Loan forgiveness for public service employees. The College Cost Reduction and Access Act of 2007 created a new loan forgiveness program for public service employees. This program requires quite a commitment – 10 years working as a public service professional. But the payoff – the cancellation of all remaining federal direct loans after 10 years of service — may be just the incentive a heavily-indebted college grad needs to choose a lower-paying, service-oriented career path.
Eligible public service jobs include everything from emergency management, public health and safety and law enforcement to social work, childcare, library sciences, public interest law services, and jobs serving people with disabilities and the elderly.
To be eligible for this program, you must make 10 years of consecutive, on-time repayments of your federal direct loans. This program also includes federal direct consolidation loans, so it would be possible to consolidate federal Stafford loans into the direct loan program and therefore be eligible for the cancellation of your remaining loan debt after 10 years of service. Keep in mind that the standard repayment period for federal student loans is 10 years. If you choose standard repayment for your student loans and keep up with your payments, your student loans will be paid in full in 10 years. You won't qualify for loan forgiveness because you'll have no remaining debt left to forgive!
Only grads that are eligible for reduced student loan payments, because of very high debt levels or consistently low salaries, would be eligible for this loan forgiveness program. To qualify, they would still need to make 10 years of on-time payments through an income-based or income-contingent repayment plan and work full-time for 10 years in a public-service job.
For more information on this program, visit the U.S. Department of Education's web site: http://studentaid.ed.gov/
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