Public Service Loan Forgiveness Program
Through the College Cost Reduction and Access Act of 2007, Congress created the Public Service Loan Forgiveness Program to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, borrowers may qualify for forgiveness of the remaining balance due on their eligible federal student loans after they have made 120 payments on those loans under certain repayment plans while employed full time by certain public service employers. Since borrowers must make 120 monthly payments on their eligible federal student loans beginning after October 1, 2007 before they qualify for the loan forgiveness, the first cancellations of loan balances will not be granted until October 2017.
Definition of Full-time Employment: Final regulations define “full-time” as working in qualifying employment in one or more jobs for the greater of:
- An annual average of at least 30 hours per week;
- For a contractual or employment period of at least 8 months, an average of 30 hours per week; or
- Unless the qualifying employment is with two or more employers, the number of hours the employer considers full-time.
- Taxes : The U.S. Department of the Treasury confirms, in a September 19, 2008, letter to members of Congress, that public service loan forgiveness under the College Cost Reduction and Access Act meets the requirements of Internal Revenue Code Section 108(f) and is therefore not taxable income to the borrower.
Updated September 19, 2013