What’s the deal: Can I combine student loan forgiveness programs?


Created in 2007, Public Service Debt Forgiveness is for people who work for a nonprofit organization or the government.

INDIANAPOLIS — Student loan forgiveness is getting a lot of attention.

That’s why it’s important to understand the different programs available to federal borrowers like Tanya Merritt-Mulamba. She has spent her working life in public service.

“Most of my career has been about youth and families,” Merritt-Mulamba said.

The single mother said she went to school for social work.

“I really had a strong desire to help people,” Merritt-Mulamba said.

And that dedication to service means she may qualify for a civil service loan forgiveness.

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Established in 2007 under President George W. Bush, PLSF is for people who work for a nonprofit organization or the government.

To be eligible, borrowers must make 120 student loan payments and work at least ten years for an eligible employer.

“You have to read the fine print and you have to do your due diligence to hand in your annual certifications,” Merritt-Mulamba said. “All those sorts of things.”

The PLSF is different from President Biden’s recently announced one-time forgiveness, and Merritt-Mulamba wants to know: Should she apply for the new program if she’s on track to get her federal loans forgiven through the PSLF ?

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NerdWallet’s Cecilia Clark said borrowers don’t have to choose between the two programs. Instead, you could cast a wide net.

“If you are eligible for both and will still have debt after the one-time cancellation, you may still qualify for a utility loan forgiveness,” Clark said.

The Ministry of Education said borrowers can apply for a one-time discount until December 2023.

PSLF VS Single Pardon

There are a variety of differences between PSLF and one-time forgiveness.

As far as income is concerned, there is no ceiling for borrowers applying for the PSLF. To be eligible for a one-time rebate, individuals must earn less than $125,000.

As for Indiana taxes, there are none on PSLF. For a single discount, borrowers will owe both state and county taxes.

In terms of value, PSLF cancels the remaining federal loan amount after your 120 payments. The one-time discount can be up to $10,000 in cancellation or $20,000 if you are a Pell Grant recipient.

“If you get the $10,000 or $20,000 rebate, while you’re still working for PSLF, it doesn’t change your monthly payment,” Clark said, “it’s based on your Discretionary Income, not the amount of your loan.”

Disposable income to help Merritt-Mulamba become debt free at age 50.

“It’s $2,000 more. I have to pay my mortgage (and) for me, that makes a big difference,” Merritt-Mulamba said.

PSLF issues and waiver

It should be noted that PSLF has been heavily criticized for not forgiving many people’s loans.

To make more payments count for the discount, the government has temporarily relaxed some rules.

To take advantage of this program, a waiver must be completed by October 31.

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