Government Employee Forgiveness

One of the best ways to qualify for the student loan forgiveness benefits is to work for the government and use the government employee student loan forgiveness. You’ll be completely free from your loans after ten years of public service and payments.

Simply put, as you work in the public service, you can acquire your forgiveness loan through the government employee student loan forgiveness if you meet the following requirements. They are:

  1. You must work full-time
  2. Ensure that you have a Direct Loan Forgiveness
  3. You must work in an eligible work for the government or any nonprofit
  4. Pay your 120 monthly payments consecutively in full.
  5. You must use a required repayment plan, typically an income-based repayment plan such as PAYE, IBR, ICR, or REPAYE.

It’s that simple. But the amount of U.S. citizens who are eligible for the government employee student loan forgiveness is enormous. About a quarter of all jobs are available for the program. Almost two-thirds of college graduates borrowed student loans to finish their degrees.

Even today, more than a decade after the enactment of the forgiveness program, many students who borrowed loans are not sure of how the program works and how to sign up. It gets complicated for many college students. But that shouldn’t stop you.

Most employees of the federal government, state, and most nonprofits qualify to have their Direct Loans forgiven under the state worker student loan forgiveness. But only after ten years or 120 months of payments. The private loans are not included in the government employee student loan forgiveness. 

However, you should complete your employee certification every year, even though you don’t need to apply every year.

On this page, you’ll get a step-by-step guide to the government employee student loan forgiveness program eligibility requirements. It will allow you to work in the public sector without worrying about your enormous student loan debt.

Let’s dive in.

What is Government Employee Student Loan Forgiveness?

The official name for the government staff member student loan forgiveness is the Public Service Loan Forgiveness Program (PSLF). President George W. Bush introduced the PSLF in 2007. The purpose of the program is to encourage students like you who have borrowed to work full-time in the public sector. In doing so, the federal government will forgive your student loan debt. The public sectors include social workers, teachers, police officers, military, etc.

The government employee student loan forgiveness or PSLF has five eligibility requirements:

  1. You must make 120 monthly payments
  2. You must have the right loans
  3. Make payments under the right repayment plan
  4. You must complete the number of working hours
  5. You must work with the right employer

What Loans Are Eligible For The Government Employee Student Loan Forgiveness?

The loan forgiveness program can forgive loans under the Direct Loan Program. Private loans are excluded. Also, other Education Department Loans such as Perkins, FFEL, etc. are not qualified. 

If you’re able to consolidate your non-Direct Loan Program into a Direct Consolidation Loan, the consolidated loan that resulted will be eligible for the government employee student loan forgiveness. But you have to remember that the forgiveness resulted is contingent on making the 120 payments.

You can find out the types of loans you have by finding out from the National Student Loan Data System. Visit the studentloans.gov to know more about the consolidation of your loans.

Guidelines For Government Employee Student Loan Forgiveness For Public Service

You should make 120 payments to be able to have your loans forgiven under the program. You should make those payments:

  • In full
  • On-time
  • As scheduled
  • Under a qualified repayment plan
  • Every month

 While you’re working full-time for a public service organization or a nonprofit.

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What Constitutes As Full-Time Employment?

Generally speaking, full-time employment must:

  1. Meet your public service employer’s definition of full-time
  2. Be a minimum average of 30 hours per week

But there are two exceptions to this rule. First of all, Let’s say you’re a teacher under a contract for a minimum of eight months a year, you’ll be full-time as long as:

  • You worked an average of 30 hours minimum per week during your contractual period
  • You got credit from your employer for a year’s worth of employment

Secondly, if you work in a part-time qualifying work at the same time, you’ll meet the full-time employment requirement. All you have to do is work 30 hours minimum per week with your employers.

Organizations That Qualify As A Public Service Organization

The Department of Education defines a qualified public service organization as follows:

  • A government organization, federal or state.
  • A tax-exempt, not-for-profit organization under 501(c)(3) of the Internal Revenue Service Code (IRS) or
  • A private nonprofit organization that provides one or more of the following service but not a partisan political or labor union organization:
  • Military service
  • Emergency management
  • Public interest law services
  • Public safety
  • Early childhood education
  • Law enforcement
  • Public health
  • School library
  • Public library services
  • Public service for people with disabilities and elderly people

Making Timely Payments

You make timely payments when your federal loan servicer receives payment 15 days after your payment is due.

