Public Service Loan Forgiveness

The Public Service Loan Forgiveness program (PSLF) offers complete loan forgiveness to those who work in the public sector. This includes non-profit employees, Peace Corps volunteers, public school teachers and staff, and government employees to name a few.The PSLF Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.

How much in loan forgiveness can I receive from Public Service Loan Forgiveness?

All your existing federal student loans would be combined into one new loan, with a weighted average interest rate of all the loans combined.Going through a federal student loan consolidation allows you to choose from a number of easy and affordable monthly payment plans, including the income-driven repayment plans.

Who is eligible for Public Service Loan Forgiveness?

The PSLF program cares more about who you work for rather than what you do. To qualify, you must work or volunteer for one of the following:A government organization at any levelA tax-exempt 501(c)(3) not-for-profit organizationA not-for-profit organization that provides qualifying public servicesWorking full-timeProgram participants must also work full-time.You are considered a full-time worker if your employer considers you a full-time employee or if you work a minimum of 30 hours per week, whichever is greater. You must also be paying in an income-driven repayment plan to qualify.

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Benefits of Consolidation

A student loan consolidation takes the borrowers loans and combines all the loans into one new loan with one lender, and one weighted average interest rate.This removes the burden from the borrower of trying to keep track of many different loans, with different lenders, balances, and interest rates.Consolidation programs exist for both federal and private student loans, but the purpose of this page is to discuss federal student loan consolidations.For more information of private student loans, click here.

William D Ford Direct Loan Consolidation Program

President George H.W Bush first passed the Direct Loan program in 1992, as an amendment under the Reauthorization of the Higher Education Act.Although the program existed since then, it was not until President Obama’s budget in 2010 switched all new student loan lending over to the Direct Loan program.This is part of the reason why many people refer to it as the Obama Student Loan Forgiveness program.The Direct Loan program now has a $1 trillion dollar balance, with a yearly increase in the hundreds of billions of dollars being lent to students.

Benefits of the Consolidation

-Having only one federal loan under your name, with one lender, and one interest rate will greatly simplify your student loans.You will be able to track this student loan balance on one monthly bill. No more paying many bills to many lenders, and not knowing the combined balance of all your loans on one single statement.-Consolidation offers flexible repayment plans. You can enter into a payment plan that fits your needs, with payments even as low as $0.00 per month depending on your income and family size.This is not a deferment or forbearance, its an actual payment of $0.00 per month if your income is so low that the government says you cannot afford to make payments.Payment plans are also not written in stone as with a normal loan. If for example you are currently able to make your payments without a problem, but in the future lose part of your income, you will be able to change your repayment plan with no other adjustments to your loans being necessary.This offers the borrower to have flexibility with the monthly payment, and not fall into default when unemployed, or earning less than what he or she is able to pay the most necessities with.-Consolidation also has various loan forgiveness aspects which may not be available with your current loans.--After paying on your loans for 20-25 years, any remaining balance on your federal student loans is forgiven. This could be a very sizable amount.--Interest in the IBR repayment plan is forgiven on the subsidized portion of your loans for the first three years if your monthly payment is less that the interest that should be accruing.--Consolidated loans are eligible for the Public Service Loan Forgiveness program.-Consolidation also takes any defaulted loans you have out of default and puts them into good standing with a fresh start. This gives the borrower a second chance, combined with the flexible repayment plans it makes falling back into default difficult unless the borrower is not pro-active with the loans, and takes an “I do not care” attitude towards them.-Interest on the loan is exactly what your current interest is on all your loans. This means you do not have to worry about the interest rate, no negotiating, no hassle.

Reasons To Not Consolidate

Consolidation may not be the best option for everyone. What is the most important is to become educated about your loans, what programs exist to help you, and then to take action on what you determine to be the best for your particular situation?Here are some reasons you may want to consider not consolidating your loans:-Consolidation will in some cases extend the life of your loan. If you can afford your payment and want to get the loan paid off as fast as possible, consolidation may not be for you.-When your loans are consolidated, they are converted into Direct Loans. At that time, you will lose any benefits of your old loans, but gain the benefits of the Direct Loans.

Repayment Plans

There are several repayment plans the borrower can choose to take advantage of in the new consolidated loan. The Income Based Repayment and Pay As You Earn are often the most beneficial for those with financial difficulties.

How Long Does It Take To Consolidate

The length of time required to complete the consolidation depends largely on the borrower and the federal servicer. Once the borrower has signed all the necessary paperwork and has submitted it to the lender, it typically takes between 30-60 days for the loans to be consolidated and paid off.

Loans That Are Eligible For Consolidation

Only federal student loans are eligible for this consolidation:-Direct Subsidized-Direct Unsubsidized-Federal Perkins Loans-Plus Loans-Stafford Unsubsidized-Stafford Subsidized-Supplemental Loans for Students(SLS)-Federal Nursing Loans-Health Education Assistance Loans-FFEL Loans (must be consolidated with another loan, or applying for PSLF)

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Income-Based Repayment

What is An Income-Based Repayment?

Income-Based Repayment (IBR) is the most widely available and widely used income-driven repayment program for borrowers of federal student loans. IBR helps keep monthly loan payments affordable according to each individual borrower’s monthly income.Your student loan payment in an income-based payment is based on your discretionary income, rather than your loan balance. This can often mean that a borrower will have a $0.00 monthly payment on their student loan, and this amount counts as an actual payment.

What Will My Income-Based Payment Be?

If your student loan was disbursed on or after July 1st, 2014, your monthly payment will not exceed 10% of your discretionary income.For loans disbursed prior to this date, your monthly payment will not exceed 15% of your discretionary income. If you want to self-calculate your payment, you can use the IBR Calculator linked below.

• Income-Based Repayment (IBR) Calculator

Qualifying Loans For Income-Based Repayment

-Direct Subsidized Loans-Direct Unsubsidized Loans-Direct PLUS Grad or Pro-Subsidized FFEL-Unsubsidized FFEL-FFEL PLUS Grad or Pro-Federal Perkins Loans-Direct Consolidation Loans-FFEL Consolidation**Consolidated loans that included a Parent Plus loan are ineligible.

Disqualifying Loan Types for Income-Based Repayment

-Direct PLUS Loans made to parents-Direct Consolidation Loans that repaid PLUS loans made to parents-FFEL PLUS Loans made to parents-FFEL Consolidation Loans that repaid PLUS loans made to parents

Benefits of Income-Based Repayment

The first and most obvious benefit of IBR is that your monthly student loan payments are calculated based on what you earn, rather than what you owe.

Interest Forgiveness

There are several repayment plans the borrower can choose to take advantage of in the new consolidated loan. The Income Based Repayment and Pay As You Earn are often the most beneficial for those with financial difficulties.

How Long Does It Take To Consolidate

The length of time required to complete the consolidation depends largely on the borrower and the federal servicer. Once the borrower has signed all the necessary paperwork and has submitted it to the lender, it typically takes between 30-60 days for the loans to be consolidated and paid off.

Loans That Are Eligible For Consolidation

Only federal student loans are eligible for this consolidation:-Direct Subsidized-Direct Unsubsidized-Federal Perkins Loans-Plus Loans-Stafford Unsubsidized-Stafford Subsidized-Supplemental Loans for Students(SLS)-Federal Nursing Loans-Health Education Assistance Loans-FFEL Loans (must be consolidated with another loan, or applying for PSLF)

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