Is Public Service Loan Forgiveness Right for You?

June 29th, 2015

Is Public Service Loan Forgiveness Right for You?

By Jessica Ferastoaru, Take Charge America
Jessica Ferastoaru - reduced headshot

 

If you recently graduated from college with a significant amount in student loan debt, you may be exploring your options for debt relief. And if you haven’t yet landed your first job out of college, now may be the time to consider a career in public service! The Public Service Loan Forgiveness Program (PSLF) was introduced in 2007 to help provide assistance to student loan borrowers who pursue work in the public service field. This includes working for a government agency on the federal, state, or local level, as well as working for a nonprofit organization.

If you commit to ten years in public service, you could qualify for loan forgiveness on your federal student loans.  If you’re trying to decide if Public Service Loan Forgiveness is right for you, ask yourself the following questions:

Did you take out a lot of student loans?

If so, you could be a great candidate for loan forgiveness. Student loan borrowers with higher balances have a greater chance of achieving loan forgiveness under the Public Service Loan Forgiveness Program compared to borrowers with smaller student loan balances. This is because PSLF requires you to make payments on your loans for ten years (120 payments total). Borrowers with small balances may pay off their loans in less than ten years.

Do you have a passion for serving others?

Since Public Service Loan Forgiveness requires a commitment of ten years, borrowers who plan to pursue a long-term career in this field are best suited for the program. When you envision your future, if you see yourself in a job where you can make a difference in the lives of others, PSLF could be a great fit for you.

Worried about how to pay your student loans if working in public service?

Jobs in public service are often associated with lower earnings than jobs in traditional, for-profit companies. This fact can turn new graduates off from public service work, out of concern that they will not be able to afford basic living expenses on top of their large student loan payments.

If you’re worried about how you will afford your student loan payments if you accept a lower-paying job in public service, don’t let this stop you! The PSLF program is designed to keep your student loan payments affordable based on your income. If you have a low income relative to your total student loan debt, you are actually at an advantage for PSLF. This is because in order to make qualifying payments towards PSLF, your loans need to be enrolled on an Income-Driven Repayment Plan, such as Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), or Pay As You Earn.

Borrowers with lower incomes will qualify for lower income-based payments, and as a result, will have a greater potential for forgiveness after ten years. Borrowers with higher incomes will likely have higher monthly payments, and as a result will have less potential forgiveness after 120 payments.

If you’re not sure whether you can commit to ten years in public service, but you’re looking for relief for a large student loan balance, you can explore alternatives such as Pay As You Earn or Income-Based Repayment, which offer loan forgiveness after 20 or 25 years, regardless of where you work.

To learn more about Public Service Loan Forgiveness or any other federal program, you can visit studentloans.takechargeamerica.org or contact Take Charge America at 877-784-2008.

 

Jessica Ferastoaru is a Student Loan Counselor for Take Charge America

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