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September 18th, 2009

Federal student loan forgiveness

Published on September 18th, 2009 | By: pwray@ceramics.org

Maybe this is old news, but I didn’t know there was a “Public Service Loan Forgiveness” federal program.

In brief, if you work in a “public service” job for at least 10 years, and are still holding federal loan debt you can have the outstanding amount erased.

I am not sure how many individuals still have debt after 10 years. A lot loans are initially set up under a 10-year repayment plan. But, for one reason or another, many people also repay these loans under other repayment plans. One requirement for this new program is that participants must make 120 monthly payments before any forgiveness kicks in.

The good news: “Public Service” is defined pretty broadly. There are the obvious jobs, such as in federal, state and local government. Public school and college employment and military serve is also included. Peace Corps and AmeriCorps service counts, too.

Even better, full-time employment with any non-profit, tax-exempt organization also counts. Even some non-501(c)(3) not-for-profit employees may be eligible.

The bad news: There is not much retroactivity to the program. Only payments made after Oct.1 2007 count towards the 10 years/120 months.

Check out an FAQ on the PSLF program here.


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