Federal Student Loans | JerseySmarts.com

Posts Tagged ‘Federal Student Loans’

Hope For My Student Loan Debt…Maybe

Tuesday, January 6th, 2009

Yesterday, I found out that the rules and regulations for the College Cost Reduction and Access Act of 2007 (CCRAA) were finalized. These regulations included something called the Public Service Loan Forgiveness Program. In short, this program allows those working for nonprofit organizations to have the balance of their federal student loans forgiven after ten years of payments (with the clocking beginning in October 2007). The payments do not need to be consecutive, they just need to be comprised of 120 monthly payments (paying twice in one month does not count as two payments). I had to find out more about this program, so I contacted the program administrator in Washington, DC to get the facts. Here is our conversation starting with my e-mail to the program administrator:

My name is Joe and I am contacting you about the Public Service Loan Forgiveness Program created by the College Cost Reduction and Access Act of 2007. I have been working, full-time, for nonprofit organizations since May 2005. I have approximately $56,000 in federal student loans (a Direct Loans consolidation loan) and $48,000 in private student loans.

I understand that the private student loans do not qualify for the new provisions, however, I want to confirm that my Direct Loans consolidation loan does qualify. Also, I’ve read that the new regulations apply to payments made from October 2007 forward. Since I make my payments each month, does this mean that I can count my last 14 payments towards the 120 required for the balance of the loan to be forgiven? Is there anyway to count the previous monthly payments that I’ve made since I began repayment in July 2006?

Please let me know if you need any additional information. This is exciting news!

And here is the response from the program administrator in Washington, DC.

Good Morning Joe,

Your Direct loan consolidation loan will qualify for the forgiveness, and will count payments beginning on October 2007 forward. So, all payments made from the Oct. date on will count towards the 120 payments. Sorry, none of the payments made before that date can or will count towards the 120 payments. I’m glad that the public service forgiveness program will be a great benefit for you. If there is anything else I can do to help, please let me know.

A very friendly response from the feds – I like it! I thought that I should return the favor with a comment or two of my own and another question or so.

Thank you so much for the information! A final question or two.

First, do the 120 payments need to correspond to 120 months? Or if I make two payments in one month does that count as 2 payments towards the 120?

And finally, is there anything that I need to sign up for in order to be a part of this program? Or do I just track the payments on my own and when I hit 120 payments I contact Direct Loans?

And, within a matter of minutes, the program administrator replied as such…

One payment per month is what counts towards the 120 payments and direct loans will track the payments for you, we are also in the process of developing a form to have your employer sign as a public service position to tie the job with the payments.

This was perhaps the most pleasant experience that I’ve ever had dealing with my student loans. The representative, Ms. Nikki Harris, was professional and courteous and showed the utmost in professionalism in her prompt responses to my questions. And on top of that, I might be looking at getting some of my student loans forgiven after another 106 payments!

I have to figure out what I’d like to do with this, actually. I’ve been making excess payments on both my private NJHESAA loan and my Direct Loans consolidation loan. However, since I am being charged more on my NJHESAA loan and there is a possibility to have the Direct Loan forgiven at some point, it might make sense to begin adding more to my monthly payments to NJHESAA and then see where I’m at in a few years with the Direct Loans. The problem that I have with NJHESAA, though, is that you can’t make online payments – it’s so archaic.

Anyway, I take this information about the Public Service Loan Forgiveness Program as a good sign. This is a good way to begin the new year!

Posted in Money, Jobs, & Finances, Student Loans | 5 Comments »

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!

Posted in Money, Jobs, & Finances, Student Loans | 2 Comments »