Student Loan Forgiveness with Public Service

Consolidate Student Loans

For those considering how to consolidate student loans, one consideration is the College Cost Reduction and Access Act of 2020. This law establishes a public service loan forgiveness program. Those who work in the public sector and make at least 120 payments towards their student loans, may be able to have any remaining principle and interest discharged after 10 years. Individuals must work full time in an approved public service position to qualify.

Who Is Eligible?

To be eligible for loan forgiveness through this program, individuals must make 120 payments on or after October 1, 2020 towards their eligible Federal Direct Loan. Any time the loan spends in forbearance or deferment does not count towards this 120 payment goal. The individual must also be employed in a public service job, such as:

• Military service
• Government positions
• Public education
• Health care
• Work in a clinical setting
• Social work in family service or public child service agencies
• Public safety positions and law enforcement
• Emergency management positions

In addition to this, individuals must have an eligible loan to quality for this forgiveness. Eligible loans include the Federal Direct Stafford Loans, both unsubsidized and subsidized, the Federal Direct PLUS loans and Federal Direct Consolidation loan. Those who are in the FFEL program will need to consolidate student loans into Direct loans to qualify.

Keep in mind that you must be in an eligible repayment plan as well to qualify for this loan forgiveness. That includes income contingent repayment plans, standard repayment plans, income based repayment and any combination of the above options.

Who Should Obtain This Benefit?

The goal of this loan forgiveness is to encourage individuals to enter public service careers. These careers typically have low income. The targets of this program are those people who have high debt and low income and work in the public sector.

Students who will be employed in public service jobs and who have FFEL loans should use this service. These individuals should obtain a Federal Direct Consolidation Loan so that they can qualify for this forgiveness. Also, those parents who have PLUS loans who entered repayment of the loan will need to consolidate student loans into a Direct Loan program so they can take advantage of the forgiveness.

Also, note that to get the most out of this repayment, individuals should start with an income contingent repayment plan and then switch to income based repayment as soon as it is possible to do so. In doing so, these borrowers will pay the least amount possible on a month to month basis before allowing the loan forgiveness to cover the rest, ten years later.

To consolidate student loans, individuals should seek out the right option for their unique situation. This public service loan forgiveness program offers outstanding opportunities for individuals to reduce the amount of debt they need to repay towards their student loans.