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Don’t Want to Pay Back Student Loans? Go Into Public Service
Learn More About Income Based Repayment and Public Service Loan Forgiveness
Would you give ten years to public service for student loan forgiveness?
A few lucky students enter college knowing exactly what they want to do when they graduate. Most of us, however, take a murkier and more winding path through our college careers. During that time we may accrue four, five or even more years worth of student loan debt. At the end of that process, we have a degree but it may not be one that guarantees us a job after graduation. What should you do if you find yourself in this position? One smart answer might be to enter the field of public service. Doing so allows you to not only gain valuable work experience but also to have the opportunity to eliminate your student loan debt through a loan forgiveness program.
The Public Service Loan Forgiveness Program
The federal government created this program in 2007 as part of the College Cost Reduction and Access Act.It requires you to work full-time in the field of public service for ten years. During that time you do need to make small monthly payments on your student loans. However, at the end of the ten years, the amount of money that you still owe on your student loans will be forgiven. In other words, that debt is wiped out because you’ve effectively contributed to your society. You no longer owe those school loans at all.
Some of the rules of the program
o To qualify for the program you must be employed in a public service field. This can include working for AmeriCorps or the Peace Corps, working for a nonprofit organization or working for the government itself.
o This must be full time employment. Typically this means working at least thirty hours per week or more although this may vary depending on the nature of the work that you do.
o Only Federal Direct Loans are included in the loan forgiveness program. This includes things like Stafford loans and federal student debt consolidation loans. It does not include other loans such as Parent PLUS loans or private commercial loans.
o You must make on-time monthly payments on your student loan during the ten years prior to the forgiveness of the loan for a total of 120 monthly payments. There are rules surrounding this repayment including that you are not allowed to choose an extended repayment plan. However, you can choose an income based repayment plan which should make the debt payments manageable for you during the time that you are working in public service.
Signs that this is a good program for you:
o You already plan to work in an area of public service. If you are entering a field such as social work, education or public defender law then you’re going to be working in public service anyway. Why not make this work for you by applying to participate in the loan forgiveness program.
o You aren’t sure what type of work you want to do now that you’ve graduated. Many students graduate with degrees in very general fields and then aren’t sure what to do with those degrees. Instead of getting a job as a bartender or customer service representative, consider using your time to help others by entering a public service field. You can spend the next ten years gaining work experience while you figure out what else you might like to do in the future. At the end of the ten years, you’ll have a better picture of the work that you want to do and you’ll be debt-free.
o You have racked up a lot of student loan debt and can’t imagine how you are ever going to pay it off. This is one option for getting that debt taken care of in just ten years rather than spending a lifetime paying it off. You do have to commit ten years of your life to others in your work but there are a lot of different job options that you can select to make this happen.
o You plan to take a long time to repay your loans. This program is not for people who are using a standard ten year repayment plan for their student loan debt. That’s because the debt would already be paid off at the end of ten years and there would be nothing left to forgive. Instead, it is for people who are choosing to extend their loan repayment through programs like income-based repayment.
Signs that this is not a good program for you:
o You have a career path in mind that does not include public service. Think about this carefully, though, because there are many public service positions available and you could possibly take your career path in that direction after all.
o You have the opportunity to earn a high income immediately after graduating without participating in public service. In that case you should be able to repay your loan yourself within the next ten years and therefore don’t need this program’s assistance.
o The majority of your loans are private loans. If you don’t have a significant amount of federal student loan debt then this program isn’t going to be able to help you out. If you’ve consolidated your loans into a private loan then it’s not going to work for you either.
o You are using an extended repayment or graduated repayment plan. These repayment plans are not eligible for participation in the program and therefore the program wouldn’t work for you.
The student loan forgiveness program is a great way to defray the costs of your education while performing important public service duties at the start of your career. However, it’s not right for everyone. Consider it carefully. If it’s something that interests you then you can get more information about the application process through the U.S. Department of Education.