Making Full Payments

You make full payments when you pay back your student loan debt equal or the exceeded amount required for you to pay each month under the Direct Loan repayment schedule.

Making Scheduled Payments

You make scheduled payments when your loan servicers bill you for month’s payments. You have to know that any payment made in deferment or forbearance doesn’t count. Also, any payments made in a grace period or in-school statues are not counted as scheduled payments.

Will you be able to qualify?

Almost anyone who has ever been involved in taking out a Federal student loan can qualify for some student loan forgiveness programs through the many relief programs that are on offer. These benefits will heavily depend on your current employment. Some programs will evaluate the level of value your job has to society can often be a defining factor. 

Some of the student loan forgiveness programs mentioned above are a highlight of the most significant and more beneficial forgiveness programs. If you are not employed in the fields mentioned above, you should not give up yet because the list of debt relief programs out there can go on for pages.

You could owe hundreds of thousands of dollars, or a mere thousand. This should not worry you, because you are sure to find a program that can suit your personal needs. All you have to do is keep reading this article, and choose the one that’s best for you. It is also worth mentioning that receiving relief through student loan forgiveness programs may take months, even years. This makes it crucial for you to carry out thorough research before enrolling in any of the programs.

What Is A Repayment Plan?

There are qualifying repayment plans that the government employee student loan forgiveness counts are eligible. They are:

  • 10-Year Standard Repayment Plan
  • IBR Plan
  • PAYE Plan
  • Income Contingent Repayment Plan
  • Repayment plans in which your monthly payment amount is more than or equals what you’d pay under the 10-year plan

Income-Based Repayment Plan (IBR)

You need a lower monthly payment on your student loan debt. With federal student loans, you can enroll in one of the U.S. Education Department’s loan repayment on your income. Private loans don’t offer a repayment plan on your income.

The income-based plan is offered by the Department of Education to help you get affordable student loan payments. There are four income-driven payment plans:

  • IBR Plan
  • PAYE Plan
  • REPAYE Plan
  • ICR Plan

Each plan has an alternative to the 10-year Standard Repayment Plan. Here’s what you need to know. Three things make up your monthly salary:

  1. Your adjusted gross income from your recent tax return within the previous two years
  2. Your loan balance
  3. The size of your family

To have an affordable monthly payment, you’ll have to extend your repayment terms from ten years under the Standard Repayment plan to 20 or 25 years under the Income-Repayment Plan.

Eligibility Requirement for Income-Based Repayment Plan (IBR)

The income-based repayment plan is more flexible in its requirements than the other four IDR plans. The IBR has two eligibility requirements.

First, your student loan monthly payments under the Income-Based Repayment plan should not equal or exceed your payments that would have been under the 10-year Standard Repayment Plan. Second, your student loans must be one of these:

  • Direct Graduate Plus Loans
  • FFEL Consolidation Loans
  • Direct Consolidation Loans
  • Federal Family Educational Loans (FFEL loans)
  • Direct Loans (Subsidized and Unsubsidized)

If you have other loans such as Parent Plus Loans and consolidation loans that include Parent Plus Loans, you’ll have to look into the ICR plan for a low payment.

Is The Income-Based Repayment Plan Best For You?

From our experience, the best IBR plan boils down to the type of loans you have and your marital status. If you’re married, here’s how it works. Let’s say you are married and still with your spouse with separate taxes and your spouse is not having a federal loan, then the Income-Based Repayment plan will possibly have a better outcome than the REPAYE or PAYE plan.

If your loan is under the FFEL loan program, it’s best if you stick to the IBR plan, that is, if you don’t want to get a loan consolidation. However, if you are not married and have FFEL loans, you’ll get a lower monthly payment under the REPAYE plan.

