Are You Ready for Public Service Loan Forgiveness?

1. Are You Ready for Public Service Loan Forgiveness? Eileen Eiden Student Loan Supervisor Austin Community College Texas Association of Student Financial Aid Administrators

2. Agenda • History and Intent of the program • Overview of the program • How is your Financial Aid Office getting ready for it? • Future of PSLF Texas Association of Student Financial Aid Administrators

3. History and Intent of the PSLF Program • Public Service Loan Forgiveness (PSLF) was signed into law July 2007 by President Bush • It is part of the College Cost Reduction Act (CCRA) • Intent of PSLF program from CCRA • “The Public Service Loan Forgiveness Program is intended to encourage individuals to enter and continue in full-time public service employment by forgiving the remaining balance of their Direct Loans after they satisfy the public service and loan payment requirements” Texas Association of Student Financial Aid Administrators

4. Let’s go over PSLF Texas Association of Student Financial Aid Administrators

5. Five Steps for Public Service Loan Forgiveness

6. Right Loan • ONLY DIRECT LOANS are ELIGIBLE for PSLF • As of July 1, 2010, all Federal student loans are Direct Loan • Prior to July 1, 2010, most loans were FFEL loans • How do I know if my Loans are Direct or FFEL???

7. NSLDS.ed.gov

8. Eligible Loans • Direct Subsidized Loans • Direct Unsubsidized Loans • Direct PLUS Loans (for parents and graduate or professional students) • Direct Consolidation Loans • Special Direct Consolidation Loans • Other federal loans eligible if consolidated into a Direct Consolidation Loan, including: • FFEL Subsidized/Unsubsidized Stafford Loans • FFEL PLUS Loans for parents and graduate or professional students • FFEL Consolidation Loans (excluding joint spousal consolidation loans) • Federal Perkins Loans • Title VII Health Professions and Nursing Loans

9. STUDENTLOANS.gov To consolidate your loans, you can visit studentloans.gov.

10. Right Payments Income-Driven Repayment Plan • Payments are based on your income and family size. • Loans will be forgiven in 20 or 25 years. • Old & New IBR and PAYE Plans require partial financial hardship (PFH). • No PFH for REPAYE and ICR • IDR Plan after 20 or 25 years canceled amount is taxable as income. PSLF is not taxable income.

11. Summary of Income – Drive Repayment Plans

12. Modeling PSLF - Billy Borrower • Is single with no dependents and lives in Georgia • Has an AGI of $35,000 that rises at 5% per year • Has $50,000 in Direct Loan debt ($23,000 of which is subsidized), all of which has a 6% interest rate • Borrowed for graduate school 12

13. Modeling PSLF Without PSLF REPAYE ICR IBR PAYE Time in Repayment Total Paid $36,538 $0 $0 Total Forgiven $0 With PSLF REPAYE ICR IBR PAYE Time in Repayment Total Paid Total Forgiven $55,333 $22,459 $45,065 $51,746

14. Taxation of Forgiveness - PSLF

15. Taxation of Forgiveness - IDR *Based on Billy’s year 20 income of $88,455, 2015 tax brackets, uncomplicated tax filer.

16. THE MAGIC NUMBER On-time Monthly Payments

17. Payments • Payments must have been made after 10/1/07 • On-time (no later than 15 days after the scheduled due date) • Must be made each month • Must be made when the loan is not in default status • Reduced and/or Zero dollar monthly payment under an IDR plan qualify • Lump sum payments that exceed the scheduled payment amount do not count as separate payments

18. PSLF Qualifying Payments Source: FedLoan Servicing

19. Right Job • Yes to Tribal or Gov’t organizations, entities or agencies. • No Government Contracts • Organization can’t be a labor union or partisan political organization • Time can’t be spent in religious instruction, worship services or any form of proselytizing • Full Time • # of hours the employer considers full-time • 30 hours per week on average, whichever is higher • More than one qualifying part-time job simultaneously, may meet full-time employment requirement if work combined average of at least 30 hours per week with multiple employers

20. Repeat 120 times On time payments once a month for 10-years

21. Prove it Fedloan Servicing Myfedloan.org

22. Prove It • Verify income & Family size annually • Certify your employment annually • Apply for forgiveness

23. Getting the word out!!! • Start educating your staff • Encourage them to attend the FedLoanPSLF webinar • This webinar is offered monthly through the FedLoan website • Or check out American Student Assistance • ASA offers a PSLF webinar twice per month • Check out Last years FSA Conference on PSLF • Reach out to staff and Faculty at your institution by providing information • Identify who handles your employment certification at your institution • Start talking to your community leaders regarding this program Texas Association of Student Financial Aid Administrators

24. What is the future for PSLF? Texas Association of Student Financial Aid Administrators

25. Thank you! Eileen Eiden Student Loans Supervisor Eileen.eiden@austincc.edu Phone: 512-223-7553 FedLoan Servicing Support Center MyFedLoan.org/pslf Toll-Free number: 855-265-4038