Dear Student Loan Hero: Am I on Track for Public Service Loan Forgiveness?

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

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If you made a word cloud of 2017’s most-searched student loan topics, Public Service Loan Forgiveness (PSLF) would have to be prominent.

In fact, during the week this column was being prepared, about 40 percent of the 195 reader questions we received contained the phrases “Public Service Loan Forgiveness” or “PSLF.”

That popularity is partly because PSLF promises so much. It could wipe out the student loan debt of many public and nonprofit employees.

5 common questions about Public Service Loan Forgiveness

There’s a second reason for the flood of questions about PSLF. The program — although pretty black and white in its requirements — leaves some gray area for borrowers. For example, you must work in public service to qualify for PSLF, but only the loan payments you make while working full time help you achieve it.

The first PSLF applications just became available in September. It’s still a relatively new program, leaving many potential applicants wondering if it’s a fit for them.

Due to the heightened interest, we’re focusing our latest Dear Student Loan Hero column on not one question but five of them. They’re more common than they might sound.

1. Am I on track for PSLF?

The majority of PSLF questions are from readers who don’t yet qualify. That’s because PSLF was created in 2007 and requires 10 years (or 120 months) of timely loan payments.

Some borrowers are just learning about it now. One wrote to us, “I have worked as a school nurse in a public school system for chronic children for the last two years. I was wondering if this setting would qualify for loan forgiveness.”

Provided you meet other requirements, government employees of all sorts are eligible for PSLF. After all, public schools are government entities.

But don’t take my word for it. No matter how far along you are in repayment, fill out the PSLF Employment Certification form. Only then will you know whether your employer could eventually earn you loan forgiveness.

2. Do older payments count toward PSLF?

Relatively new student loan borrowers aren’t alone in wondering if they’ll one day receive forgiveness. There are also borrowers in their 50s and 60s with the same sorts of questions.

One woman wrote to us about her situation: “I work at a nonprofit school. I have for 17 years. My loan [has] doubled over 25 years even though I’ve paid off the $29,000 principal because I put the loan in [forbearance] when I worked part time. I need help finding out how to get info on loan forgiveness given the nonprofit status of my workplace. Please help.”

Unfortunately, only payments made after Oct. 1, 2007, are eligible for PSLF. Also, you must work full time for your eligible employer during repayment.

To this reader, I’d say to complete the PSLF Employment Certification form. In fact, fill it out for each year that you were both employed full time by your nonprofit school and made timely payments on your loan. That will give you the best sense of how much further you’d have to go to achieve PSLF.

It’s also possible that PSLF isn’t the best route to forgiveness. You mentioned that you have been in repayment for over 25 years but were interrupted by a forbearance. If you’re on an Income-Based Repayment plan, you could qualify for forgiveness after 25 years of payments.

3. Is my repayment plan eligible for PSLF?

When you took out your federal student loans, you received a 10-year Standard Repayment Plan. You could have switched to an income-driven repayment (IDR) plan to lower your monthly payments to a percentage of your discretionary income.

Fortunately, IDR plans are PSLF eligible. But that hasn’t stopped confusion.

One mother of a borrower messaged us about her son. He has worked for a nonprofit for five years, she said, but he’s been told he wasn’t eligible for PSLF because he was under the Standard Repayment Plan. The mother asked about receiving “credit” for his half-decade of payments and switching to an eligible plan.

A Standard Repayment Plan is eligible for PSLF. But if it’s the 10-year plan you were assigned as a student, you might not have a balance left to forgive. After all, PSLF requires making 10 years of timely payments.

That means our concerned mother is likely referring to the Standard Repayment Plan associated with Direct Consolidation Loans. Unfortunately, payments made via that Standard Repayment Plan don’t qualify for PSLF.

To echo the Department of Education (DOE), you should switch to an IDR plan as soon as possible if you’re seeking PSLF. You can learn more about applying at StudentLoans.gov.