Income-Based Repayment Calculation

The monthly payment of the income-based Repayment plan is calculated using three things:

  • Your family size
  • The Adjusted Gross Income (AGI)
  • Your loan balance

You can locate your AGI on the first page of your recent federal tax return. Tally your family size after you have your AGI. Your family size includes your children and adults who live with you, and you provide half the support, according to the U.S. Department of Education. The support consists of food, insurance, rent, tuition, etc.

After you tally your family size, you’ll have to reference the federal poverty guidelines. You can find the federal poverty guidelines from the Assistant Secretary for Planning and Evaluation (ASPE) on their official website.

Find the poverty guideline for your family size and multiply it by 150%. Let’s take an example from the 2020 poverty guidelines for the 48 contiguous states and the district of Columbia. If your family size is 5, then 150% of $30,680 is $46,020. After, subtract $46,020 from your AGI. The number is your discretionary income. If you multiply your discretionary income by 15%, you’ll get your annual payments. Finally, you’ll just have to divide your annual payments by 12 to get your monthly payment amount.

That’s a lot of math. If it’s complicated for you, you can visit the Department of Education’s Repayment Estimator at the Federal Student Aid official website. 

How To Apply For The IBR Plan

There are a couple of options available for you to apply for the income-based repayment plan. You can submit your application via the official Federal Student Aid Website. You also have the chance to file an application to your loan servicer.

Income-Based Repayment Plan Forgiveness Options

Two options are available with the Income-Based Repayment plan. They are:

  • Government employee student loan forgiveness or PSLF
  • Forgiveness at the end of the IBR plan

Under the Public Service Loan Forgiveness, the government will forgive your loans after making 120 qualifying payments. It’s not possible to offer loan forgiveness for FFEL loans.

For the second option, you have to make 300 qualifying payments on time before the Department of Education will forgive the remaining balance. The forgiveness takes effect at the end of your loan repayment term of 25 or more years.

Disadvantages Of Income-Based Repayment Plans

There are lots of advantages to the IBR plan offer, but there are a few disadvantages too. Let’s go over them quickly.

1. Switching Repayment Plans

Your unpaid interest will capitalize if you leave the Income-Based Repayment plan. It means that your due interest will add to your principal balance, therefore, increasing your loan debt. You’ll be placed under the 10-year Standard Repayment for one payment. Of course, it will cause your payment to grow rapidly. But you can avoid the payment by requesting a one-month forbearance payment.

2. Tax Implications

You are forgiven after making your 300th payment under the Income-Based Repayment plan. But be careful. It is considered taxable income of the amount forgiven. It can lead to a lot of tax bills. But there are ways to avoid tax liability. You’ll have to talk to a qualified tax expert to help you out.

3. If You Can’t Afford IBR Payments

It happens most of the time. The Income-Based Repayment plan is not accounted for credit card payments, tuition payments for your children, and medical expenses. If you can’t afford to make payments under the IBR plan, you can switch to the REPAYE plan. Another way is to contact your loan servicer to request a forbearance or a deferment.

Comparing Payment And Forgiveness

PlanPayment Forgiven After
REPAYE10 percent of discretionary income20 or 25 years of repayment
PAYE Not more than 10 percent of discretionary income20 years of repayment
IBRNot more than 10 percent of discretionary income25 years of repayment
ICRMaximum of 20 percent of discretionary income25 years of repayment 

Completing The Employment Certification Form Annually

You should submit the Employment Certification form every year, even though it’s not mandatory. When you submit the form, you’ll have multiple receipts that show you have worked at a Public Service Loan Forgiveness qualified employer during your 120 months.

Here is how to do it:

First, Download the Public Service Loan Forgiveness application. Complete the form by using black or blue ink, and get your employer’s certification. Usually, your employer should have an authorized official who will certify your employment. If that’s not the case in your part, tick the box stating that and complete Sections one, two, and three of the form.

Second, submit the Public Service Loan Forgiveness application to the FedLoan Servicing. Lastly, wait as the FedLoan Servicing review your form. They’ll check to find out if your request is complete and if you qualify for the government employee student loan forgiveness.

