Program Cancellation Benefits

Transcription

1 Federal Student Loan Forgiveness and Cancellation Benefits for School Librarians Ian Foss and Brian Smith U.S. Department of Education March 6, Federal Perkins Loan Program Cancellation Benefits 2 1

2 Librarian Cancellation To qualify for a librarian cancellation a Perkins borrower must be employed full-time as a librarian by: An elementary or secondary school that is eligible for assistance under Title I, Part A of the Elementary and Secondary Education Act (ESEA); or A public library that serves a geographic area that contains one or more schools eligible for assistance under Title I, Part A 3 Librarian Cancellation The borrower must be a librarian with a master s degree A librarian with a master s degree is an information professional trained in library or information science who has obtained a postgraduate academic degree in library science awarded after the completion of an academic program of up to six years in duration, excluding a doctorate or professional degree 4 2

3 Librarian Cancellation A portion of a borrower s Perkins Loan is cancelled for each year (12 consecutive months) of eligible employment at these rates: 15% of principal each year for the 1 st and 2 nd years of eligible service 20% of principal each year for the 3 rd and 4 th years of eligible service 30% of principal for the 5 th year of eligible service Interest is cancelled for each year of eligible service The year of eligible service must include August 14, 2008, or begin on or after that date 5 Librarian Cancellation To apply for a librarian cancellation, the borrower contacts the school that awarded the Perkins Loan, or the servicer acting on behalf of the school The borrower must submit to the school or servicer a written request for the cancellation, and any required supporting documentation Borrowers qualify for deferment during the year of eligible service Partial cancellation is granted at the end of the year of eligible service 6 3

4 Perkins Teacher Cancellation For purposes of a Perkins teacher cancellation only, the definition of teacher includes individuals who provide educational services to students Educational services are services directly related to classroom teaching, and include services provided by school librarians or school guidance counselors 7 Perkins Teacher Cancellation A Perkins borrower who meets the definition of teacher may qualify for a teacher cancellation if the borrower is employed full-time by a public or private non-profit elementary or secondary school and-- The school is included on the Teacher Cancellation Low-Income Directory; The borrower is teaching in a teacher shortage area; or The borrower is a full-time special education teacher 8 4

5 Perkins Teacher Cancellation A school is included on the Teacher Cancellation Low- Income Directory if 1 It is in a school district that qualifies for funds under Title I, Part A Over 30% of its enrollment are Title I children, 2 as determined by the State education agency 3 The State education agency has submitted the school for inclusion on the Directory 9 Perkins Teacher Cancellation The Teacher Cancellation Low-Income Directory is available at this link: choolsearch.jsp 10 5

6 Perkins Teacher Cancellation A portion of a borrower s Perkins Loan is cancelled for each academic year of eligible employment at these rates: 15% of principal each year for the 1 st and 2 nd years of eligible service 20% of principal each year for the 3 rd and 4 th years of eligible service 30% of principal for the 5 th year of eligible service Interest is cancelled for each year of eligible service 11 Perkins Teacher Cancellation To apply for a Perkins teacher cancellation, the borrower contacts the school that awarded the Perkins Loan, or the servicer acting on behalf of the school The borrower must submit to the school or servicer a written request for the cancellation, and any required supporting documentation Borrowers qualify for deferment during the year of eligible teaching service Partial cancellation is granted at the end of each year of eligible teaching service 12 6

7 William D. Ford Federal Direct Loan Program and Federal Family Education Loan (FFEL) Program Forgiveness Benefits 13 Teacher Loan Forgiveness To receive Teacher Loan Forgiveness, a borrower must be a teacher. For Teacher Loan Forgiveness, a teacher is a person who provides direct classroom teaching or classroomtype teaching in a non-classroom setting, including special education teachers. Because school librarians do not provide direct classroom teaching, they cannot qualify for Teacher Loan Forgiveness. 14 7

8 Public Service Loan Forgiveness (PSLF) 120 qualifying payments On Direct Loans On qualifying repayment plans While working at qualifying i employer 15 Borrower must also be employed by a qualifying organization at the time that the borrower applies for and receives PSLF According to the IRS, the forgiven amount is not treated as taxable income PSLF: Qualifying Payments Must make 120 separate, monthly payments 1 After October 1, Do not need to be consecutive 3 Must be for full amount due under plan 4 Must be made within 15 days of due date

9 PSLF: Qualifying Payments Multiple, partial payments during the borrower s monthly billing cycle will qualify if they add up to the borrower s monthly payment amount A borrower will not receive credit for more than one payment toward PSLF if the borrower makes a lump sum payment (e.g., makes a single payment equal to two or more full monthly payments) Exception for AmeriCorps and Peace Corps borrowers who make lump sum payments using education award or transition payment 17 PSLF: Qualifying Repayment Plan 10-Year Standard IBR ICR Pay As You Earn Others >= 10-Year Standard 18 Income-driven repayment (IDR) plans are most likely to leave a remaining balance for forgiveness after 120 qualifying payments 9

