Future of PSLF debated as student debt grows

Seven in 10 college graduates are in debt from their education. The average person leaves school $30,000 in arrears, while nearly 20% owe more than $100,000. Americans are now more burdened by education loans than they are by credit card or auto debt.

With the plan to bring the Public Service Loan Forgiveness Program (PSLF) to an end still on the table, here is a rundown of requirements for borrowers to be eligible for the program:

• Qualified, full-time employment of 30 or more hours a week, for a government organization, 501(c)3, or other group that provides qualifying services.
• Must have a federal Direct Loan/FFEL, as opposed to a federal PLUS loan. Private student loans are not eligible; only certain federal student loans.
• Must be in a qualifying repayment plan.
• Must be making the full amount of the payment due on your monthly statement and doing it on-time.
• Not in school, in your grace period, on deferment, or in forbearance.
• The amount of the loan forgiven will not be taxed as income.

Volunteer government programs AmeriCorps and Peace Corps are eligible, but their stipends do not provide income sufficient to cover the loan payments while in service, limiting the opportunity to those who have the repayment cash on hand already, or some other way to get it.

This brings up the important shift that will happen if loan forgiveness programs are ended; like internships, government and nonprofit jobs will be (more) limited to those who can afford to take them - i.e., those who don’t need to immediately maximize their income to afford both living costs and loan repayment.

Other tips:

• Nonprofit professionals should apply as soon as they are eligible.
• Read and follow the instructions completely, as there could be thousands of dollars in play.
• Each year you must file to continue in the program. Do this in a timely fashion.
• Make sure every question is answered - even things like the form that goes to the employer to confirm your employment will come back if they leave off something like their phone number.