How to qualify for public service loan forgiveness

Among the other points you should know: under public service loan forgiveness, your debt is forgiven tax-free.

Your private loans can’t be forgiven; only federal loans qualify for public service loan forgiveness.

Kantrowitz said some people assume they’ll qualify for forgiveness after 10 years of payments. However, it’s not about how long you’ve been paying but how many payments you’ve made. Maybe you took a leave from public service work, for example, stopping the clock on your payments for a few months or years. It’s after 120 qualifying payments that your loans will be eligible for forgiveness.

On that note, if you miss a payment, or if you switch jobs, your clock is not reset to zero. Your qualifying payments don’t need to be consecutive.

Others asked if their employer counts if it’s a contractor for the government. Not always, Kantrowitz said. “Government contractors must themselves be qualifying organizations for their employees to qualify for public service loan forgiveness,” he said.

The best way to find out if your job qualifies as public service is to fill out the so-called employer certification form.

Many people think they need to fill out this form; in reality, it’s optional. In theory, you could wait until you’ve made the 120 payments, then apply, Kantrowitz said. “But, it may be easier if you’ve been filing the employer certification forms all along, especially if one of your previous employers no longer exists,” he said.

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There’s some 14 ways to repay your student loans, but to qualify for public service loan forgiveness you need to be enrolled in one of these four income-based repayment plans: Income-contingent repayment, income-based repayment, pay-as-you-earn repayment and revised pay-as-you-earn repayment.

The standard repayment plan also qualifies, but under it you’d have paid off your loans in 10 years anyway.

Others believe that consolidating their loans will not affect forgiveness. This is wrong, Kantrowitz said.

“Consolidating loans resets the clock on public service loan forgiveness,” he said.

More and more companies are charging people to apply for loan forgiveness. You should not pay for this service, Kantrowitz said. “If you have to pay money to get money, it’s probably a scam,” he said. “You can go to StudentLoans.gov to switch repayment plans and do the work yourself for free. It should take less than half an hour.”

He went on, “Take everything the lender says with a grain of salt.” Seek confirmation with the Education Department, school counselors, a college financial aid administrator and on reputable web sites, he said.