Today I’m excited to bring you a guest post from fellow-blogger Christa. She’s going to talk to you all about her experience with student debt. It’s a perspective I can’t bring you as dragged out my education in order to get a degree without taking out loans, graduating debt-free. But it’s a serious problem that effects so many people. Today she’s going to give you some insider tips so you don’t miss out on any potential loan forgiveness!
Do you have student loan debt? If your answer is no, congratulations! I am supremely jealous. If your answer is yes, then I can commiserate and maybe help guide you in the right direction.
Student loan debt is a problem that plagues many of us. We work hard, get into a good college, research the right career and major – then blindly take out loans to pay for it. Our adult self is left with the financial consequences of repaying the loans a teenager took out for the next 10-30 years.
I have a love-hate relationship with my student loans. I love that they helped get me through undergrad and pharmacy school and into a fulfilling career that helps people. I hate that I am now trying to pay off about $220,000 in student loan debt.
What I really, truly hate is that I lacked certain information regarding student loans when I came out of school. All else being the same, not knowing this single piece of information cost me nearly $50,000. So what is this information? The Public Service Loan Forgiveness (PSLF) program
This is a program available by the federal government to help those working for the government and public service non-profit companies.
I have seen three big reasons why people don’t use this opportunity:
1) Lack of knowledge about the program
2) Difficulty level to get on the program
To qualify for the PSLF, you have to have the right kind of student loans under the right kind of repayment program and work full time at the right kind of job for 10 years. After 10 years of making on-time, scheduled monthly payments the remaining balance is forgiven.
When I originally found out about the program, I had:
~The right kind of student loans
~The wrong kind of repayment plan
~The right kind of job
Unfortunately for me, since I was under the wrong repayment plan, the first 3 years of work did not count. A little bit of math tells me that because I did not know about the PSLF program, I will have to pay an additional $48,000 worth of payments!
I quickly realized I was not the only person who did not know about the program and was, therefore, paying thousands more than they need to. It has become my mission to spread the word about this program in order to help as many people with their student loan debt as possible.
Some specifics about the program:
~What type of job do I need?
- Those who work for the government (example: military, police officers)
- Those who work for public service non-profit company with a tax exemption code of 501(c)(3). (example: public libraries, non-profit hospitals) Tip: You can call human resources or even check your company’s website for their tax exemption code.
~Which type of student loans qualify?
- Federal loans that were received under the Federal Direct Loan Program.
- If you have student loans under the Federal Family Education Loan (FFEL) Program, the Federal Perkins Loan (Perkins Loan) Program, you can consolidate them into the Direct Loan program in order for those loans to be eligible.
- Sorry, but private student loans are not eligible
~What repayment programs do I need to be on?
- Income Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
- Pay As You Earn Repayment Plan
- 10 year repayment plan (this one is kind of silly since you would have nothing to forgive after 10 years)
~What qualifies as an on time, scheduled monthly payment?
- On-time payments- paid no later than 15 days after the due date.
- Scheduled monthly payments- you must be in active repayment status for the payments to count. You can’t be in a grace period, forbearance, deferment…
~Where can I find out more?
- You can go to the Federal Student Aid website. They have a bunch of information regarding student loans.
- You can also come visit me on my site where I talk about all things personal finance including my step-by-step guide to the Public Service Loan Forgiveness program.
This is a guest post from Christa, the founder of ObjectWealth.com, a blog on personal finance and her journey to go from massive debt to building financial independence. She is also a hospital pharmacist and enjoys eating bologna straight out of the container.
*Featured image: ©Raven/PhotoXpress