Public Student Loan Forgiveness: What you don’t know can cost you big

With almost 4 million students graduating from a college or university this year and over $1 trillion in student loan debt, you would think there would be more resources dedicated to financial counseling upon graduation and information about repayment options.

Unfortunately, most students are left to fend for themselves. In fact, a large percentage of graduates don’t even know whether their loans are private or federal. 

In order to help with large loan balances, many borrowers elect to work in public service or at a non-profit to receive public student loan forgiveness.  Sadly, some borrowers are in for a big surprise when they discover their payments and 10 years of service didn’t count.

Federal Loan Servicers

In regards to federal loans, most students simply accept the default plan they are placed into or rely on the information provided by the loan servicer.  The problem is that federal loan servicers don’t always provide accurate or complete information.  There may be many reasons for this: either due to poor training, knowledge of the options, a more complicated issue, or perhaps the fact that the servicer also owns a debt collection subsidiary and  makes more money when you default on the student loans.  Whatever the reason, the information is far from reliable and there is little to nothing that can be done when you discover the information was incomplete or even outright false.

Public Student Loan Forgiveness(PSLF)

Public student loan forgiveness provides an incentive for borrowers to enter the fields of public employment or work with a non-profit.  If you work the government, hospital, or non-profit – you should know about this.  After ten years of qualifying payments, you can receive forgiveness of your remaining federal student loans.  

Some borrowers simply assume they will qualify for the loan forgiveness (after all-they are working in public service), other borrowers contact their loan servicer for questions.  Servicers may tell the borrower that they qualify for public student loan forgiveness.  In reality, the borrower is in the wrong payment plan. Or the loans are being held by the wrong lender. Or the employment doesn’t actually qualify.

The borrower doesn’t discover this issue until years later.  Many people probably believe they are going to receive public student loan forgiveness.  In a few years, when the first borrowers become eligible for loan forgiveness, there will be many angry people who learn that the 10 years of payments and public service didn’t actually qualify for loan forgiveness.

Can you tell the Department of Education that it was a mistake and you relied on the information the federal loan servicer gave you? Sure.  Will they care? Maybe.  Will they fix it? No.

Review Your Options Now

Don’t wait 10 years to find out something is wrong.  Learn your options now.  We can review your loans, advise you of all of your options, and make sure your loans are set up correctly.

Many people have stayed in public employment in order to take advantage of public student loan forgiveness.  After years of service and thousands of dollars in payments, they discovered something was wrong.  Don’t let that happen to you- get your student loans reviewed now.

P.S. please don’t hurt yourself more by using a student loan relief company that you found online.

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