Paying back student loans? Read this

Iowa State employees who work at least 30 hours a week and are repaying direct educational student loans for themselves or parent loans for their children may have those loan balances forgiven by the federal government following 120 payments.

The catch? There are lots of hoops to jump through before the debt is forgiven. But extra effort to investigate the program -- called the Public Service Loan Forgiveness (PSLF) program -- and complete the appropriate paperwork might be worth the trouble. Be aware that email scammers have discovered the program and may send out bogus contact information. The websites, addresses and phone numbers in this article are official and linked to the U.S. Department of Education.

What is PSLF?

Created in 2007 by Congress, the PSLF program forgives the remaining balances of direct educational student and parent loans of full-time public service employees -- with lots of stipulations. For those who joined the program 10 years ago, the first opportunity for loan forgiveness takes place this fall.

 Here are the requirements ISU employees must meet to save any money:

• Qualifying payments must be:
  • Paid in full each month
  • Paid no later than 15 days after due date
  • Paid while employed by a qualifying employer
  • Part of a qualifying repayment plan

• Qualifying repayment plan
  • Only income-driven repayment plans qualify. These plans set student loan payments at affordable amounts according to the payer's income and family size.
  • The 10-year standard repayment plan also qualifies for PSLF, but because the loan is paid off entirely after 10 years, there is no remaining balance after 120 payments. To benefit from the loan forgiveness program, individuals must switch to an income-driven repayment plan. Go online to complete an online income-driven repayment plan application.

• Qualifying employer
  • Government organization at any level (federal, state, local or tribal). This includes Iowa State.
  • Nonprofit organizations with Section 501(c)(3) tax exemption status
  • Other nonprofits that are not 501(c)(3) exempt but provide other types of qualifying services (for example, military service, emergency management, public safety, etc.)
  • Full-time AmeriCorps or Peace Corps volunteers

Which loans are forgiven?

A direct educational loan by either a student or parent is eligible if it has not been in default and was received under the William D. Ford Federal Direct Loan Program. There are exceptions: Federal Family Education Loan or Federal Perkins Loan programs don't qualify for PSLF. But those loans may be converted to a direct consolidation loan, which would make them eligible. However, only the payments made following the conversion would qualify for the program. The loan amount forgiven is not considered income for tax purposes.

How to apply

To participate in PSLF, complete and submit the Employment Certification for Public Service Loan Forgiveness form. The ISU payroll office must complete section 4 (Employer Certification) of this form. Scan this section and email it to payroll@iastate.edu. Payroll will complete the form and send it back to you. Completing the employment certification form helps the U.S. Department of Education determine if you qualify for the program based on your employer and loan type, and if payments already made can be applied to the program. File the form one of three ways:

• Mail: U.S. Department of Education
  FedLoan Servicing
  P.O. Box 69184
  Harrisburg, Pennsylvania 17106-9184

• Fax: 717-720-1628

• Online: myfedloan.org

Questions?

For more information about the PSLF program, read the program's FAQ or contact FedLoan Servicing at 1-855-265-4038.