Yesterday, I found out that the rules and regulations for the College Cost Reduction and Access Act of 2007 (CCRAA) were finalized. These regulations included something called the Public Service Loan Forgiveness Program. In short, this program allows those working for nonprofit organizations to have the balance of their federal student loans forgiven after ten years of payments (with the clocking beginning in October 2007). The payments do not need to be consecutive, they just need to be comprised of 120 monthly payments (paying twice in one month does not count as two payments). I had to find out more about this program, so I contacted the program administrator in Washington, DC to get the facts. Here is our conversation starting with my e-mail to the program administrator:
My name is Joe and I am contacting you about the Public Service Loan Forgiveness Program created by the College Cost Reduction and Access Act of 2007. I have been working, full-time, for nonprofit organizations since May 2005. I have approximately $56,000 in federal student loans (a Direct Loans consolidation loan) and $48,000 in private student loans.
I understand that the private student loans do not qualify for the new provisions, however, I want to confirm that my Direct Loans consolidation loan does qualify. Also, I’ve read that the new regulations apply to payments made from October 2007 forward. Since I make my payments each month, does this mean that I can count my last 14 payments towards the 120 required for the balance of the loan to be forgiven? Is there anyway to count the previous monthly payments that I’ve made since I began repayment in July 2006?
Please let me know if you need any additional information. This is exciting news!
And here is the response from the program administrator in Washington, DC.
Good Morning Joe,
Your Direct loan consolidation loan will qualify for the forgiveness, and will count payments beginning on October 2007 forward. So, all payments made from the Oct. date on will count towards the 120 payments. Sorry, none of the payments made before that date can or will count towards the 120 payments. I’m glad that the public service forgiveness program will be a great benefit for you. If there is anything else I can do to help, please let me know.
A very friendly response from the feds – I like it! I thought that I should return the favor with a comment or two of my own and another question or so.
Thank you so much for the information! A final question or two.
First, do the 120 payments need to correspond to 120 months? Or if I make two payments in one month does that count as 2 payments towards the 120?
And finally, is there anything that I need to sign up for in order to be a part of this program? Or do I just track the payments on my own and when I hit 120 payments I contact Direct Loans?
And, within a matter of minutes, the program administrator replied as such…
One payment per month is what counts towards the 120 payments and direct loans will track the payments for you, we are also in the process of developing a form to have your employer sign as a public service position to tie the job with the payments.
This was perhaps the most pleasant experience that I’ve ever had dealing with my student loans. The representative, Ms. Nikki Harris, was professional and courteous and showed the utmost in professionalism in her prompt responses to my questions. And on top of that, I might be looking at getting some of my student loans forgiven after another 106 payments!
I have to figure out what I’d like to do with this, actually. I’ve been making excess payments on both my private NJHESAA loan and my Direct Loans consolidation loan. However, since I am being charged more on my NJHESAA loan and there is a possibility to have the Direct Loan forgiven at some point, it might make sense to begin adding more to my monthly payments to NJHESAA and then see where I’m at in a few years with the Direct Loans. The problem that I have with NJHESAA, though, is that you can’t make online payments – it’s so archaic.
Anyway, I take this information about the Public Service Loan Forgiveness Program as a good sign. This is a good way to begin the new year!
I really wish there were more people like Ms Niki Harris managing our banks. If CEOs were more ethical in there practices and made ethics integral in the banking process, then there wouldn’t have been an overblown economic bubble to begin with.
What I really loved about the e-mail conversation with Ms. Harris is that she responded quickly and effectively to my questions. In other words, she didn’t put off until tomorrow what she could do today.
But yes, I agree. If there were more people running the big banks who could provide quick, direct answers to programmatic questions, we might not be in the middle of the storm that we currently find ourselves in.
this repayment plan seems set up to fail. I wonder why they don’t make the deal five years instead of 10. there must be a bases for 10 years as opposed to five. To me five years would make sense. Considering if one was ever allowed to do chapter 13 on loan and chapter 13 requires 5 years. Why not make it 5 years at full standard payment. that would be essentially the same amount of money as doing 10 years under the ibr plan and would match up with chapter 13 yet DOE could set the amount instead of bankruptcy.court.