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Student Loan Forgiveness: Find Out if You Qualify and What to Do if So

My College Story

I took a different path than most to earn my college degree. I’ve always enjoyed working, so did so full-time while completing my degree.

I first took classes at the Community College of Denver because my telecom employer provided tuition reimbursement and their tuition rates were so reasonable, I didn’t have to pay any out-of-pocket expenses. As a bonus, most of my instructors also taught at the University of Colorado Denver, meaning I received the same education at more than half the cost of the university students.

From there, I was able to transfer to Regis University’s School for Professional Advancement, a program of learning dedicated to working professionals. I was also able to earn some of my college credits by taking CLEP exams and through my work experience, saving me on tuition because I didn't take the classes. I graduated with my Bachelor of Science in Business Administration with very little student loan debt.

You Might be One of the Millions with College Debt, Especially if You're a Woman

Unlike me, millions of U.S. college graduates go the traditional route or go for advanced degrees, thus beginning their careers with a sometimes overwhelming student loan debt balance.

In fact, you might be one of the more than 40 million Americans who owe more than $1.7 trillion in total loan debt. This equates to more than 50 percent of students graduating with significant debt[1]—so you're certainly not alone.

And more women than men graduate with debt. According to the American Association of University Women (AAUW), "Women hold almost 2/3 of the country’s $1.54-trillion student debt: $929 billion. Women earning a bachelor’s degree graduate [end up] owing an average of $2,700 more than their male peers." Add gender pay gaps to the equation, and it's no surprise that on average, it takes women about two years longer than men to repay their student loans.

This chart from the AAUW website highlights these differences.

Overall, the majority of student loan debt is carried within federal student loans, with the remaining amount owed to private lenders.[2]

Several existing programs may lessen the burden of student loans, but require decades of repayment. The Public Service Loan Forgiveness (PSLF) program was created to provide relief and attract students into public service careers. It allows borrowers who make ten years of loan payments to have the remaining outstanding balance forgiven.

Immediate Relief Might be Available to You

In the past two years, you might have been one of the student loan debtors who enjoyed some relief as monthly payments were paused during the pandemic. In late August, the Biden Administration extended this hiatus on student loan payments until December 31, 2022.

In addition to this extended pause, on August 25, 2022 President Biden announced that the government would forgive federal direct loans up to $10,000 for graduates with annual salaries below $125,000 or $250,000 for married couples or heads of households.[3] The Biden administration will also cancel up to $20,000 for borrowers who meet those requirements and were Pell Grant recipients in college. The initiative caps the relief at the amount of a borrower's outstanding eligible debt.

If you have kids in college, they could be also eligible to have their debt canceled, though the income cap applies to your income. You're also eligible if you're a parent who took out Parent PLUS loans. For many borrowers, the debt cancellation will be automatic for those whose information is already on file. If your information isn't on file, you'll need to verify your income with the Department of Education.

You Might be Eligible for Public Service Loan Forgiveness (PSLF)

This long-term loan forgiveness plan is available to federal, state, local and Tribal government and qualifying nonprofit employees with federal student loans.

If you work for one of these types of nonprofit organizations, the government may forgive your remaining loan balances if you completed 120 qualifying loan payments, i.e., ten years of work.

How to Qualify for PSLF

1. You Must Hold the Types of Loans that are Forgivable

PSLF will only forgive those with William D. Ford Federal Direct Loan (Direct Loan) loans. Unfortunately, private student loans do not qualify. If you're a debtor with this type of loan, you can also consolidate it with other federal student loans, such as Federal Family Education Loan loans or Perkins loans, to make them eligible for PSLF.

If you're a borrower with a Perkins loan consolidation, you can request forgiveness after five years of public service. In that instance, the best option is to pursue that forgiveness and not consolidate the Perkins loans. You can still participate in PSLF if you have other federal student loans.

2. You Must Work Full-time for a Qualifying Employer

The types of nonprofit employers include:

  • A government organization at any level (including tribal)

  • 501(c)(3) nonprofits

  • AmeriCorps or the Peace Corps

  • Nonprofit organizations without 501(c)(3) status but who provide a qualifying public service as their primary mission

  • Religious organizations

You must complete an employment certification form to confirm that your employer qualifies and send the form to FedLoan Services, the contractor that services PSLF for the department. Once your form is processed, your loans will be transferred to FedLoan to be serviced going forward.

