When you graduate from college and work in a career that is part of the public service, you can have your student loan forgiven under the Public Service Loan Forgiveness Program. This program was initiated as part of the College Cost Reduction and Access Act that was passed in 2007. As a result many people who have been paying on student loans for years can now enjoy having more money each month when they no longer have to make payments on their student loans. This program is also designed to encourage more people to work in public service because of the incentive.
There are criteria attached to having your student loan forgiven under this program. The main requirement is that you must have been paying on your student loan regularly for the past ten years. One hundred and twenty payments are required before you qualify for the program. The program came into effect in October, 2007 and it only applies to those payments made after that date. Therefore, it will not be until 2017 that public service workers will see any benefits from the program, but it is something to work for.
The public service loan forgiveness program only applies to federal student loans. It does not apply to any private student loans or loans obtained from banks for the purpose of paying the costs of attending college. If you have used deferred payment options for repaying the student loan, then this does not meet the requirements because it means that you have not been making regular payments.
Once you meet the eligibility criteria, the remaining amount of money owing on your student loan, which includes the balance and the interest, will be forgiven by the federal government. Other criteria for qualification include the fact that you must be employed full-time in a public service occupation. Working a year in one field with a break of several months means that you won`t qualify. The service must be continuous with no breaks. Check with the Public Service Loan Forgiveness program to find out which public service jobs are considered and which federal student loans are part of the program.
When the program was first announced in 2007, graduates with student loans and who went to work in the public service were not considered eligible if they consolidated their federal student loans into one monthly payment. However, this was changed in July, 2008, but in order to be eligible the consolidation must occur after that date.
The Perkins Student loan is not considered as part of the public service loan forgiveness program on its own. However, if it is part of a student loan consolidation, then it is will be forgiven one the applicant has met the 10-year payment and service criteria.