Public Service Loan Forgiveness: Frequently Asked Questions

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If you’re considering Public Service Student Loan Forgiveness, there are a few things you should know before starting the application process.

Is Public Service Loan Forgiveness tax-free?

You’ll definitely want to speak with a tax adviser for more details, but student loans forgiven by Public Service Loan Forgiveness are not taxable. No income requirement exists for the Public Service Loan Forgiveness program. 

What are the best repayment plans?

If you’re looking into Public Service Loan Forgiveness, the best repayment plans are income-driven. Some plans, like the 10-Year Standard Repayment Plan mean you would not have any leftover loan balance to be forgiven if you made all 120 payments.

Another option is the Graduated Repayment plan, which has payments starting low and increasing gradually over time as your income level rises with more work experience. You should be looking for a plan that will enable you to have a portion of your debt forgiven once you make the necessary payments. Most medical professionals find income-driven repayment plans to be the best option.

What is a qualifying payment?

Qualifying payments are made after October 1, 2007, received no later than 15 days after the due date, cover the full monthly amount due, part of a qualified repayment plan, and made when you are full time with an eligible employer.

These payments do not have to be consecutive, but there must be 120 separate payments. Unfortunately, the program does not allow you to make higher payments in order to complete the process in a shorter time frame.

And, it’s worth remembering that the majority of hospitals do have status as a qualified employer for Public Service Loan Forgiveness, so medical professionals can advance their careers and pay off loans at the same time.

What about work outside the United States?

If you are working at a nonprofit operating outside of the USA, then you would not qualify. If your organization does operate in the USA, then you would be eligible. Work for a foreign government or places like the United Nations or NATO would not make you eligible, but work at a place like the U.S. Mission to the United Nations would qualify.

Additionally, work done in places which have legal relationships with the USA such as Guam or Puerto Rico do qualify for Public Service Loan Forgiveness.

Can I certify my own employment?

You are able to do so, but additional information will be requested. Be prepared to procure documents like W-2 forms, earnings statement and tax-exemption applications.

How can residents take advantage of Public Service Loan Forgiveness?

Public Service Loan Forgiveness can be a great option for those in residence because you can start paying off your loans during your residency period. Since many residency programs are at non-profit teaching hospitals, your payments could count towards the 120 payment required by Public Service Loan Forgiveness.

Keep in mind if you join a private practice after residency, then your payments might not go towards the 120 required for the program, especially if your employer does not qualify.

You could do a 7-year residency at an approved place of employment, then work for three years at a hospital. That would put you at 10 years, and you’d most likely have any remaining balance forgiven if all is properly handled.

You can find more questions and answers about eligible loans, qualified repayment plans, eligible employment and more by clicking here.

A quick summary of the Public Service Loan Forgiveness program can be found here, as well as a glossary of terms related to federal student loans. Both are good resources to review throughout the process.

Want to read more about student loan forgiveness? See articles below:

Student Loan Forgiveness Program: Guide for Healthcare Professionals

Public Service Loan Forgiveness for Healthcare Providers

Income Driven Repayment Plans for Student Loans

Are You a Healthcare Professional and Interested in Public Service Loan Forgiveness?

The Public Service Loan Forgiveness Application Process

The Future of Public Service Loan Forgiveness



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