What is Public Service Loan Forgiveness and how does it work?

Average student loan debt hits a record high of $38,792 in 2020 for undergraduates.

With repayments likely to begin again in the new year, many students are starting to consider student loan forgiveness.

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What is student loan sharking?

Established by the US government under College Access and Cost Reduction Act of 2007, the Public Service Loan Forgiveness (PSLF) program is designed to give indebted professionals a way out of their federal student loans by working full-time in the public service. or at a nonprofit organization.

PSLF will write off the remaining balance on your Direct Loan after you have made 120 qualifying monthly payments under the qualified repayment plan while working full time for a qualified employer to sue.

How do you qualify?

One of the first things you should do is call your loan officer. When you take out a loan, a loan officer is automatically assigned to you. So even if you don’t think you have one, you still do!

Once you’ve contacted your loan officer to ask them if you qualify. They can usually tell you right away if you look like a good candidate.

If you look like a good candidate for student loan forgiveness, your loan officer will provide you with an application that you will need to submit. This application will then be approved or rejected.

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What are other ways to reduce your payments?

To keep your debt manageable, it’s essential to make at least the minimum payment on your student loan each month. If you don’t make the minimum payments, you may default on your student loans and end up with additional fees and debt.

If your current minimum payment can’t afford it, ask your loan officer if you’re a candidate for an income-based repayment plan.

If you don’t qualify for an income-based repayment plan, ask your loan officer about the deferral. Deferral allows you to temporarily defer or reduce your federal student loan payments with no interest.

While you talk to the loan officer, they may also offer a negative opinion. Forbearance is very similar to procrastination; however, the only difference is that interest WILL add up to your loan balance. So if you can avoid it, don’t go into the box as it will only make your balance higher.

Another important way you can reduce student debt is to refinance.

One reason why you might want to consider this is because interest rates are still low.

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