From there, you must submit a new form every year, or when you switch jobs. It's not a requirement to send in your form every year, but it is recommended to do so for your own records. You can can also apply for forgiveness if you're eligible and get your employment certified retroactively.

Bottom line? If you currently work for a government or nonprofit organization, you should submit a form even if you haven't been there for ten years. Getting in the habit of regularly certifying your employment will make it easier to qualify for loan forgiveness if you do end up making it to the ten-year payment mark.

3. The Number of Hours You Must be Work Each Week

You must work for a qualifying employer full-time, which is considered a minimum of 30 hours per week. However, if you happen to work part-time for two qualifying employers and the hours average at least 30 hours each week, you may still be eligible.

4. You Have to Complete 10 Years’ Worth of Payments

You need to make at least 120 monthly loan payments.

These payments must be made:

  • For the entire amount that's due

  • On time, i.e., within 15 days of the due date

  • On or after October 1, 2007

  • While you're working full-time for a qualifying employer and on a qualifying repayment plan

It's important to note that your payments won't count if you made them while you were a student still in school, or you were in deferment or forbearance status or during a grace period.

There are a few other considerations. Eligible workers are allowed to change jobs, even switching between qualifying and non-qualifying employers. However, payments only tally towards PSLF during the time a worker is at a qualifying employer.

A Temporary Change That's Made a Big Difference for Many

As anybody who pursued eligibility in the program can tell you, since its inception, it's suffered from being too difficult to navigate, and the types of eligible loans was small.

In October 2021, temporary changes were made to the PSLF program to simplify the debt cancellation process for borrowers who made ten years of on-time payments. A retroactive waiver broadened the types of loans that are eligible for forgiveness, and the government introduced automatic certification of payments for federal employees and members of the military. In addition to having their debts canceled, more than one million borrowers have used the waiver to receive additional credit toward forgiveness.

The temporary changes allow borrowers to get credit for payments they made on loans from the Federal Family Education Loan (FFEL) Program, Perkins Loan Program and other federal student loans.

If you're one of these borrowers, you must apply to consolidate your loans into a Direct Consolidation Loan before the deadline of October 31 to qualify for the program under these temporary changes. Remember, you can combine multiple sources of part-time employment to qualify, and months of eligible employment don't have to be consecutive.

In my opinion, these changes were necessary and long overdue. Over its history up to October 2021, the program has only discharged debt for 7,000 borrowers according to the Department of Education.

These temporary changes resulted in more than 175,000 borrowers having $10 billion in debt canceled in just the last ten months. Remember though, the waiver for the qualifying payment rules ends on October 31, 2022, so get started with the application right away if you qualify!

Final Steps

If you're a borrower who has fulfilled all the requirements of the PSLF program, it's time to submit your Public Service Loan Forgiveness application. As an applicant, you must be working full-time for a qualifying employer at the time of the application.

Along with the application, an employment certification form from your current employer and each employer during the 120 payments must be submitted. If you've completed these forms each year, only your current employer's certification must be included. FedLoan Servicing will notify you when it receives the paperwork. And little known tip, you don't have to pay your monthly loan bill while FedLoan Servicing processes the application.

Finally, according to the Internal Revenue Service, any student loan amounts forgiven aren't considered income for tax purposes.

The Bottom Line

If you're a borrower with a lower balance, the $10,000 or $20,000 student loan forgiveness program could mean an immediate, tangible difference in your income and standard of living.

Even if you're a borrower with higher balances and have made payments, but have difficulty getting your debts discharged, you will – at least until October 31, 2022 – have a chance to cut through the red tape and find relief.

Need some help figuring out your student loan situation? Schedule a call today to talk through your options.

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[1] Annie Nova. “Biden’s decision on student loan forgiveness could come as soon as Wednesday.”, August 23, 2022. [2] Alicia Hahn, Jordan Tarver. “2022 Student Loan Debt Statistics: Average Student Loan Debt.” June 9, 2022. [3] Annie Nova. “Biden cancels $10,000 in federal loan debt for most borrowers.” August 24, 2022.


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The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.


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