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Archive for the ‘Student Loans’ Category

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Public Service Loan Forgiveness Program

Monday, January 5th, 2009

This information comes from a great web page created by the National Council of Nonprofits. It has to do with the Public Service Loan Forgiveness Program which was created by the College Cost Reduction and Access Act of 2007. There might be hope for those with tremendous student loan debt yet!

1. What is the Public Service Loan Forgiveness Program?
The Public Service Loan Forgiveness Program is intended to encourage individuals to enter and continue in full-time public service employment by forgiving the remaining balance of their eligible federal loans after they satisfy the Program’s public service and loan repayment requirements. Those individuals with certain federal student loans for college (Federal Eligible Direct Loans) may qualify to have the outstanding principal balance and accrued interest cancelled under the following conditions: (a) the borrower makes 120 monthly payments on the loan after October 1, 2007; (b) the borrower is employed by a “public service organization” at the time that loan forgiveness is requested and granted, as well as during the period the borrower makes the required 120 monthly payments; and (c) the loan is not in default at the time of the request.

“Federal Eligible Direct Loans” is defined to mean a Direct Subsidized Loan, a Direct Unsubsidized Loan, Direct PLUS loan, or a Direct Consolidation Loan. Your loan documentation should identify the type of federal loan you have.

2. What is a “public service organization?”
Public service organizations include full-time jobs at a nonprofit that is a Section 501(c)(3) organization under the Internal Revenue Code. Other public service organizations include federal, state, local or tribal governments, agencies or entities; public child or family service agencies; Tribal colleges or universities; and private organizations that provide public services like emergency management, public safety, public interest law service, public care for children, elders or disabled, or public health, education or library services.*

3. When and how can I start counting my ten years?
The Program applies to payments made after October 1, 2007. Every month you work at a public service organization and make your loan payment on time counts towards the necessary 120 payments. Your service does not have to be consecutive however (e.g., if you worked for a nonprofit for a year, then a business for a year, and then again at a nonprofit, you just starting counting payments where you left off).

4. Do I have to keep working in the same public service job?
No. For a payment to count towards the forgiveness period, the borrower has to have been employed full-time by a public service organization when the payment was made. As noted, there are many types of public service organizations.

5. What does it mean to work full time?
“Full-time” means working in one or more public service jobs for the greater of: (a) an annual average of at least 30 hours per week, or for a contractual or employment period of at least 8 months, an average of 30 hours per week; or (b) the number of hours the employer considers full-time.

6. What if I am a teacher?
For borrowers with a contractual or employment period of less than 12 months, qualifying payments have to be made each month for all 12 months. Teachers who work on an academic year basis, often for only nine months in a year, would still be required to make payments on their loans during the summer vacation period.

7. What if I was/am an AmeriCorps or Peace Corps volunteer?
Full-time service in an AmeriCorps or Peace Corps position counts as employment in a public service job. AmeriCorps Segal Education Awards or Peace Corps transition payments used for loan repayment may qualify to meet the 120-payment requirement.

8. How do I keep track of this?
It is the borrower’s responsibility to collect and retain the documents that support eligibility for this benefit.

9. Does this just apply to loans taken by the student, or does it also apply to the loans a student’s parent(s) have taken?
For the most part, this just applies to eligible loans the student has taken directly. Parents with outstanding loans would need to contact the Department of Education to learn the conditions under which part of their loans could be forgiven.

10. What if I have further questions?
For further information on the Public Service Loan Forgiveness Program, contact Nikki Harris at the Department of Education. Telephone: (202)219-7050. Internet: Nikki.Harris@ed.gov

*This last category of private organizations providing public services do not include the following: for profit organizations, labor unions, partisan political organizations, or religious organizations (unless the activities of the religious organization are unrelated to religious instruction, workshop or any form of proselytizing).

Disclaimer: The information in this courtesy fact sheet is provided for informational purposes only and is not a substitute for expert legal, tax, or other professional advice specific to an individual’s circumstances.

Again, this information comes from the National Council of Nonprofits and I trust in their review of this program. For those of us with tremendous student loan debt - be on the lookout for more information about this program. It could be big!

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Should the Four-Year Degree be Abolished?

Tuesday, December 16th, 2008

Wick Sloane at InsideHigherEd.com wrote a piece on whether or not the Bachelor’s degree is relevant any more. In fact, he wrote an entire pamphlet on the topic, which is available as a free download at the previous link. Before you judge anything that I write here or the notion that a college education is obsolete, I encourage you to read the brief editorial posted at InsideHigherEd.com. One of the better parts of the editorial:

In MBA speak, the central cost driver of a college education is not health insurance, salaries, rising oil costs, or even costly academic journals. It is the four-year, 36-course structure that determines the cost of a college degree. This model, leading to annual tuitions and fees of $25,000 at public colleges and $50,000 at many private ones, crushes families with $100,000 to $200,000 in cost and debt.

Impossible to imagine the end of the bachelor’s degree packaged into four years? Most of us — households or other enterprises — from time to time take a look at the fundamentals of our budgets and ask, “Is there another way?” As an example, consider the bloodless iPod and MP3 revolution. What happened? A demographic cohort, people roughly 16 to 25 years old who wanted access to one song at a time in a form that could easily be shared among friends, revolted and created a new market when the music industry refused any modifications or price breaks.

Could something similar be brewing in higher education? Maybe a better question is whether something similar should be brewing in higher education?

I financed my own four-year degree and two-year graduate degree and saddled myself with $118,000 in student loan debt in the process. At this point in my life, I’m not bitching about the debt - it’s just a fact of life that I live with (and battle) everyday. Frankly, I think I’m doing pretty good in the battle considering that I started repaying these loans some two and a half years ago and thanks to extra payments against the principal amounts I’ve managed to lower my total amount owed to $105,000. Yeah, it’s still a disgusting number that has stifled my ability to do what other people my age are doing, but I’m making progress.

Since I received a Bachelor of the Arts Degree in English from my undergraduate institution I’ve often wondered about what a college degree really gets a person. Let’s face the facts - the world is built on networks, not on pieces of paper. It’s often a matter of who you know and how you know them that supersedes the competition of two equally qualified job candidates. Keeping this in mind, I’ve always considered my Bachelor’s Degree as my passport; in other words, I think that piece of paper is nothing more than a ticket to get on the train.

Going to college doesn’t “make” you smart. Getting a Master’s Degree didn’t “make” me smart. Sure, getting these two pieces of paper greatly increased my knowledge on a broad variety of subjects, but they didn’t create intelligence where it didn’t previously exist! I was always an excellent student and an eager learner. But high school kids don’t have the access to certain networks that college graduates have available to them.

As an Adjunct Professor at my local college, I encourage my students to take advantage of the opportunities that surround them. Become a member of a campus club, join a fraternity or sorority, take up your Professors on their offers to proofread your work or to stop in and have coffee with them during their office hours. I believe that the main purpose of going to college is to develop the types of networks that will get you ahead in life, not to keep your head stuck in a book. Granted, I do believe that college students have an obligation to be actively engaged in their education. However, the idea of what an “education” is needs to be broadened. English majors should be encouraged to take minors in Business or Information Technology. Those in the Business Department should look at minors in the Fine Arts or Art History.

This mixture of disciplines is not only good for the mind, but it vastly increases one’s social and (eventually) professional network. Unfortunately, not many average citizens can live the American Dream these days by simply obtaining a college degree and announcing to the job market that they’re ready to be employed. Let this be a suggestion to all of my college-age and high school-age readers - take advantage of your time on campus and build a diversified social network. Make the investment now and you’ll be glad that you did later.