- All right, so you're interested
in Public Service Loan Forgiveness,
and whether or not you qualify for it.
This is the Ultimate Guided Video for you
where we are going to be breaking down
what used to be a very complicated program.
There have been steps taken to help uncomplicate this system
and provide the necessary steps and approvals
for the right borrowers.
So let's go ahead
and dive into Public Service Loan Forgiveness.
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Hey, what's up, guys, it's Justine with The College Investor
investing and personal finance for millennials,
and we are talking about Public Service Loan Forgiveness
for your federal student loans.
A certain specific set of borrowers are eligible
for these types of forgiveness programs,
for this forgiveness programs.
Before we get into it, though, if you wanna make sure
that you are on the right repayment plan,
that there are other options maybe
that you hadn't considered
for your student loan consolidation,
you definitely wanna check out Chipper.
Chipper can do all of that and more
simply by plugging in your information,
and then they spit out the best options
and results for you, specifically.
We love it, so be sure to check out Chipper.
We will link to that below.
All right, so let's talk about
what the heck Public Service Loan Forgiveness is anyways
because not everybody qualifies for it.
Public Service Loan Forgiveness is available
for specific employees who work full time
and make 120 qualifying student loan payments.
After 120 payments, the rest of the balance
remaining on your student loans are forgiven.
However, these specific employees
must work in particular industries.
So qualified employees include the government, nonprofit,
the public sector, such as military service, public safety,
law enforcement, public education, public libraries.
You get the picture.
You wanna make sure that you are in one of these jobs,
and you are in it for the entire duration
of that forgiveness program
when you are making those 120 qualifying payments.
So speaking of 125 qualifying payments,
which means you would be making these payments on time
over the course of 10 years, what does that look like?
How does that work?
One, you need to have been employed full time
by a qualified employer.
Two, you've been making your payments
after October 1 of 2007.
Three, you made all of your payments on time and in full.
Four, you were under a qualified repayment plan.
Typically, this means that you were put
on an Income-Driven Repayment plan
in order to qualify for Public Service Loan Forgiveness.
Another key thing to note here
is that the 120 payments don't have to be consecutive.
So let's say that you went to work in public education,
you took some time off, and maybe you got out
of public education for a couple years,
and then you jumped back in.
When you jump back in,
and you continue to make those payments,
that's when those payments would qualify.
Okay, so if you are wanting to get on this type
of forgiveness program, there are some tips
that I wanna share with you to make the most out of it.
First, try to avoid making a large lump sum payment
towards your student loan debt.
Don't make more than one payment per month
and get on an Income-Driven Repayment plan right away.
Also, try to avoid consolidating your student loans.
If this is something that you're considering,
make sure that you do it up front at the start
of this whole debt-free payoff plan
that you have with Public Service Loan Forgiveness.
Once your in-school deferment and grace period ends,
that's when the clock starts
on qualifying for the Public Service Loan Forgiveness
and doing those qualified payments.
And big warning here.
When you consolidate your student loans in the middle
of this process of you doing those qualified payments,
it resets the clock.
So if you had been doing this for maybe two years,
and then you're like, oh, I wanna consolidate,
that two years was just a waste
because then you're gonna have to go back
and reset the clock and make those payments again.
So really, do not do that if you are planning
on going after Public Service Loan Forgiveness.
So how do you apply for Public Service Loan Forgiveness?
How do you make sure that you are on this program so that
you can get a bulk of your student loan debt forgiven?
As of today, the best way to do this
is to apply using the PSLF Help tool.
Now, I wanna take you inside
and show you what the form looks like,
so that you can be aware of what this process is
and also make sure that you set aside
at least an hour or two to fill this out correctly.
The last thing that you wanna do is feel rushed
and feel like you're in the middle of something
and incorrectly fill out the form.
This is what happened to a lot of borrowers in the past
is that they were told
that they filled out the form incorrectly,
and all the payments that they were making
actually didn't qualify for PSLF.
And so, now they're actually having the administration
go back in and manually review some of these applicants
to make sure that they are being qualified for PSLF.
All right, let's take a look at the form.
All right, so this is a look
at what the form looks like here.
So go ahead and fill out all of these things,
and also there's a note here.
You'll wanna make sure you check one of these boxes.
You understand all of this stuff.
Borrower's signature. All that fun stuff.
Go down to the bottom and make sure
you fill this out correctly.
A lot of times, people's applicants are being declined
because they did not fill in the Employee ID Number
or the correct employer name.
So if you need help with that, I strongly suggest
that you contact HR and have them help you
just walk through this section.
