Student Loan Forgiveness. Presented by: Ashley Norwood Presented to: American Student Assistance Date: March 20, 2013

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1 Student Loan Forgiveness Presented by: Ashley Norwood Presented to: American Student Assistance Date: March 20, 2013

2 Agenda Teacher Loan Forgiveness (TLF) Public Service Loan Forgiveness (PSLF) Income-driven repayment forgiveness Income-based (IBR) Income-contingent (ICR) Pay As You Earn Perkin Loan Cancellation 2

3 Teacher Loan Forgiveness Created to encourage individuals to enter and continue teaching in certain elementary and secondary schools that serve low-income families. Forgiveness of up to $17,500 is offered for eligible teaching service of five consecutive years. Established in the 1998 amendments to the Higher Education Act of

4 Teacher Loan Forgiveness New borrower as of October 1, 1998 No loans as of this date or no loan balance when loans are borrowed after this date. Teach 5 consecutive years at a Title I school School must serve low income families Gaps in service due to FMLA count, but others do not including job loss Loan must have been made before the fifth year of teaching At least one of the five years must be after academic year Loan Forgiveness Amounts: Up to $5,000 or Up to $17,500 4

5 Teacher Loan Forgiveness Qualified Teaching Began: Before Oct. 30, 2004 Can earn up to $5,000 by being either: An elementary school teacher with skills in reading, writing, mathematics, and other areas of the school s curriculum, as certified by the school s Chief Administrative Officer (CAO) A secondary school teacher teaching a subject area relevant to their academic major 5

6 Teacher Loan Forgiveness Qualified Teaching Began: After Oct. 30, 2004 Can earn up to $5,000 by being either: A highly qualified elementary school teacher A highly qualified secondary school teacher highly qualified is part of the No Child Left Behind Act 6

7 Teacher Loan Forgiveness Highly Qualified Can earn up to $17,500 by being either: A highly qualified math or science teacher in a secondary school A highly qualified special education teacher 7

8 Public Service Loan Forgiveness Created to encouraged individuals to enter and continue to work fulltime in public service or non-profit jobs. Forgiveness offered on any remaining balance after 120 payments and 10 years. Established in the November 1, 2007 Federal Register First forgiveness October 1,

9 Public Service Loan Forgiveness Eligibility Loans DL loans only FFELP borrowers may consolidate into DL to become eligible No payments under FFEL count toward forgiveness Parent PLUS loans are not eligible unless consolidated and paid under Income-contingent repayment Consolidation restarts forgiveness clock 9

10 Public Service Loan Forgiveness Eligibility Payments Full-time public service/non-profit work At least 30 hours per week 10 years and 120 eligible payments Must be on-time and full payments Deferment and forbearance payments do not count 120 eligible payments (do not need to be consecutive) must be made on or after October 1, Must be working full-time when payments are made and when applying for forgiveness Made in a Standard, Income-based, Income-contingent, or Pay As You Earn repayment plans 10

11 Income-Based Repayment Income-based repayment (IBR) is designed to reduce monthly payments to help make your student loan debt manageable and offers forgiveness after 25 years and 300 eligible payments. Enacted as part of the College Cost Reduction and Access Act of 2007 and became available as of July 1, First available forgiveness in July

12 Income-Based Repayment IBR bases monthly payments on discretionary income, family size, and eligible federal student loan debt. FFEL and DL loans are eligible Parent PLUS and Consolidation loans including Parent PLUS are ineligible Must have a partial financial hardship (PFH) Monthly payment under standard repayment for all eligible federal student loans must exceed 15% of discretionary income Payments capped at 15% of discretionary income Must re-apply annually Remaining balance after 25 years and 300 payments may be forgiven Amount is taxable 12

13 Income-Contingent Repayment Income-contingent repayment was designed to help make federal student loan debt more manageable and avoid default by lowering monthly payments and offering forgiveness after 25 years and 300 eligible payments. Enacted in the July 1, 1994 Federal Register 13

14 Income-Contingent Repayment ICR bases monthly payments on discretionary income, family size, and eligible federal student loan debt. DL loans only Parent PLUS are ineligible, but Consolidation loans including Parent PLUS are eligible No PFH required Payments capped at 20% of discretionary income Remaining balance after 25 years and 300 payments may be forgiven Amount is taxable Option for DL borrowers who are not eligible for IBR or Pay As You Earn 14

15 Pay As You Earn Repayment Pay As You Earn repayment was designed to provide a lower incomedriven payment option than IBR or ICR for borrowers struggling with repayment and offers forgiveness after 20 years. Enacted in the November 1, 2012 Federal Register. 15

16 Pay As You Earn Repayment Pay As You Earn bases monthly payments on discretionary income, family size, and eligible federal student loan debt. New Borrower DL loans are eligible New borrower as of October 1, 2007 with a disbursement after October 1, 2011 Parent PLUS and Consolidation loans including Parent PLUS are ineligible Must have a partial financial hardship (PFH) Monthly payment under standard repayment for all eligible federal student loans must exceed 10% of discretionary income Payments capped at 10% of discretionary income Must re-apply annually Remaining balance after 20 years and 240 payments may be forgiven Amount is taxable 16

17 Perkins Loan Cancellation Created to encourage individuals to enter and continue in high need professions. Perkins loans can be placed in concurrent deferment while qualified service is being performed. Important to not consolidate Perkins loans to not lose special cancellation and deferment benefits. 17

18 Perkins Loan Cancellation Military in Imminent Danger Area Firefighter Law Enforcement Nurse or Medical Tech Librarian Attorney Child or Family Service Agency *VISTA or Peace Corps Volunteer Head Start Intervention Services Provider Speech Pathologist Special Education Teacher Teacher in a Shortage Area Ed Services Agency Teacher Tribal College Faculty Member *Prekindergarten or Child Care 18

19 Perkins Loan Cancellation For most service, 100% cancellation schedule is: 1 st and 2 nd year: 15% of principal plus accrued interest each year 2 nd and 3 rd year: 20% of principal plus accrued interest each year 5 th year: 30% of principal plus accrued interest VISTA or Peace Corps service can receive up to 70% 1 st and 2 nd year: 15% of principal plus accrued interest each year 2 nd and 3 rd year: 20% of principal plus accrued interest each year Prekindergarten or non-profit child care providers can receive up to 100% 15% of principal plus accrued interest for every year of service 19

20 Resources National Council of Higher Education Loan Programs National Council of Higher Education Loan Programs Department of Education 20