Student Loan Forgiveness for Government Employees (Federal, State & Local Gov’t Workers)
In 2018, one of the best ways to get rid of your Federal Student Loan Debt is to become a Government Employee, and use the Public Service Loan Forgiveness Program to earn complete forgiveness for your loans.
PSLF program benefits are available to all sorts of Government Employees, including those working at the Federal, State and even Local level. That means that if you have any sort of job connected to the Government, you’re eligible for the best Federal Student Loan Forgiveness Program on the market.
But that’s not all, because President Obama’s Student Loan Forgiveness reforms modified the Public Service Loan Forgiveness Program to make it even better than ever before, offering complete forgiveness benefits after making just 10 years worth of monthly payments!
And it’s important that you start taking advantage of this program now, because President Trump’s Student Loan Plan seeks to destroy it, but anyone who starts now is sure to be grandfathered through and remain eligible for the benefit, whether or not President Trump is successful at killing the program off.
President Trump Proposes Eliminating Government Employee Loan Forgiveness!
President Trump’s Proposed 2019 budget was just released and it officially calls for cutting support for the Public Service Loan Forgiveness Plan entirely, which would mean that the Government Employee Loan Forgiveness Program could be coming to an end.
If Congress passes President Trump’s budget in it’s original form, PSLF and Government Employee forgiveness benefits will disappear entirely, and anyone not already in repayment and taking advantage of the current forgiveness system will not be able to rely on it for eliminating their student loans.
Fortunately, one bright note for existing borrowers is that this change will only impact loans taken out AFTER July 1st, 2019, so if you’re already in repayment, then you have nothing to fear and can continue to rely on PSLF’s Government employee forgiveness benefits to wipe out your debt.
Before I Explain PSLF In Detail
You wouldn’t be here if you weren’t looking at ways to reduce your student loan debt, and I’m going to let you in on the dirty little secret that your lender and student loan servicer do NOT want you to know: you may be able to get rid of your loans quickly, at a very low cost, by paying a hired gun to come in and do the work for you.
If you want to fast track getting rid of your loans, then you need to call the Student Loan Relief Helpline right now. Your first call to the Helpline is free, and they’ll be able to take down all your financial info, then tell you the best way to get rid of your loans quickly, and cheaply.
The Helpline offers a paid service that lets you outsource all the work to them for a pretty low fee (usually a few hundred dollars), but you are not obligated in any way to accept their offer, and the reason why I suggest calling them now is that you’ll be able to ask questions, get answers, and figure out what you need to do to wipe out your loans as fast as possible.
Since your first call is free, all you risk is a few minutes of your time…
If you need help with your student loans, call 1-888-906-3065/a>.
Government Employee Student Loan Forgiveness
While there are all sorts of Student Loan Forgiveness Scams floating around these days, Government employee student loan forgiveness benefits are very real, and completely legitimate.
In fact, this is one of the easiest loan forgiveness programs to qualify for, and the process required to get your benefits is also extremely simple:
Anyone employed by the Government and working full-time satisfies the employment condition required to qualify for Public Service Loan Forgiveness, making them eligible for total loan forgiveness after they’ve made 10 years worth of payments on a qualifying student loan.
Other than getting approval for a debt discharge via the Borrowers Defense Against Repayment Program, this remains the best, cheapest, and fastest possible way to wipe out your Federal student loans.
And just to be clear, PSLF is actually better than the Borrower’s Defense Discharge benefit, especially for people with large debts, because while Borrower’s Defense may get you loan forgiveness in an instant, it also requires you to claim whatever amount of money you have forgiven as taxable income, while PSLF lets you completely wipe out your loans without having to pay any taxes on them.
Also, just to make clear how powerful the PSLF benefit is, think of it this way: normal people who don’t qualify for PSLF don’t get student loan forgiveness until they’ve made 20 years worth of payments, while anyone who qualifies for PSLF will qualify for loan forgiveness at the 10 year mark.
The key to successfully leveraging PSLF benefits is to make sure that you start making qualifying payments right away, so that you can start eating up that 10 year requirement as quickly as possible. And that’s exactly what this page will teach you to do… so keep reading!
What are the Eligibility Guidelines?
There are four main conditions that you must satisfy in order to qualify for federal or state employee student loan forgiveness benefits via PSLF.
Those four requirements are:
- You must have received your Student Loan under the William D. Ford Federal Direct Loan Program, and your loan may not be in, or have ever been in default
- You must make 120, full, on-time and scheduled monthly payments on your Direct Loan (and only payments made after October 1st, 2007 will count toward the required 120)
- You must make those 120 monthly payments while enrolled in a qualifying Federal Student Loan Repayment Plan
- You must be, or have been working in a full-time position at a qualifying public service organization (any Government position counts) at the time each of those 120 monthly payments were made
It seems pretty complicated, but for anyone who’s got a Federal Direct Loan, and who also works for a Government agency of any sort (Police, Firefighter, Park Ranger, Civil Service, DMV, etc.) this program is virtually guaranteed to work, so participating is a no-brainer.
1. Qualifying Loans
Are all student loans eligible for Government worker loan forgiveness? Unfortunately, no.
Private student loan debt cannot be forgiven under this program, though you may have access to other forms of Private Student Loan Debt Relief.
In fact, even some Federal loans won’t qualify for these benefits.
Only those Federal loans issued under the William D. Ford Direct Loan Program are eligible for Government employee forgiveness.