10 IDR: Eligible Borrowers ICR Eligible DL * = partial financial hardship IBR Eligible DL/FFEL *IBR < 10- year Std. PAYE Eligible DL *PAYE < 10-year Std. New borr. on/after Oct Disb. on/after Oct IDR: Eligible Loans ICR Direct Loans Loans received as student Consolidated parent loans IBR Direct & FFEL Loans Loans received as student PAYE Direct Loans Loans received as student 20 10

11 IDR: Payment Amounts Under ICR, borrowers pay the lesser of: 12-Year Standard * Percentage based on income (payments based on income) 20% of Discretionary Income (payments based on income) Under IBR, borrowers pay the lesser of: Under Pay As You Earn, borrowers pay the lesser of: 15% of Discretionary Income (incomebased payments) 10-Year Standard (non-incomebased payments) 10% of Discretionary Income (incomebased payments) 10-Year Standard (non-incomebased payments) 21 IDR: Loan Forgiveness PAYE: 20 years IBR: 25 years IRS: it s taxable ICR: 25 years Qualifying repayment includes: Payments under an incomedriven plan Payments under the 10-year standard repayment plan (or any other repayment plan with a payment amount at least equal to the 10-year standard d plan amount) or Economic hardship deferment 22 11

12 Billy Borrower Billy Borrower: Is single with no dependents and lives in DC Has an AGI of $35,000 that rises at 5% per year and Has $50,000 in Direct Loan debt ($23,000 of which is subsidized), all of which has a 3.86% interest rate 23 Repayment Estimator Repayment Repayment Initial Final Total Total Paid Plan Period Payment Payment Interest Standard 10 years $504 $504 $10,462 $60,462 Graduated 10 years $282 $845 $13,049 $63,049 Extended 25 years $261 $261 $28,350 $78,350 Ext-Grad 25 years $163 $473 $35,672 $85,672 IBR 16 yrs, 2 mos $222 $504 $20,779 $70,779 PAYE 20 years $148 $471 $31,788 $67,980 ICR 13 yrs, 4 mos $360 $449 $14,832 $64,832 Available on StudentAid.ed.gov/repayment-estimator. 12

13 $600 IDR: Billy Borrower $500 $400 $300 Pay As You Earn IBR ICR $200 $100 $0 25 PSLF: Eligible Loans PSLF is only for Direct Loans, but all Direct Loans qualify. FFELP Loans Parent PLUS Loans Perkins Loans 26 Direct Consolidation Loan Only payments made on the Direct Consolidation Loan will qualify. 13

14 PSLF: Qualifying Employment 1 Any government organization Doesn t matter what the borrower s job duties are (c)(3) not-for-profit organization Other not-for-profit organizations providing specific qualifying services Borrower can work at multiple organizations while making the required120 payments. PSLF: Full-Time Employment Must be a full-time employee or work multiple parttime jobs that equal full time Full-time is whatever the employer considers fulltime, but must be at least an annual average of 30 hours per week For borrowers working for a not-for-profit organization (501(c)(3) or otherwise) with job duties that include religious instruction, worship services, or proselytizing, the hours spent on those activities cannot be factored into meeting the full-time employee requirement 28 14

15 PSLF: Employment Certification On January 31, 2012, released a voluntary Employment Certification Form that borrowers can submit to the FedLoan Servicing (FLS) for a determination of whether their employment and payments qualify for PSLF Borrower submits form to FLS FLS determines whether employment qualifies FLS has loans transferred to FLS FLS determines whether qualifying payments Borrower submits another form FLS determines new qualifying payments 29 For more, including Q&As, see StudentAid.gov/PublicService PSLF: Employment Certification Employment Certification Form is not an application for forgiveness Borrower must make 120 qualifying payments after October 1, 2007, so no borrowers can qualify until 2017 at the earliest PSLF Forgiveness Application will be developed and released prior to earliest date of eligibility for PSLF 30 15

16 Form: Common Problems FFEL-only borrowers Missing EIN Certification in wrong category of employer Common Problems Wrong repayment plan 31 For-profit corporations Income-Driven vs. PSLF Income-Driven Income-Driven Di & PSLF 32 16

17 Plan Income-Driven vs. PSLF Initial Payment Final Payment Total Paid Forgiven (IDR) Total Paid (at 10 yrs) Standard $504 $504 $60,462 N/A $60,462 $0 Forgiven (PSLF) Graduated $282 $845 $63,049 N/A $63,049 N/A Extended $261 $261 $78,350 N/A $31,320 N/A Ext-Grad $163 $473 $85,672 N/A $23, N/A IBR $222 $504 $70,779 N/A $35,987 $30,535 PAYE $148 $471 $67,980 $13,808 $23,991 $44,838 ICR $360 $449 $64,832 $0 $47,424 $16, Where Can I Learn More? Employment Certification Form: Loan Consolidation: Loan Deferment: Loan Repayment Plans: loans/understand/plans Public Service Loan Forgiveness: Remember: if there are any questions about student loans, always contact your loan servicer

18 Contact Information Ian Foss Federal Student Aid (202) Brian Smith Office of Postsecondary Education (202)