All right, so it's going to ask
is your employer a governmental organization,
are they tax-exempt, nonprofit, just making sure
that the employer meets the eligibility requirements.
So you'll check one of these boxes as well,
and then see here
that this needs to be completed by the employer.
And so, this is, I think, where HR is going to come in
and help you with that.
Okay, after you complete the form,
you will need to get a wet ink signature
in order to ship this off.
This seems very old school, but there is a way
that you can securely upload the form,
versus faxing or mailing.
I don't know what millennial is using a fax machine
at this point, but you do have the option
to securely upload it.
Also, you'll wanna make sure that you have the correct type
of loans that qualify for this forgiveness program.
That includes direct subsidized and unsubsidized loans,
direct plus loans, and direct consolidation loans.
All right, let's talk about
the Federal Family Education Loan Program.
So the FFEL and the Perkins Loans
that you might have and want to like roll this
into Public Service Loan Forgiveness,
there's actually been a waiver put in place
by President Biden.
In order to have those payments
qualify from underneath those loans,
and this waiver extends until October 31st of 2022,
you'll need to consolidate that
into a new direct student loan
and make sure that you have employment certifications
on file in order to qualify.
That can be a very tricky process,
so you'll wanna make sure you pay attention to those forms.
And again, if you have an HR team member
who can help you out with that,
I think that is going to make this process
a little bit more smooth for you.
By the way, this type of loan forgiveness is not taxable.
So when you actually get approved
and the rest of your balance is forgiven,
you are not taxed on the forgiven amount,
which is a relief to hear
because the last thing is you get $20,000 forgiven,
and then you owe taxes on that money.
That is not the case.
Just be aware of any state taxes
that might be levied on the forgiven amount.
So check with your specific state.
In fact, we have a whole blog post article
that we will link to below for you to check out.
So what happens
to your Public Service Loan Forgiveness status
if you go into default with your loans,
and you just stop paying on those loans?
When you stop paying on those loans,
and it goes into default, it no longer qualifies.
Plus, you should be on an Income-Driven Repayment plan,
meaning that payment should reflect something
that is manageable based off of your given income.
If that's not the case, then you'll need
to switch up your income driven repayment plan
in order to make sure that payment is prioritized
and that you can actually make it work in your budget.
So will Public Service Loan Forgiveness still be around?
This is something that Congress
likes to use as a punching bag.
This program could be eliminated altogether.
Given its track record over the past decade, at least,
if not longer, it has been something
that really hasn't helped a ton of borrowers
unless they followed these very strict guidelines.
So I think they are making some effort
to simplify this process to make sure
the right borrowers get the right forgiveness.
But if you're worried about this program going away,
then just stick to the standard repayment plan,
which is also 10 years.
Then you can go ahead and pay off that debt,
ideally in less than 10 years, and then be done with it.
If you've been on Public Service Loan Forgiveness,
and you've been making those payments,
and then all of a sudden you realize
that you are missing qualified payments,
which has been happening to a lot of borrowers,
there are ways that you can appeal that
to make sure that you have the right count set up.
Make sure that you're paying attention to that.
In fact, you could keep a folder on your computer
and just screenshot every single payment that you've made
to make sure you have the proof to back up
in case this happens to you.
So under Biden's PSLF limited waiver,
they are actually doing manual reviews
of borrowers' status and accounts
to make sure that they actually did qualify for PSLF.
Also, some borrowers might qualify for even more relief
as part of the Income-Driven Repayment Waiver,
and that lasts until January of 2023.
If you want to go ahead and appeal your repayment count,
there's a form that you can fill out we will link below.
You'll need your FSA ID and then fill out that form
in order to submit that.
Know that this is kind of a lengthy process,
but it is steps that you can take
to make sure that you have an accurate counting
of those payments to make sure that you are still on track
to have your student loans forgiven.
And lastly, there is the Temporary Expanded PSLF,
which helps borrowers
who were on the wrong payment repayment plan,
get onto the correct repayment plan
in order to help them with PSLF and help them
have those payments count as qualified payments.
We have a whole blog post on that, as well.
If you fall within this category,
and you were on the wrong repayment plan,
be sure to check that out.
Okay, we covered a lot of ground
with Public Service Loan Forgiveness.
Was this video helpful for you
in breaking down such a complicated program?
If you can follow the strict rules of this program,
you might be of benefit, but know that this is a process,
and you have to stay on top of it,
including filling out the correct paperwork
and having some guidance and help
from your employer along the way.
If you like these videos,
be sure to give them a big thumbs up.
That really helps out our channel,
and we'll catch you in the next one.
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