The Five “Q’s” of Public Service Loan Forgiveness
06/16/2014 Published by: Suzanne
For those about to embark on a college career, thinking about the debt they will carry once they graduate is enough to give anyone pause. Something to look into is the “Public Service Loan Forgiveness Program.” This employment- based program is for federal student loans and in order to be eligible, students must satisfy all five qualifications.
The Five Qualifications:
- Work in a “Qualifying Employment” – Must be “public service” which is based on who employs you rather than what you do for your employer
- “Qualifying Employment Status” – Must be a full-time employee
- Have a “Qualifying Loan” – Must be a “Direct Loan” . . . If your loan isn’t a Direct Loan you may be able to consolidate other federal student loans into a Direct Consolidation Loan to qualify!
- Have a “Qualifying Repayment Plan” – Must have an income-driven repayment plan
- Make 120 “Qualifying Payments” – Must be payments made based upon receiving a bill with a due date v. payments you chose to make on your own. (Only payments made after October 1, 2007 qualify, therefore, no one will be eligible for forgiveness until 2017.) *All qualifying criteria have to be met at the time of each payment for it to count!
What’s the bonus if you qualify? The IRS doesn’t consider Public Service Loan Forgiveness to be income . . . so it’s tax-free!
Visit “Homeroom”, the official blog of the U.S. Department of Education, for a detailed explanation of how the program works written by Ian Foss.
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