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Light at end of student loan tunnel in PSLF Program
million student loan borrowers already have outstanding student loans debt. So it’s no surprise paying back student loans can be a looming prospect for graduates. (American Student Assistance, Student Loan Debt Sta- tistics, accessed on October 4, 2013 http://
www.asa.org/policy/resources/stats/) Fortunately for county employees making
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good on student loans; it may be a bit easier than you thought. Te Public Service Loan Forgiveness Program (PSLF) is a federal pro- gram that encourages those with student loan debt to work full-time in the public service arena by forgiving a portion of the loan balance after a certain set of qualifications are met. Tis article outlines each requirement to receive stu- dent loan forgiveness. First you must determine if your student
loans are eligible. Only loans received under the William D. Ford Federal Direct Loan (Direct Loan) Program are eligible for forgiveness. Tis means loans received under the Federal Family Education Loan (FEEL) Program, the Federal Perkins Loan (Perkins Loan) Program, or loans under a state loan program do not qualify. If you aren’t sure what kind of student loans you have, don’t worry, it is an easy question to an- swer. You can contact the National Student Loan Data System at
www.nsld.ed.gov to find out. You can also call your loan servicer directly (whoever you send your monthly payments to) and ask them if you have Direct Loans. If you find out you do not have Direct Loans don’t despair! You have the option of consolidating your FEEL Program or Perkins Loans into a Direct Consolidation Loan, which is a qualifying loan under the program. Te caveat is only payments made after con- solidation will count as qualifying payments (more on that later). Once you have established that your student
loans are Direct Loans and therefore eligible for forgiveness, you have to determine if you are working or have worked at a qualifying public service organization. When it comes to county
COUNTY LINES, FALL 2013
lmost 12 million college stu- dents take out student loans each year to help cover the ex- penses of college. Another 37
employees the answer to this question is typi- cally going to be a yes. Qualifying employment is defined as any employment with a federal, state or local government agency, entity or or- ganization or a not-for-profit organization that has been designated as tax exempt by the IRS under Section 501(c)(3). Additionally, if you aren’t an official “county” employee, but you work for a private not-for-profit public service organization your employment may still qualify if your employer provides any of the following services: emergency management, military ser- vice, public safety, or law enforcement services; public health services; public education or public library services; school library and other school-based services; public interest law ser- vices; early childhood education; public service for individuals with disabilities and the elderly. Te organization will not qualify if it is a labor union or a partisan political organization. Te best thing to do is submit an Employ- ment Certification form each year or every time you change jobs to confirm your employment does count as qualifying employment for the program. Te form can be accessed at the fol- lowing web address:
http://studentaid.ed.gov/ sites/default/files/public-service-employment- certification-form.pdf So far so good. Now, you have qualifying student loans and qualifying employment. Te next question is whether or not you are a full- time employee. Under the Public Service Loan Forgiveness Program full-time employment is defined as an annual average of at least 30 hours per week. While this next exclusion may not be as applicable to county employment as some other types of qualifying employment, it is still important to mention; hours that you cannot include towards your 30 hours are those spent participating in religious instruction, worship services, or any form of proselytizing. Now, let’s put it all together. You must make
120 qualifying payments while working full- time at a qualifying employer. Qualifying pay- ments must meet a two-part test. First, you must make a regularly scheduled
(payments received greater than 15 days after the due date do not count) to your servicer in an amount equal to or greater than the mini-
payment
Legal Update
mum amount due that month. Additionally, payments that are made while your loans are in an in-school or grace status, in deferment, or in forbearance do not count to- ward your 120 qualifying payments. Similarly, lump sum payments or advance payments do not typically count towards your qualifying payments either. Basically, you must make the payment when it is due (not early and not more than 15 days late) and you have to pay at least the minimum amount of the payment. Any ad- ditional amount you pay toward principal will not count toward any additional payment. Te second part to the qualifying payments test is that you must make the 120 payments under a qualifying repayment plan. Qualify- ing repayment plans are limited to the Income Based Repayment Plan, Pay as You Earn Repay- ment Plan and the Income Contingent Repay- ment Plan. Tere are payment calculators avail- able online for each of these plans in order to help you determine the option that is best for you. After you have made your 120th qualify- ing payment you will need to submit the PSFL application to receive loan forgiveness. Tere is one final qualifying step: you must
be working for a qualified public service orga- nization at the time you submit the application for forgiveness and at the time the remaining balance on your loan is forgiven. What this means is don’t quit your day job after that 120th payment gets mailed in and you have actually received forgiveness for the balance on your loan(s). To get more information, access the Employ- ment Certification form or any other docu- ment please visit the Public Service Loan For- giveness webpage at
http://studentaid.ed.gov/ repay-loans/forgiveness-cancellation/charts/ public-service#what-is-the-public.
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Brandy McAllister Risk Management Legal Counsel
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