Sunday, November 18, 2012

Public Service Work and U.S. Federal Student Loan Forgiveness

Is public service work your passion?  Do you want to work in emergency response or education or law or medicine but your student loans are huge and you have no idea how to do the work you love and find a way to pay down your federal student loans?  [Or pay for lunch?]

Yep.  I hear ya.  Fortunately, Congress has heard you, too.  So, they have some ideas.  None of which are immediate fixes.  Of course there are the cool federal volunteer programs like AmeriCorps, Peace Corps, and VISTA.  But what if your life situation does not let you just up and leave for a year or so that these programs require.  Well, not much options.  Of course, talking with your federal loan servicer for different options and rates and even income-sensitive adjusted payments and deference and forbearance is always a first call.

However, this post is about something new that came together in 2007 and updated (with more concrete information) in 2012 called the Public Service Student Loan Forgiveness Act.
Source:  ClipArt


What is the Public Service Student Loan Forgiveness Act?

Well, it is complicated. I will piece together what I have learned so far and paste the links to the information I studied for this post. If you have more insights on this subject, PLEASE share in the comments box below.

"Federal Student Aid" is an office of the U.S. Department of Education.  On their website or, they say “if you work full-time in a public service job, you may qualify for Public Service Loan Forgiveness.” 

 What is the Public Service Loan Forgiveness Program (PSLF)?

According to website, the program was created in 2007 by Congress.  Its goal is to encourage people with college degrees to “enter and continue to work full-time in public service jobs”.  If you have accrued large federal student loans in your quest to obtain your college and/or graduate degree(s), you “may qualify for forgiveness of the remaining balance due on eligible federal student loans”.  However, there are limits to being able to qualify for the loan forgiveness. 
  • First, you must have already made 120 payments on these qualifying federal loans.
  • Second, you must have made these 120 payments while employed by certain public service employers. 
  • Third, these payments must be made as part of specific repayment plans.  (See the website for specific plans that qualify).  
  • Fourth, only payments made after October 1st, 2007, qualify to be counted as part of these 120 payments.
  • Fifth, only loans received under the Federal Direct Loan program qualify for PSLF.  “FFEL and the Perkins Loan program are not eligible for PSLF.”

So, say you think your gigantic federal student loan qualifies under most or all of the above 5 specifications, do you know what kind of public service employment qualifies?

The website states: 
1.  “qualifying employment is any [job] with a federal, state, or local government agency, entity, or organization” or

2.  a 501(c)3 non-profit organization.

3.  “A private non-profit employer that is” does NOT have 501(c)3 status MAY “be a qualifying public service organization if it provides certain specified public services.”  Services such as:  emergency management, military service, public safety, law enforcement, school library, other school-based services, public interest law services, early childhood education, public service for individuals with disabilities and the elderly.

Employment through a non-profit that does NOT qualify:
1.  An organization that is a labor union or a partisan political organization does NOT qualify as a public service organization for the PSLF program.

2.  An organization that is non-profit and your employment involves “time spent participating in religious instruction, worship services, or any form of proselytizing” does NOT qualify as a public service organization for the PSLF program.

 What does PSLF consider full-time employment?

“At least an annual average of 30 hours per week”.  However, if you are “a teacher or other employee of a public service organization, under contract for at least eight out of 12 months, you meet the full-time standard if you work an average of at least 30 hours per week during the contractual period and receive credit by your employer for a full year’s worth of employment”.

Also, “if you are employed in more than one qualifying part-time job simultaneously, you may meet the full-time employment requirement if you work a combined average of at least 30 hours per week with your employers.”

Keeping Track of Your Eligible Employment and Loan Repayments

So, if you still think you may be eligible, start keeping track of your hours!  See the website for more information on eligibility and check out the PSLF online form.  PSLF created this form to help you keep track of your qualifying employment terms and qualifying payments.  The form “allows you to get your employer’s certification of employment while you are still employed at that organization or shortly after leaving.”  Keeping track of this information will make it easier for you to submit proper documentation for potential loan forgiveness by the PSLF if they deem you qualify for it.  The website lists steps to follow to apply for student loan forgiveness that includes an “employment certification for public service loan forgiveness”, submitting it to the correct authorities, and following it up with the proper office.
Remember, you do not become eligible for the PSLF until AFTER you make your 120th qualifying payment.
Now, since the program started in 2007 and it takes 10 years to make 120 qualifying payments (assuming you had all your ducks in a row for this in October 2007), the program does not actually kick in until October 2017.  What does that mean?  Well, the program is still in development.  I hope some of you find the program useful.  Meanwhile, I will be keeping track (a written record) of my qualifying employment hours, my federal loan repayment times and dates, and have any potential 501(c)3 employers to sign my “employment certification for Public Service Loan Forgiveness” form.  Then, I will see how close I am to 120 qualifying payments in the years 2017 or 2018 and determine where I stand on how much I have still to pay in federal loans versus how many more qualifying payments I need to make to be eligible for the PSLF.


Other useful information on the program:
Loan Forgiveness for Public Service Employees Fact Sheet” –published March 2012

Public Service Loan Forgiveness Program Questions and Answers (Q&A) for Borrowers”—last updated 5/12/2012.
The PSLF form for keeping track of your qualifying employment and qualifying repayment, also called the “Employment Certification for Public Service Loan Forgiveness

The “Dear Borrower Letter” that the Federal Student Aid office published in January 2012

The “Instructions for Completing Employment Certification for Public Service Loan Forgiveness” form
See a much better description of student loan forgiveness for public service on the Student Loan Network webpage

Stafford Loan Forgiveness is a separate program from the PSLF program.  It seems more geared toward federal student loan forgiveness for those students who volunteer with AmeriCorps, Peace Corps, and the VISTA programs.  For more information on the Stafford Loan Forgiveness program, check out this link.

More articles you may find useful 
Federal Government using Student Loan Repayment incentives to recruit new hires

Federal Government using Student Loan Repayment incentives to recruit CAM providers,including acupuncturists

Would the new (2012 proposed, different than the 2007 Public Service) Student Loan Forgiveness Act Help You?

The 2012 Student Loan Forgiveness Act

For physicians only--Partial federal student loan forgiveness for public service

Part of receiving federal student loan forgiveness lies in having a recognized “occupational health code”.  For more information on this, see the August 2008 article in Acupuncture Today (vol. 9, issue 8), by Kory Ward-Cook, the leader of the NCCAOM (National Certification Commission on Acupuncture and Oriental Medicine), “NCCAOM Seeks Federal Recognition of the Profession”.


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