Student Loan Forgivness Program

[formerlyak]

I have been reading about the Federal Direct Loan forgiveness program for people working in public service. My loans qualify for this, and my job also qualifies me. However, I am looking at the repayment plans that qualify, and they would all have me paid off in 10 years or less ... but you have to make 120 payments in order to get the rest of your loan forgiven under this program. That is what confuses me. It should all be paid off in that time period, so what would be forgiven?

Anyone know anything about this program?

[cgpm]

You have to qualify for a payment plan based on your income that would allow you to pay less than the minimum payment. Then you can have the loans remaining after 120 payments forgiven. I looked into it as well, but I "make too much money" so I don't qualify for anything other than the standard repayment plan so I cannot take advantage of the forgiveness program.

[womet]

Karinothing is the resident expert on this. Try posting again in the morning.

[cgpm]

Aug 21, 2012 19:12:15 GMT -5 carrotsmakemefat said:

Aug 21, 2012 19:02:36 GMT -5 cgpm said:

You have to qualify for a payment plan based on your income that would allow you to pay less than the minimum payment. Then you can have the loans remaining after 120 payments forgiven. I looked into it as well, but I "make too much money" so I don't qualify for anything other than the standard repayment plan so I cannot take advantage of the forgiveness program.

I make a good salary and qualify. Even with standard payments I would still have close to 20k forgiven. I make close to 100k for reference purposes

I may have fewer loans in relation to my income so my monthly payment is lower and therefore don't qualify. That's the only thing I can think of.

[Brie]

Aug 21, 2012 19:19:30 GMT -5 cgpm said:

Aug 21, 2012 19:12:15 GMT -5 carrotsmakemefat said:

I make a good salary and qualify. Even with standard payments I would still have close to 20k forgiven. I make close to 100k for reference purposes

I may have fewer loans in relation to my income so my monthly payment is lower and therefore don't qualify. That's the only thing I can think of.

This is entirely possible.

It's designed for people who have a lot of debt but take low-paying positions. It works well for me because I make very little money but have a lot of debt from law school. I am on income-based repayment, which took my monthly payment from $700+/month to $170/month.

The drawback to it is that H and I have to file taxes separately because his income is much higher. If we filed jointly, his income would be included in that calculation, and my monthly payment would go back up.

If you have a low amount of debt and make a decent salary, it may not be worthwhile for you.

[Mrs.Beagle]

Brie, if you filed jointly one year, can you file separately again and be eligible for IBR? I would be eligible if we file separately, but not if we file jointly.

[ohiowan]

Just lurking here, but the thing I don't like about the program is that the 120 payments must be consecutive, so if you lose your public service job or miss a payment I think that resets your timeline; that's how I understand it at least. I could be way off. I figured out ill save a ton of month eh in the long ru. If I make two full payments a month on my giant one--doing that it should be paid off in six years. Oh, and they have to be fedrally consolidated. I realized this after already paying on mine for four years. Dang it.

[lolzlala]

Aug 21, 2012 20:23:14 GMT -5 Mrs.Beagle said:

Brie, if you filed jointly one year, can you file separately again and be eligible for IBR? I would be eligible if we file separately, but not if we file jointly.

I'd like to know this too, if anyone knows the answer. One loan company already said I was IBR approved with my joint taxes from 2011 - for 2012 I have to file joint again due to contributing to a Roth IRA with no income of my own, but after that filing separate would benefit us payment-wise.

Aug 21, 2012 21:03:21 GMT -5 ohiowan said:

Just lurking here, but the thing I don't like about the program is that the 120 payments must be consecutive, so if you lose your public service job or miss a payment I think that resets your timeline; that's how I understand it at least. I could be way off. I figured out ill save a ton of month eh in the long ru. If I make two full payments a month on my giant one--doing that it should be paid off in six years. Oh, and they have to be fedrally consolidated. I realized this after already paying on mine for four years. Dang it.

If (and this is a giant if) it is similar to the 25 year standard forgiveness on IBR/lower payment options, in times of unemployment you'd have to contact them for a forbearance proactively, as missing payments due creates the issue with the clock. These programs apply to federal loans (direct loans - FFEL program loans would need to consolidate to direct, afaik for the 10 year public sector program).

[hubes]

What qualifies as a public service position?

[ohiowan]

Aug 21, 2012 22:10:06 GMT -5 hubes said:

What qualifies as a public service position?

www.studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service#what-kinds-of-employment

[karinothing]

Aug 21, 2012 20:23:14 GMT -5 Mrs.Beagle said:

Brie, if you filed jointly one year, can you file separately again and be eligible for IBR? I would be eligible if we file separately, but not if we file jointly.

Yes, you can.

[karinothing]

Aug 21, 2012 22:17:03 GMT -5 @littlemoxie said:

Also, what if you quit and just volunteer for charities? Would that count?

This does not count as far as I know, but I suppose you could argue for it and see where that gets you.

[karinothing]

Aug 21, 2012 21:03:21 GMT -5 ohiowan said:

Just lurking here, but the thing I don't like about the program is that the 120 payments must be consecutive, so if you lose your public service job or miss a payment I think that resets your timeline; that's how I understand it at least. I could be way off. I figured out ill save a ton of month eh in the long ru. If I make two full payments a month on my giant one--doing that it should be paid off in six years. Oh, and they have to be fedrally consolidated. I realized this after already paying on mine for four years. Dang it.

