DENIED? Public Service Loan Forgiveness HORRORS
You may have seen in the news that 99% of the applicants to the public service loan forgiveness program have been denied.
By the end of this post, you'll know exactly why people are being denied and how to not be one of them. Scroll to the bottom if you'd rather watch the video.
We did the heavy lifting to make sure you get your loans forgiven.
Why are people being denied for public service loan forgiveness?
The first reason is that they don't have the right loan. To be eligible for public service loan forgiveness, you have to be in a Direct Loan. If you have other loans they can be consolidated into Direct Loans to be eligible, but you have to do that first.
The second reason is they refinance their debt in the middle of making their qualifying payments. Whenever you refinance your debt, even if you refinance to a direct loan, the clock still starts over, unfortunately.
The third reason is they didn't make 120 qualifying payments. In order to be a qualifying payment it has to be for the full amount shown due, so you can't do any partial payments. It can't be any later than 15 days after due date, so a late payment does not count. You also have to be employed by a qualifying employer.
What is a qualifying employer?
These are 501C-3's or nonprofits, in the government at any level (federal, state, local or tribal). You can work in emergency management, military service, public safety and law enforcement, public interest, legal services, early child education, public service for individuals with disabilities, public service for the elderly, public health, public education and public library services. There's also a lot with schools, like school library services, other school-based services, the Peace Corps and AmeriCorps also count.
In order to also be counted as a qualifying employer, you must be employed full-time at at least 30 hours per week and you cannot have your loan in a grace period, deferment, or forbearance.
The fourth reason why people were denied for public service loan forgiveness is that they were not on an income driven repayment plan. You must be on the PAYE, REPAYE, IBR or ICR plans. One caveat is the standard ten year repayment plan, also counts. If you made a year of payments on that plan before switching to an income based repayment plan, you'd be able to count those qualifying payments. However, if you went to it any type of extended payment plan that is a payment period longer than 10 years, those do not count towards qualifying payments.
The fifth reason why these people are not being approved for the public service loan forgiveness program is that they did not submit the proper paperwork. You must submit two pieces of paperwork, one is the public service loan forgiveness employment verification once per year and the income-driven payment plan income verification once per year.
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