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A Path to Debt-Free Living: Student Loan Forgiveness

July 20th, 2021

A Path to Debt-Free Living: Student Loan Forgiveness

TopLine Financial Credit Union and LSS Financial Counseling are here to show you an option that may help you on your journey to debt-free living – Public Service Loan Forgiveness (PSLF) Program. Federal student loan payments are currently under forbearance, thanks to the CARES Act passed in March 2020 and actions Congress and the White House took since then. The pause in loan payments is set to expire on September 30, 2021. As that expiration date approaches, borrowers should review their plans for paying off student loan debt. PSLF may be an option for those with federal student loans.

Eligibility:

To qualify for PSLF, you must:

  • Work for a not-for-profit that is a tax-exempt, 501(C)(3) organization; OR a not-for-profit organization that provides certain types of public services (e.g., public health, public safety, libraries, or emergency management); OR a U.S. federal, state, local, or tribal government agency.
  • Be a full-time employee for that agency or organization. “Full-time” means an average 30 hours per week or the organization’s definition of full-time, whichever is greater.
  • Have student loans from the Federal Direct Loan Program. Other federal loans (i.e., Federal Family Education Loans and Perkins Loans) are only eligible if you consolidate them into a Direct Loan. Private student loans don’t qualify.
  • Repay the loans using a federal payment plan based on the borrower’s income, formally called an Income-Driven Repayment Plan (IDRP).
  • Make 120 “qualifying” payments. Such payments must be made while employed with a government agency or non-profit organization, cover the full amount due on your bill and sent no later than 15 days after the due date.

Tips to make the process smooth:

  • Be sure to turn in the required paperwork each year.
  • Keep a paper or electronic copy anytime you receive a review of your payments.
  • Appeal anything you think is not right.
  • Be sure you’re working full-time for an eligible employer at the time you apply for forgiveness and at the time your loans are forgiven.

LSS Financial Counseling can explore your eligibility for PSLF and work with you to get you started in the program. Being a TopLine member gives you and your family access to up to six (6) free private and confidential financial education counseling sessions annually with a certified consumer credit counselor from LSS Financial Counseling. Sessions are available by phone, in-person or online. Contact LSS today for your free financial education session at 1-800-528-2926 or visit LSS online and mention you are a TopLine member.