4. Is my career eligible for PSLF?

One of the surprising requirements of PSLF is that it’s your employer (not your job) that has to gain eligibility.

The school nurse who asked if her workplace qualified for forgiveness isn’t unique. Our customer support team often receives questions about workplace eligibility. Recent graduates message us wondering if they should switch employers. Older readers think about leveraging their past work experience.

Less frequently, something like this happens: A woman read our post about unusual careers that qualify for PSLF, saw call center representative listed, and asked if she too was eligible for PSLF.

“I work in customer service for an utility company and do emergency calls, electric and gas leaks, etc.,” she wrote. “Can I qualify for student loan forgiveness?”

For this reader, the employee-employer distinction is worth pointing out. For her to receive forgiveness, her utility company would have to be a government or nonprofit organization.

The DOE also clarifies that volunteering full time (as a call center rep or in another role) for Americorps or Peace Corps qualifies. But working full time for for-profit organizations, including for-profit government contractors, doesn’t qualify.

5. Is PSLF going away?

For readers who learn they could be eligible for PSLF, the next natural question is whether the program will be around long enough to benefit them.

One reader put it best: “Is PSLF still in effect? I’m hearing conflicting information that’s it’s being cut out.”

There were over half a million borrowers on track to receive forgiveness when the Trump administration first proposed ending PSLF in May, according to The Washington Post. That sounded alarm bells initially.

Fortunately, it became clear the PSLF program’s potential closure would only affect new borrowers. Simply put: If you borrowed a federal loan before July 1, 2018, you’ll remain eligible to apply for PSLF.

Keep seeking clarity on Public Service Loan Forgiveness

PSLF could do a whole lot of good for your student loan situation. But it’s not the right path for every borrower. As you consider how the program fits your situation, assume nothing.

The PSLF requirements are clear, but they don’t always apply seamlessly to borrowers’ situations. Hopefully, these answers helped you figure out what’s best in your case.

If you have a student loan question you’ve been waiting for an answer to, contact our customer support team. Your question might end up in this column.

Interested in refinancing student loans?

Here are the top 6 lenders of 2020!
LenderVariable APREligible Degrees 
1.99% – 5.64%1Undergrad
& Graduate

Visit Earnest

1.89% – 5.90%2Undergrad
& Graduate

Visit Laurel Road

2.25% – 6.09%3Undergrad
& Graduate

Visit SoFi

1.89% – 6.77%4Undergrad
& Graduate

Visit Splash

2.39% – 6.01%Undergrad
& Graduate

Visit Elfi

1.99% – 5.41%5Undergrad
& Graduate

Visit CommonBond

Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of July 31, 2020, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 7/31/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.

© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.


2 Important Disclosures for Laurel Road.

Laurel Road Disclosures

All credit products are subject to credit approval.

Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.

As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

  1. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
  2. Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.
  3. After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship. During any period of forbearance interest will continue to accrue. At the end of the forbearance period, any unpaid accrued interest will be capitalized and be added to the remaining principle amount of the loan.
  4. Automatic Payment (“AutoPay”) Discount: if the borrower chooses to make monthly payments automatically from a bank account, the interest rate will decrease by 0.25% and will increase back if the borrower stops making (or we stop accepting) monthly payments automatically from the borrower’s bank account. The 0.25% AutoPay discount will not reduce the monthly payment; instead, the discount is applied to the principal to help pay the loan down faster.

Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.

Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.

Interest Rate: A simple annual rate that is applied to an unpaid balance.

Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.

KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

This information is current as of September 9, 2020. Information and rates are subject to change without notice.
 


3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 2.99% APR to 6.09% APR (with AutoPay). Variable rates from 2.25% APR to 6.09% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.25% APR assumes current 1 month LIBOR rate of 0.18% plus 2.32% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. 

4 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of September 10, 2020.


5 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. ‍All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.16% effective August 10, 2020.

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.