Public Service Loan Forgiveness
It is essential to be aware that an alternative already exists for loan forgiveness. The Public Service Loan Forgiveness Program, or PSLF, is a program from Federal Student Aid, or FSA, an Office of the U.S. Department of Education.
The goal of the program is to enable nonprofit employers to attract, hire, and retain high-quality employees in exchange for offering loan forgiveness. The program provides an opportunity to devote employment to worthwhile nonprofit organizations and reduce debt.
However, despite the good intentions of the program, the technicalities of qualifying for loan forgiveness can be complicated, becoming a burden for employers and employees alike. In fact, "99% of borrowers" were rejected for loan forgiveness, according to the latest data released by the Department of Education. If only 1% of any target audience is successful, many questions arise. For example, how can employees improve their chances of success with the PSLF program?
How to Succeed with Public Service Loan Forgiveness
Misunderstanding the rules of the PSLF program is likely one reason so few are receiving forgiveness. Understanding the program will help make sure that borrowers have the exact requirements and information when requesting forgiveness.
Communication can improve too. Currently, borrowers need to initiate requests with FedLoan Servicing to better understand their situation. One example of this has borrowers making sure to file the Employment Certification for Public Service Loan Forgiveness Form annually, or every time there is an employment change. If employees do not submit the form, perhaps FedLoan Servicing should send out a notification. This simple change alone would alert borrowers that there may be issues with their current eligibility.
There is enough focus on the results of the PSLF programs that approvals for forgiveness are bound to increase. This is good news for nonprofit employers and borrowers alike.