Loan Forgiveness

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Eliminate your student loan balance?

Work full-time at an eligible nonprofit or government agency while making steady student loan payments for ten years (120 monthly payments), and the federal government will forgive the balance of your student loans. Careers include teaching, social work, military service, disability assistance, emergency management, and others.

What you need to know:

  • To receive credit toward the PSLF while in VISTA or AmeriCorps, you need to serve in a full-time position. Part-time positions, Summer of Service, and Summer Associates positions do not count.
  • You need to make loan payments while serving to qualify. Based on your living allowance, your payments might be small if you are participating in the Income-Based Repayment program.
  • For members placing student loans into national service forbearance (not IBR): When you complete service and receive your Education Award, you need to use your award to make a lump sum payment on your loan equaling one payment for each month you served.
  • For members placing student loans into IBR: When using your education award to make payments, it's probably your best bet to make 12 payments per year rather than making a "lump sum" payment.
  • PSLF started in October 2007. Public service employment prior to that doesn't count.
  • The 120 months do not need to be consecutive.
  • PSLF only works on federal "Direct" student loans. These are loans with the federal government as a lender. To participate in this program, you will need to consolidate your loans from Sallie Mae or other loan companies into Direct Loans. See http://loanconsolidation.ed.gov/ to learn more about Direct Loans. It doesn't work on Perkins or parent PLUS loans.
  • Keep a file with your pay stubs for ten years (120 months) as proof of your full-time employment in an eligible agency.
  • The amount forgiven at the end of the 10 years is NOT considered taxable income.

Crunch the numbers to see how much you might (or might not) save over the life of your student loans if you participate in Income-Based Repayment and this program.

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