It’s no secret that student loan forgiveness is a hot topic. When it comes to Public Service Loan Forgiveness, in particular, the requirements can be tricky.
That’s why it’s critical to ensure you know the details and are not headed down the wrong path.
Here are the 10 most common public service loan forgiveness mistakes to avoid at all costs.
1. Thinking Public Service Loan Forgiveness is automatic
Nope. Thinking that you work in “public service” and are performing a “public service” job won’t cut it.
The Public Service Loan Forgiveness Program is a federal program that forgives federal student loans for borrowers who are employed full-time (more than 30 hours per week) in an eligible federal, state or local public service job or 501(c)(3) non-profit job who make 120 eligible on-time payments.
Those “eligibility” requirements bring us to our second common mistake.
2. Not completing the Employment Certification Form
The next question is: how often should I submit the employment certification form for public service loan forgiveness?
You should submit this form:
- when you begin a job in public service
- when you switch employers
It’s important to submit this form annually to keep the U.S. Department of Education aware of your employment to ensure you’re on the right track.
3. Submitting an Employment Certification Form with errors
This sounds like a no-brainer, but your employment certification form could be rejected if there are errors.
Here are a few common mistakes:
- information on one form that does not match previous forms
- missing information such as an employer address
- not completing all the required fields
- correcting errors on the form, and then failing to place your initials next to the corrected errors
This all may sound bureaucratic, but better safe than sorry.
4. Not having your employment certification form signed by your employer
Your employment certification form must be signed by an authorized official at your employer.
Make sure it is that person who signs the form, not the person who sits next to you at work.
5. Not enrolling in an income-driven federal student loan repayment plan
To be eligible for public service loan forgiveness, you must be enrolled in an income-driven federal student loan repayment plan.
Remember, only federal student loans (not private student loans) are eligible for public service loan forgiveness). You also must make a majority of the 120 required payments while enrolled in a federal student loan repayment plan.
While the 10 Year Standard Repayment Plan qualifies for public service loan forgiveness, your federal student loans would be paid off after 10 years so there would be no more student loans to forgive.
How do you know which income-driven student loan repayment plan is best for you? Well, it depends on your specific financial situation.
This public service loan forgiveness calculator shows you which income-driven student loan repayment plan will maximize your student loan forgiveness.
6. Forgetting to consolidate your student loans, if necessary
Remember, only Direct student loans qualify for public service loan forgiveness.
So, if you have Perkins Loans, FFEL Loans or you borrowed student loans before 2011, you may need to consolidate these federal student loans into a Direct Consolidation Loan.
How do you know if you have Direct student loans?
You can check at Federal Student Aid. If you don’t see the word “Direct” next to your student loans, then you may need to consolidate those student loans.
How do you consolidate those student loans?
If you decide to consolidate those student loans, you can do so through StudentLoans.gov.
7. Not taking advantage of Temporary Expanded Public Service Loan Forgiveness
Were you denied public service loan forgiveness because you were enrolled in the wrong student loan repayment plan?
Congress has set aside an extra $350 million of public service loan forgiveness for this exact situation.
8. Failing to re-certify your income each year
As the name suggests, your income-driven student loan repayment plan is based on your income.
As your income may change each year, the federal government wants to ensure that you are still eligible for that income-driven student loan repayment plan.
Therefore, make sure to re-certify your income each year at studentloans.gov. At the same time, you can submit your annual Employer Certification Form.
9. Skipping student loan payments
While your 120 student loan payments under public service loan forgiveness do not have to be consecutive, you need to submit each payment within 15 days of the due date for that payment to count.
10. Thinking your job is what qualifies you for public service loan forgiveness, when it’s your employer that matters
Remember, it’s your employer that matters, not your role.
If you work with a non-profit, but are employed by a private company, this would not qualify for public service loan forgiveness.
Now that you’re in the know, hopefully the path toward public service loan forgiveness will be smoother.