
If you are interested in the PSLF program, there are a couple things you should do as soon as you obtain that full-time public-service job:
- Make sure that your loans are eligible for PSLF. Perkins loans and FFEL (old) loans are not eligible unless you make them part of a consolidation loan. Not sure how to do that? Contact the Financial Aid Office or click here for more information.
- Make sure that you are in one of the Income-Based Repayment plans (there are five of them with names like New IBR, Old IBR, PAYE, ICR, or RePAYE). While Standard Repayment will qualify for PSLF, your loan will have been paid off before the forgiveness would occur if you are in Standard Repayment.
- Complete the Employment Certification Form (ECF) and send it to FedLoanServicing - their address os on the form (your loan services may be Navient, Greatlakes, Nelnet, or one of several other loan servicers, but FedLoanSErvicing is the only loan servicer for PSLF). Your loan servicer will work with FLS to move your loans over once you enter the PSLF program. Go to FedLoanServicing's website for more information.
- Make your payment ON TIME every month. You must accumulate 120 on-time (not more than 15 days late) payments while working full-time for a qualifying employer.
- Every year, you will re-certify to stay in your Repayment plan and to stay in the PSLF program.