Understanding Loans

All About Public Service Loan Forgiveness

The Public Service Loan Forgiveness or known simply as PSLF Program is focused on forgiving the remainder balance on Direct Loans after making 120 qualifying monthly payments under the qualifying repayment plan while working for a full time job for qualifying employer.

You may be wondering what a qualifying employment is. Well, the qualifying employment for PSLF Program isn’t about specific job that you are doing for your boss. But this is much more on who your employer is. The employment with government organizations at any level be it tribal, local, state or federal, not-for-profit organizations that are tax exempted of the Internal Revenue Code and other kinds of not-for-profit organizations that are providing certain kinds of qualifying public services are the type of organizations qualified for PSLF Program. In PSLF Program, it is also deemed to be a qualifying employment by serving full time in Peace Corps or AmeriCorps position.

On the other hand, employers who aren’t qualified for PSLF include labor unions, for-profit organizations, partisan political organizations and non-profit organizations that aren’t tax exempted and not providing qualifying service.

But what’s considered as a full time employment for PSLF? As a matter of fact, you’ll be considered to work full time if you have met your employer’s definition of full time or, has worked at least 3 hours per week or whichever is greater. If you’re employed in more one qualifying part time job at the same time, then you might meet full time employment requirement if you’re working a combined average of at least 30 hours every week with your different employers.

As for the borrowers who’re still employed by not-for-profit orgs, the time spent on worship services, religious instruction or any kind of proselytizing might not be counted toward meeting a full time employment requirement.

Another question that many people are wondering is what is a qualifying payment? In reality, the qualifying monthly payment is payment you are making under qualifying repayment plan, no later than 15 days after due date, for full amount due as shown on the bill and while you’re employed full time by qualifying employer. You can also make qualifying monthly payments during periods when you’re required to make the payment. With this being said, you can’t make qualifying monthly payments while your loans are in the grace period, in-school status, a forbearance, deferment or default. In addition to that, you have to know that your 120 qualifying monthly payments don’t have to be consecutive.

And if you make monthly payments more than the amount you required to pay, you should take into mind that you could receive only the credit for one payment every month.

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