They do not have to be consecutive.

[karinothing]

Aug 21, 2012 18:59:59 GMT -5 formerlyak said:

I have been reading about the Federal Direct Loan forgiveness program for people working in public service. My loans qualify for this, and my job also qualifies me. However, I am looking at the repayment plans that qualify, and they would all have me paid off in 10 years or less ... but you have to make 120 payments in order to get the rest of your loan forgiven under this program. That is what confuses me. It should all be paid off in that time period, so what would be forgiven?

Anyone know anything about this program?

Okay, and yes as other posters mentioned your income has to qualify you for forgiveness in that you have to be on either IBR or ICR in order to qualify. If you are on IBR or ICR these are 30 year repayment plans so it would not be forgiven in ten years.

Standard payments do qualify for forgiveness, but as you mentioned they will be paid off in ten years anyway. The reason they qualify is that if you are on IBR for 8 years and then make too much money they will switch you to standard for the remaining two years.

I am on the program and I file separately in order to qualify. I have a LOT of loans in relation to my income (200K in loans).

[sopsyched]

Aug 22, 2012 11:02:31 GMT -5 karinothing said:

Aug 21, 2012 18:59:59 GMT -5 formerlyak said:

I have been reading about the Federal Direct Loan forgiveness program for people working in public service. My loans qualify for this, and my job also qualifies me. However, I am looking at the repayment plans that qualify, and they would all have me paid off in 10 years or less ... but you have to make 120 payments in order to get the rest of your loan forgiven under this program. That is what confuses me. It should all be paid off in that time period, so what would be forgiven?

Anyone know anything about this program?

Okay, and yes as other posters mentioned your income has to qualify you for forgiveness in that you have to be on either IBR or ICR in order to qualify. If you are on IBR or ICR these are 30 year repayment plans so it would not be forgiven in ten years. Standard payments do qualify for forgiveness, but as you mentioned they will be paid off in ten years anyway. The reason they qualify is that if you are on IBR for 8 years and then make too much money they will switch you to standard for the remaining two years.

I am on the program and I file separately in order to qualify. I have a LOT of loans in relation to my income (200K in loans).

But you can be on IBR and do the public service forgiveness program as well. That is what I have signed up for...

[karinothing]

Aug 22, 2012 11:24:35 GMT -5 sopsyched said:

Aug 22, 2012 11:02:31 GMT -5 karinothing said:

Okay, and yes as other posters mentioned your income has to qualify you for forgiveness in that you have to be on either IBR or ICR in order to qualify. If you are on IBR or ICR these are 30 year repayment plans so it would not be forgiven in ten years. Standard payments do qualify for forgiveness, but as you mentioned they will be paid off in ten years anyway. The reason they qualify is that if you are on IBR for 8 years and then make too much money they will switch you to standard for the remaining two years.

I am on the program and I file separately in order to qualify. I have a LOT of loans in relation to my income (200K in loans).

But you can be on IBR and do the public service forgiveness program as well. That is what I have signed up for...

Oh, sorry I mispoke. I meant to say that if you are on IBR or ICR they are 30 year payment plans so it will not be paid off in ten years. Meaning IBR or ICR reduce your payment enough so that the forgiveness program has something to forgive.

Sorry for being confusing.

[simpsongal]

And this may be obvious, but only federal loans are eligble.

Stupid private loans

[formerlyak]

Aug 22, 2012 11:02:31 GMT -5 karinothing said:

Aug 21, 2012 18:59:59 GMT -5 formerlyak said:

I have been reading about the Federal Direct Loan forgiveness program for people working in public service. My loans qualify for this, and my job also qualifies me. However, I am looking at the repayment plans that qualify, and they would all have me paid off in 10 years or less ... but you have to make 120 payments in order to get the rest of your loan forgiven under this program. That is what confuses me. It should all be paid off in that time period, so what would be forgiven?

Anyone know anything about this program?

Okay, and yes as other posters mentioned your income has to qualify you for forgiveness in that you have to be on either IBR or ICR in order to qualify. If you are on IBR or ICR these are 30 year repayment plans so it would not be forgiven in ten years.

Standard payments do qualify for forgiveness, but as you mentioned they will be paid off in ten years anyway. The reason they qualify is that if you are on IBR for 8 years and then make too much money they will switch you to standard for the remaining two years.

I am on the program and I file separately in order to qualify. I have a LOT of loans in relation to my income (200K in loans).

This is what I was thinking was the case. Thank you.

I did the payment estimates on the IBR and my payment would be double the standard payment so I'd have them paid off in about 5.5 years at that rate.

I guess my loans aren't high enough compared to my salary to make this program work for me. I am glad it is there for people who it does help though!

[formerlyak]

Aug 22, 2012 11:32:33 GMT -5 karinothing said:

Oh, sorry I mispoke. I meant to say that if you are on IBR or ICR they are 30 year payment plans so it will not be paid off in ten years. Meaning IBR or ICR reduce your payment enough so that the forgiveness program has something to forgive.

Sorry for being confusing.

Unless, of course, they feel your salary is too high in which case you don't qualify for ICR and IBR makes your payment double. That is what I learned from the Direct Loan website calculator yesterday.