By Jordi Lippe-McGraw
Student Loan Hero, December 6, 2017 —
Public service jobs are a great chance for you to not only help people but also receive help paying back your student loans through the Public Service Loan Forgiveness program (PSLF). This federal program is designed to forgive student loan debt for employees of certain public and nonprofit jobs.
Before you jump headfirst into this specialized line of work, there are a few things to consider. Here are 10 questions you should ask yourself before pursuing public service jobs.
1. What’s considered a public service job?
If you are looking into public service jobs for the student loan forgiveness benefit, then it’s important to know exactly what constitutes such a career. There are a lot of roles and companies that fall into the category. Here are some examples:
- Federal, state, local, and tribal government positions
- Americorps (full-time), Peace Corps, and Teach for America
- Positions in 501(c)(3) not-for-profit organizations
- Military and public health services jobs
- Law enforcement positions or public service law
- Public school jobs, including administrative and teaching roles
The easiest way to determine if the role and company is eligible for PSLF is to ask the employer before accepting the position. The Consumer Financial Protection Bureau created an Employer’s Guide to Assisting Employees with Student Loan Repayment for employers to help them understand if the role would fall into the category.
Labor unions and partisan political organizations, for example, don’t fall into this category even if they are nonprofits. The same goes religious organizations where you could be teaching religion, leading worship services or proselytizing.
2. What are the workload eligibility requirements of a public service job?
To qualify for the PSLF, you need to be a full-time employee of an eligible company. This means you work more than 30 hours per week. But, if your company defines full-time as less than that, you will still have to work the 30 hours.
Luckily, you could still qualify if you work a couple of part-time jobs that add up to meet the minimum requirement for hours.
Regardless of how you meet you the required number of hours, you will also have to put in 10 years of service to be eligible for PSLF. This decade requirement was determined by the number of payments you’d need to make to qualify. You must make 120 payments, which breaks down to one payment per month for 10 years.
3. How much will I earn and what effect does that have on my student loans?
Your salary depends on your employer and line of work. What’s important to consider is your salary/student loan debt ratio. If you have high loan balances compared to your salary, applying to public service jobs would be valuable because you would be able to pay less and have more forgiven with PSLF.
To figure out whether your salary/student loan debt ratio is worth it, find out what that possible salary would be for the public service job you are considering and check out Student Loan Hero’s Debt-to-Income (DTI) Calculator to make the math easy.
4. Does my salary affect my eligibility for PSLF?
Your income level has no bearing on whether or not you qualify for PSLF, but it is an income-driven repayment plan. Since you are required to make 120 monthly payments over 10 years, your income level could be a determining factor of whether you have a remaining loan balance to be forgiven at the end of the decade.
5. Does my loan qualify for PSLF?
To determine if accepting a public service job will help reduce your student loan balance, it’s important to know if your loan qualifies. Here are the stipulations.
- No loan you received from the William D. Ford Federal Direct Loan (Direct Loan) Program can be in default.
- You must have borrowed the loan before July 1, 2010.
- Federal Family Education Loan (FFEL) Program or the Federal Perkins Loan (Perkins Loan) Program do not qualify for PSLF.
6. Do I have to stay in a public service job until the loan is paid off?
The short answer is yes. But, the 120 payments do not have to be consecutive, they just have to be made while you are working full-time under a qualified employer.
For example, if you decide to leave a qualifying public service job, you won’t lose credit for the payments you’ve already made. So, if you leave and come back to a public service job to fulfill the 10 year/120-payment requirement, you could still be eligible for PSLF.
You also must apply for PSLF before leaving your public service job at the end of your 120 payments. You can only receive forgiveness if you are currently working at an eligible employer. According to the Department of Education, however, “You could regain eligibility if you later find full-time employment at another qualifying employer and then apply for loan forgiveness.”
7. Can I consolidate my loans after accepting a public service job?
Consolidating loans may sound appealing and can certainly be helpful with organizing debt payments, but it could affect your PSLF status.
Perkins loans and Federal Family Education Loans (FFEL) might be eligible if you consolidate them into a Direct Consolidation Loan. This allows you take multiple federal education loans and combine them into one loan for a single monthly payment.
But, only payments made toward the new consolidated loan will count towards the 120 payments. Any previous payments you made on the non-eligible loans will not qualify — you will start back at square one of your 120 payment schedule. So, if you’ve made 24 payments (put in two years of service) already, they wouldn’t count.
Also, if you consolidate your Direct Loans with other types of federal student loans, you will lose any payments you made on the original Direct Loan and start all over with the new consolidated loan. So, you might want to think about consolidating your additional federal student loans separately.
8. Does my consolidated loan with my spouse affect my loan forgiveness eligibility?
While being married doesn’t affect accepting a public service job, it can change your eligibility for PSLF. “The law no longer permits joint consolidation loans to be made, so joint FFEL Consolidation Loan borrowers can’t jointly reconsolidate their FFEL Consolidation Loan into a Direct Consolidation Loan,” according to the Department of Education.
If you have a joint Direct Consolidation Loan, then you still could qualify for PSLF with some caveats.
- For have the remaining balance of the loan to be forgiven, both you and your spouse have to be working full-time with an employer that qualifies under PSLF while making payments.
- Combined payments of a joint Direct Consolidation Loans cannot be forgiven when only one spouse was working in a public service job.
9. Will the PSLF program still be available after I’ve made the 120 qualifying payments?
Unfortunately, this is another tough question. Since the Congress created the PSLF Program, they could change or end it at any point.
Changes also occur with little notice. For example, in 2016, the Department of Education (ED) disqualified some lawyers working for the American Bar Association (ABA) from receiving PSLF. The ED said that even if you received approval that your employer meets the requirements for PSLF, that doesn’t mean it’s an official approval for PSLF.
This is something graduates who haven’t yet entered the workforce might want to consider. There are other income-based repayment options, such as Pay-As-You-Earn Repayment Plan (PAYE Plan) and Income-Contingent Repayment Plan (ICR Plan), available if you’re hesitant.
10. Could the new administration affect my public service job benefit?
In August, The Brookings Institution, a research group based in Washington, D.C., released a study revealing what could happen under President Donald Trump’s new budget and student loan plan. The proposal would end the PSLF program for new borrowers taking out loans after July 1, 2018, but current borrowers would still be eligible for forgiveness.
Now that some burning questions about public service jobs have been answered, you might want to know how to go about finding a gig. Luckily, no matter your degree or interest, you can find a public service job for a variety of career paths.