There are some excellent loan forgiveness programs available to students who choose to work in the public sector after receiving their professional qualifications. Incoming graduate professionals can apply for programs in the field of law, nursing, and teaching amongst others and usually serve one or two years to have a portion of their federal student loan debt forgiven.
There are also excellent volunteer organizations which provide payments towards student loans. There is a wider program available to those who work in the public sector, the Public Service Loan Forgiveness Program, created in 2007, which works in a different way.
The program was devised to encourage more graduates to work long term in the public sector, and is intended to forgive outstanding student loan debt after ten years of working in an area with low pay. There are many qualifying conditions which graduates must meet to benefit from the program, and the only real beneficiaries are those on low incomes with a high debt ratio.
The program itself hardly stands as an incentive to work in the public service area as it disincentives internal promotion where higher wages would negate qualification by the program.
To qualify graduates need to make 120 monthly payments in a timely fashion under one of three repayment schemes. These are the standard 10 year repayment scheme; the income contingency plan; or the income based repayment plan.
Anyone making the standard repayments under the 10 year plan would have completed the repayment of their loan after 120 payments, thus leaving nothing to forgive, so it only pays for those who transfer from the standard 10 year repayment plan to one of the other plans. The only public servants who qualify for these two plans are those with salaries low enough to qualify for the plans.
Parents who hold parent Plus loans are also eligible to receive forgiveness if they are employed in by a public service organization and meet the same qualifying terms. The first forgiveness granted on federal student loans comes into effect in 2017.
Public service employees must work full time and serve in a public service organization or a private non profit one which provides public services. Qualifying jobs include those in the military; public health and education; federal, state, local and tribal government agencies; AmeriCorps and the Peace Corps; public library service; law enforcement; and emergency management. Other jobs are also included which fit into the two main designated categories.
The Public Service Loan Forgiveness program is suited to those on low incomes who work in the public sector and would benefit after 10 years service in having their remaining loans forgiven. The program does not offer enough incentive for graduates to choose the public sector if it isn’t their first choice, as it only benefits those who are willing to work in the same area without advancement.
The individual programs which are available to graduates to work in the public sector offer far more generous forgiveness without imposing a minimum of ten years working in the same field. They are naturally popular programs with graduates and a much more effective way of paying off student loan debt.