That means FEEL Loans, Stafford Loans, Perkins Loans, Grad Plus Loans and any other Federal Student Loan will not qualify for forgiveness benefits unless they’re first consolidated into a Direct Consolidation Loan.
2. Qualifying Payments
There’s three qualifying factors that determine whether or not any particular monthly payment will count toward your 120 payment threshold, including:
- Payments Must be On Time
- Payments Must be In Full
- Payments Must be Scheduled
Again, as long as you’re working for a Federal, State or Local Government organization and making monthly payments on time, in full, and according to a qualifying Repayment Plan, you won’t have anything to worry about.
But you do have to make sure that your payments are being issued under one of the Income-Based Repayment Plans, as only payments under those plans will count toward your 120 payment requirement.
3. Qualifying Repayment Plans
As I just mentioned, only Income-Based Federal Student Loan Repayment Plans qualify for Government employee loan forgiveness, so I recommend that you enroll in one of them as soon as possible.
Which plans count as being “Income-Based”?
- The Income-Based Repayment Plan
- The Pay As You Earn Repayment Plan
- The REPAYE Repayment Plan
- The Income-Contingent Repayment Plan
- The Income-Sensitive Repayment Plan
None of the other repayment plans offer forgiveness benefits, so make sure that you’re enrolled in one of the Income-Based Plans mentioned above or your monthly payments won’t count towards the forgiveness threshold.
Many people make this simple mistake, and end up costing themselves years’ worth of qualifying payments. The sooner you get enrolled in an Income-Based Repayment Plan, the sooner you’ll get your eventual forgiveness benefit.
UPDATE: In March, 2018, Congress and President Trump’s $1.3 Trillion Spending Bill approved up to $350 Million in emergency funds allocated to people who were not on the right repayment plans, but who would otherwise have qualified for PSLF forgiveness benefits.
Now, this is a one-time deal, and limited to $350 Million in benefits, but if you SHOULD qualify for PSLF, and the only thing holding you back from it is that some of your payments weren’t made on a qualifying Repayment Plan, then you need to contact your loan servicer immediately to see if this update is enough to put you over the minimum threshold required to receive forgiveness.
Keep in mind that these funds are being offered on a first-come, first-served basis, so DO NOT DELAY inquiring with your Servicer about whether or not this will help you, because once the money runs out, it’s GONE!
4. Qualifying Employment
This is probably the easy part, since you wouldn’t be reading this page unless you were already a Government employee, or considering becoming one and researching the many benefits that employment provides.
Anyway, loan forgiveness benefits are available to all Government employees, including those working for any Federal, State, or Local Government agency, entity or organization.
As long as you’re employed in one of those positions, and working full-time, then you’ll qualify for student loan forgiveness benefits once you’ve made the required 120 payments.
If you don’t plan on working for a Government agency for 10 full years, then don’t give up quite yet, because all of the following professions also qualify for the same forgiveness benefits offered by the Public Service Loan Forgiveness program:
Additionally, keep in mind that you don’t have to do your 10 year stint of Public Service all at the same organization, or even for the same type of organization, or in the same line of work.
In fact, you could mix 3 years of Government service with 5 years of Nursing and 2 years of Teaching, then receive loan forgiveness at the 10 year mark.
Do Your Forgiveness Benefits Get Taxed?
I mentioned it briefly above, but you do NOT have to pay taxes on the forgiveness benefits you receive under the PSLF program, and that’s an enormous additional benefit to participation.
Let’s use a quick example to illustrate why it matters – imagine you just got $100,000 in student loan debt forgiven.
If you had that debt forgiven under PSLF, you would owe $0 taxes on the amount forgiven.
If you had that debt forgiven under some other forgiveness benefit, like Borrower’s Defense to Repayment, then you’d have to claim that $100,000 as taxable income on your annual IRS tax return, and you’d be forced to pay income taxes on that amount.
Most people pay something like 20-30% in taxes, so that would mean you’d face a tax bill that year for $20,000 – $30,000, and it’d be due all at once, unlike your student loans, which are stretched out over a long period of time (10 years, 15 years, or whatever is set in your repayment plan).
That’s a big deal, because most people aren’t going to be able to come up with huge lump-sum payments after they’re already struggling to make small monthly payments on their student loans, and this is why I think we’re about to see the inflation of a massive tax debt bubble.
This is why I’ve created a new website, called Forget Tax Debt, where I offer tips, insights and advice on dealing with outstanding tax debt, just like I for student loans here.
If you’re worried about facing a tax crisis, or if you’re already having trouble with back taxes, then be sure to visit Forget Tax Debt, where I’ll teach you how to do things like Signing up for the IRS Fresh Start Program, Applying for IRS Tax Debt Forgiveness Benefits, and Negotiating a Tax Settlement with the IRS.
Questions? Comments? Concerns?
If you have questions about how to qualify for the Government worker student loan forgiveness program, then please feel free to ask away in the comments section below.
I’ll do my best to get you a response within 24 hours, and if I can’t answer your question, then I’ll direct you to someone who can.
What do you think about this program? Is it fair? Does it encourage over-borrowing, or does it help subsidize the all-to0-expensive costs of higher education? Should it continue? Should it be modified?
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Disclaimer:Information obtained from Forget Student Loan Debt is for educational purposes only. You should consult a licensed financial professional before making any financial decisions. This site receives some compensation through affiliate relationships. This site is not endorsed or affiliated with the U.S. Department of Education.