Student Loan Forgiveness & 0% Interest Loans

Julie Provost

4 years ago

Student Loan Forgiveness & 0% Interest Loans

There’s so much talk about oppressive student loan debt nowadays that the good news tends to get eclipsed. Here are two pieces of good news you may to find useful:

You May Be Eligible for Public Service Loan Forgiveness (PSLF)

Did you know serving in the military is considered a public service? That means serving for ten years can qualify you for the same federal student loan forgiveness teachers, police officers, and social workers can qualify for.

It also means that if you have less than 10 years of military service, but you choose to enter a line of work that qualifies, you can be eligible for this loan forgiveness program, too.

What Employers Qualify for PSLF?

Qualifying employers include government organizations, 501(c)(3) organizations, and other qualifying not-for-profit organizations that provide a qualifying public service.

AmeriCorps and Peace Corps volunteers are also eligible. If you’re in doubt about your eligibility, there’s an online tool that can help you determine where you stand.

How Do I Qualify?

To qualify for this loan forgiveness, you also have to be a Direct Loan borrower who has repaid your loans through an eligible repayment plan for ten years (in other words, you need to make 120 monthly payments).

At the end that ten-year term, your remaining loan balance will then be canceled. Of course, you’ll be more likely to complete your ten years with a larger loan balance if your income is low relative to your debt, and if you qualify for reduced payments under an income driven repayment plan at any time during that ten-year time frame.

What Loans Does PSLF Cover?

PSLF covers all types of Direct loans, including Stafford, PLUS, and consolidation loans. Parent PLUS borrowers are eligible based on the creditor’s employment, not on the employment of the student they took out the loan to help.

If you have federal student loans of other types, consolidating those loans with Direct Loans can make you eligible. Timing is crucial if you plan to consolidate your Direct loans. If you make qualifying payments on a Direct loan, and then later consolidate, rolling that Direct loan into a new loan, your previous PSLF payments may not end up being included in that 10-year time frame.

However, if you’ve already started repaying your loans, but not all payments were made to a Direct Loan, take heart. You still may be eligible under the Consolidation Appropriations Act, 2018.

For more information, or to get started on this process, contact your Student Loan Servicer. They’ll help you for free. There is no need to pay an outside company for this service.

You May Be Eligible for 0% Interest Student Loans for Active Duty in War Zones

This 0% interest benefit has been available since 2008, but until recently, it was hard to determine eligibility.

In 2019, The Department of Defense (DOD) created a new policy based on a data-sharing agreement with the Department of Education (DOE). Now those agencies can automatically determine who’s serving in combat areas, and are therefore eligible.

Who’s Eligible 0% for Interest Loans?

0% interest is available to service members deployed in a hostile area that qualifies for special pay under 37 USC 310.

Interest can be deferred for up to 60 months of service as long as the loans were taken out on or after October 1, 2008. This benefit isn’t automatic. If you want to claim it, you’ll need to apply.

Don’t worry if you missed applying while you were deployed. You can claim this benefit retroactively, as long as your loan payments were on or after October 1, 2008.

Who’s Eligible?

Active duty
National Guard
Reserve
Veterans can take advantage of this program.

How Do I Apply?

Applying is simple and straightforward. Here’s what you’ll need to do:

1.) Check your loan type and servicer by logging in to “My Federal Student Aid” at StudentAid.gov/login.

2.) Contact your loan servicer to find out how to provide any of the following forms of proof:

A leave and earnings statement (LES) showing receipt of hostile fire or imminent danger pay
A certifying official’s statement and signature
Military orders showing service in a hostile area

Remember, your loan servicer is there to help you for free.

If you think you fit the bill for either or both of these programs, there is no time like the present. Make it your priority to step up claim those financial resources that are rightfully yours.