After the FedLoan Servicing finish their review and confirm that your Public Service Loan Forgiveness application is correct, they’ll notify you of the following:

  • The number of payments you have made working at a public service organization
  • The remainder of the number of payments you have to make before you are qualified to apply for the government employee student loan forgiveness

Issues With The Public Service Loan Forgiveness Application

If the fedLoan Servicing finds a problem with your application, such as your application being incomplete or your employer not being eligible, you’ll have the opportunity to provide more information or correct the form.

Apply for Student Loan Forgiveness Help

If you struggle with university student loan forgiveness, then you should get help with that. Because the employees in these agencies are dealing with the student loans every day and they have enough experience for solving different kinds of student loan problems.

How To Apply For The Government Employee Student Loan Forgiveness

After you have made your ten years of qualifying payments, you’re now ready to have your loan debt forgiven. All you have to do is download the Public Service Loan Forgiveness Application and submit the application to FedLoan Servicing. You can submit the application through the official Federal Student Aid Website.

The Department Of Education will process your application while you wait. According to the government employee student loan forgiveness or PSLF guidelines, you are required to keep working until your loans are forgiven.

Do The Education Department Actually Approve The Public Service Loan Forgiveness Application?

According to the L.A. Times report in April 2019, there was an indication that the Public Service Loan Forgiveness application was not getting approved as they should be. The Education Department was doing everything they can to stop approvals from being issued. Out of the thousands that were approved last year, less than 300 had their applications accepted.

The fact that fewer people are getting their applications approved shows there was something wrong in the Department of Education, and not the borrowers themselves.

Temporary Expanded Public Service Loan Forgiveness (TEPSLF)

The federal government created the TEPSLF to provide relief for borrowers who were making their payments on Direct Loans, but were doing so under the wrong repayment plan. If you are part of those who made proper payments under the wrong repayment plan, then you may be in luck.

In March 2018, as part of the Consolidated Appropriation Act, Congress set aside $350 million for students like you who made payments under the wrong repayment plan. If you haven’t applied already, you need to apply for the TEPSLF immediately because the loan forgiveness is on a first-come, first-served basis. Once the $350 million runs out, you’ll not get the chance again.

 To apply, you’ll have to email TEPSLF@myfedloan.org with your name, date of birth, and a Public Service Loan Forgiveness Application request. The request has to state that the Education Department has to reconsider your application because you made the payments under the wrong repayment plan. 

Is Temporary Expanded Public Service Loan Forgiveness Working?

The TEPSLF has worked for the loan borrowers in the past; there are several indications that the program has a flaw. The U.S. Government Accountability Office (GAO) recently reported that the Department of Education rejected nearly 99% of borrowers who applied for the TEPSLF.

 The stats are likely to be true because the TEPSLF, like the PSLF, has very confusing, complicated, and poorly-communicated requirement criteria. Loan servicers also do a terrible job of helping borrowers understand the process and navigate the system.

Also, the TEPSLF only addresses one part of the problems with PSLF, that is, borrowers who were on the wrong repayment plan. It does not address borrowers who made payments on the wrong type of federal loan. They filed a bill in the Senate to solve the issue, but so far, it’s not looking good. 

What can you do? For now, you should know the requirements of both PSLF and TEPSLF to see whether you are eligible. Familiarize yourself with it so that you don’t make payments on the wrong repayment plan.

The End Of The Government Employee Student Loan Forgiveness And The Trump Administration

The government worker student loan forgiveness may go away. In the 2018 budget, Trump’s administration proposed to end the program. The budget echoed in the 2019 budget.

The government staff loan forgiveness is safe, at least for now. The future may change.

Should You Apply For the Government Employee Student Loan Forgiveness?

Although there are some setbacks in the approvals, it’s still worth applying for the Public Service Loan Forgiveness after you are eligible to qualify for the program. Why? Some people are still getting their approvals, and eventually, they will pay your loan debt due to the promise the federal government made to public service workers. If you have issues with the government employee student loan forgiveness and your loan servicer, you have two options. First, you can file a complaint in the Senate with your representatives. Second, contact the ombudsman at the U.S. Education Department.