The College Cost Reduction and Access Act of 2007 established the Public Service Loan Forgiveness Program (PSLFP). Under PSLFP, the federal government forgives any remaining debt after 10 years of full-time employment in public service for qualifying borrowers and loans. The borrower must have made 120 on-time payments on or after October 1, 2007, as part of the Direct Loan program in order to obtain this benefit. Only loans made under or consolidated into Direct Lending qualify for PSLFP. Once a borrower has met all of the requirements of the federal program, the borrower is required to submit an application for forgiveness of the outstanding loan balance to the Department of Education.
LRAP integrates with PSLFP and requires participants to use an eligible income-driven repayment (IDR) plan, if they qualify. IDR may significantly reduce a borrower’s monthly loan payment. Although there may be significant benefits to borrowers in utilizing IDR, if a borrower were to fail to qualify for loan forgiveness under PSLFP, the borrower could owe considerably more than the amount that would be owed under the standard 10-year repayment schedule. How IDR works is discussed further below.
Participants who do not initially qualify for IDR, but whose employment meets PSLFP requirements, may still be eligible for LRAP benefits, but monthly payments for these participants will generally be based on the standard 10-year repayment schedule and not IDR. This is discussed further below.
Participants may, at the discretion of the Program Administrator, be required to take all necessary steps to enroll in IDR, if they qualify. In some cases, this may require consolidating federal student loans into the federal Direct Loan program as discussed below. If a participant is required by LRAP to enroll in an IDR plan, it will be the participant’s sole and ongoing responsibility to complete any annual IDR renewal process, as required by the participant’s lender/servicer or the Department of Education. The Law School is not responsible for payments under non-IDR plans resulting from a participant’s failure to timely complete the IDR renewal process.
Participants should also be aware that the criteria for forgiveness under PSLFP differ in certain important respects from the requirements of LRAP and that participants are solely responsible for reviewing the terms of the federal program, determining whether they meet its criteria (including the employment requirements) and applying for forgiveness of their loans if and when they have satisfied such criteria.
For more information about PSLFP, visit the Department of Education’s website.