While Waiting On Your MacArthur Genius Grant, Public Service Loan Forgiveness Is A Good Option
The foundation awards a prize of $625,000 to selected fellows to be used as they see fit with no strings attached. The goal of awarding fellows is to help them continue their work, and provide them with the means to accomplish more with having to worry about the funding.
Fellows are shedding light and making progress on critical issues, pushing the boundaries of their fields, and improving our world in imaginative, unexpected ways - MacArthur President
I mention the MacArthur award, in part because of what it exemplifies but also because when you look at the 2015 class, they are made of a variety of backgrounds but quite a few of them are in the public or non-profit sector doing their work.
Which brings us to the topic for this article and information for those that plan to work in the public sector but may not have $625,000 with which to pay of student loans or other debts.
Are you considering whether to work in the public or private sector?
As you contemplate remember that either choice may come with different benefits and it is important to figure out which one's matter the most to you.
- If having more time is a factor, then a position in the public sector may offer a better work/life balance.
- Or if compensation is a factor, then private sector job may offer opportunities for higher compensation in some cases as evidenced by this U.S News article on Public Sector Workers as the new privileged elite class.
Whichever route you choose to pursue there is no right or wrong way to go, but if you opt to begin or transition your career to the public sector. One of the loan programs to keep in mind is the Public Service Loan Forgiveness Program. In many cases, you can start building towards loan forgiveness earlier than you think and although the program requires 120 successful payments, the payments do not to be accumulated consecutively.
Public Service Loan Forgiveness Background:
In 2007, as part of the College Cost Reduction and Access Act, the Public Service Loan Forgiveness program allowed for indebted professionals with a means of addressing their student loan burden if they opted to work full time in public service. A few years later in 2009 came the introduction of the income-based repayment program. The enactment of the Pay As You Earn program came about in 2012, followed by direct consolidation options in 2014.
The PSLF Program is intended to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, you may qualify for forgiveness of the remaining balance due on your William D. Ford Federal Direct Loan (Direct Loan) Program loans after you have made 120 qualifying payments on those loans while employed full-time by certain public service employers.
Loans That Qualify:
- Private loans are not eligible for Public Service Loan Forgiveness (PSLF).
- Only Direct Loans qualify for the PSLF program.
Qualifying repayment plans:
- Revised Pay As You Earn (REPAYE) plan: ~10% of discretionary income
- Pay As You Earn (PAYE) plan: ~ 10% of discretionary income
- the Income-Based Repayment (IBR) plan: ~ 10% of discretionary income for borrowers after July, 1 2014, and ~ 15% for borrowers before July, 1 2014.
- the IncomeContingent Repayment (ICR) plan: ~20% of discretionary income
Occupations and Organizations That Qualify:
A government organization:
This may include but is not limited to a federal, state, local, or tribal organization, agency, or entity; a public child or family service agency; or a tribal college or university.
A not-for-profit, tax-exempt organization under section 501(c)(3) of the Internal Revenue Code
A private, not-for-profit organization, that provides one or more of the following public services:
Public interest law services
Early childhood education
Public service for individuals with disabilities and the elderly
Public library services
School library or other school-based services
Next Steps and Determining Eligibility:
The DOE requires you to complete the Employment Certification for Public Service Loan Forgiveness form (Employment Certification form).
The process will also require your employer's certification of employment.
Once the form is completed, it is then submitted to the Pennsylvania Higher Education Assistance Agency (PHEAA). This is the agency currently selected by the DOE to serve as their federal student loan servicing entity.
It is best to stay updated and submit your forms at least annually. This will keep everything organized and avoid additional paperwork down the line. For those that delay until they complete the program and loan forgiveness is granted. They will be required to provide this form for each employer leading up to the point of forgiveness. So do yourself a favor and just keep it simple and make it part of your student loan management system if this route applies to you.
For more info on frequently asked questions on PSlF, check out the Questions and Answers for Federal Student Loan Borrowers.
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