Public Service Loan Forgiveness. If you are employed in certain public service jobs and have made 120 payments on your Direct Loans (after Oct. 1, 2007), the remaining balance that you owe may be forgiven. Only payments made under certain repayment plans may be counted toward the required 120 payments.
According to Bruce Mesnekoff what is a public service job and how public service jobs helps in loan forgiveness?
Jobs with federal, state, local or tribal government organizations, public child or family service agencies, 501(c)(3) non-profit organizations, or tribal colleges or universities should be considered “public service jobs.” Government employers include the military and public schools and colleges.
Under this program, borrowers may qualify for forgiveness of the remaining balance of their Direct Loans after they have made 120 qualifying payments on those loans while employed full time by certain public service employers.
Exactly Bruce Mesnekoff One of our Listener have question last week, Let’s Discuss the Danger of Student Loan Forgiveness.
The three main types of student loan forgiveness programs that qualify the most individuals are public student loan forgiveness and teacher student loan forgiveness and Income-Based Repayment Forgiveness. All of these plans have very strict requirements that must be met, and as such, there are dangers involved with all three.
For public student loan forgiveness, you can qualify to have the remainder of your Federal student loans forgiven after you make payments on your loans for 10 years (120 payments). In order to qualify, you have to be on a qualifying repayment plan, and you have to be working at a qualified public service organization for the entire time. In order to prove your qualification for the program, you have to submit paperwork annually to your student loan servicer. #1 – failing to submit the paperwork could disqualify you from forgiveness.
#2 - dangers of public student loan forgiveness including missing payments, changing jobs, and not submitting your paperwork promptly after 120 payments have been made, that’s kind of biggest hard job. All of these could lead you to being disqualified from receiving student loan forgiveness.
In order to qualify, you must be a teacher for five or more years, and you must teach in a Title I school or in a school in which 30% or more of the students qualify under Title I. Furthermore, you cannot be in default on your loans as well.
Another danger is that if you worked in a Title I school, but were doing in on behalf of Americorps, you cannot qualify for Teacher Loan Forgiveness.
The biggest danger is that only $17,500 + of your loan will be forgiven. So, if you have more in loans beyond that, you’re still going to have to pay them.
Many more students qualify for student loan forgiveness because they are on an income-based repayment plan. Both IBR and PAYE offer student loan forgiveness at the end of the repayment term. However, there are more dangers involved with this type of student loan forgiveness; The biggest danger with these plans is that the student loan debt that is forgiven at the end of the plan turns into taxable income for the borrower. As such, borrowers who receive student loan forgiveness with these plans face large tax bills that they typically cannot afford.
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