Eliminate Your Federal Student Loans in 10 Years, Not 25

For many Americans the thought of financing their college education seems to bring out the worst in them. Unfounded stereotypes supporting the idea of future financial woes stop some from attending college and improving their overall quality of life. Luckily for you, if you are planning to, or already are, working in public service you can increase your career marketability through education and have more financial freedom, at least 60% more to be exact. Criminal Justice professionals, as well as those working in most public service jobs, are already taking advantage of a government sponsored program that will help them eliminate federal student loan debt much quicker.

The College Cost Reduction and Access Act of 2007 makes it possible for full-time public service employees to reduce their federal student loans into 120 manageable payments vs the standard 300 payments. After ten years all remaining interest and principal balances are forgiven. The loans eligible for this benefit fall under the umbrella of the Federal Direct Loans program and include the following loan types:

  • Federal Direct Stafford Loans (Subsidized and Unsubsidized),
  • Federal Direct PLUS Loans,
  • and Federal Direct Consolidation Loans
  • other Federal Loans*

The borrower must have made 120 separate monthly payments beginning after October 1, 2007. Hence, earlier payments do not count toward meeting this requirement. The 120 required payments must be made under one or more of the following Direct Loan Program repayment plans within 15 days of the due date:

  • Income Based Repayment (IBR) Plan (not available to parent Direct PLUS Loan borrowers)
  • Income Contingent Repayment Plan (not available to parent Direct PLUS Loan borrowers)
  • Standard Repayment Plan with a 10-year repayment period
  • Any other Direct Loan Program repayment plan, but only payments that are at least equal to the monthly payment amount that would have been required under the Standard Repayment Plan with a 10-year repayment period may be counted toward the required 120 payments.

For more information about the repayment plans available in the Direct Loan program, please visit: www.ed.gov/DirectLoan

Qualifying Public Service Jobs

  • A federal, state, local, or Tribal government organization, agency, or entity (includes most public schools, colleges and universities)
  • A non-profit organization under section 501(c)(3) of the Internal Revenue Code that is exempt from taxation under section 501(a) of the Internal Revenue Code (includes most not-for-profit private schools, colleges, and universities)
  • A Tribal college or university
  • A public child or family service agency, or
  • A private organization that is not a for-profit business, a labor union, a partisan political organization, or an organization engaged in religious activities (unless the qualifying activities are unrelated to religious instruction, worship services, or any form of proselytizing) and that provides the following public services
    • Law enforcement
    • Public safety
    • Military service
    • Emergency management
    • Public interest law services
    • Public education
    • Public library services
    • Public service for individuals with disabilities and the elderly
    • Early childhood education (including licensed or regulated health care, Head Start, and state-funded pre-kindergarten)
    • Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations), and
    • School library or other school-based services

One more thing: I think this makes sense, but to qualify for forgiveness of a parent PLUS loan the parent borrower, not the student on whose behalf the loan was obtained, must be employed by a public service organization.

Student Aid on the Web. Eliminate Your Federal Loans.

* For more information please visit Repaying Your Loans section of the Federal Student Aid website – a great resource which helped me with this article.

On the fence?

I feel that the times of needless excuses and false stereotypes is way over. Now is the best time to pursue a college education without the worries and the guilt. You can research almost anything you want online, including your education related questions. Yes, you will have to make an investment of time and money, but it is well worth it and can make your life much easier.

10 years of paying down your student loans at 15% of your income is much better than doing so for 25 years, or even worse, not doing it at all. Consider the fact that most employers are used to a steady flood of job applicants with 2 or 4 year degrees, not to mention all the grad students that are looking for careers.

As time has shown, the average job seeker with a high school education has little chance of getting the career they really want for the pay which they deserve. Now is the time to do something about it. What do you think?

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Article written by Radek Gadek

Radek holds a Master’s degree in Criminal Justice from Boston University. He is currently doing consulting work and runs this blog to provide relevant information on criminal justice degrees, colleges and related careers.

1 comment… add one
  • lee

    I first heard of this from a lawyer that says he will help us do the process of first putting all the loans under one loan with the dept of ED and then follow the 10 year plan with non profit. He said he would do this for 1500. My question… Is it worth paying a lawyer to get this done or can we do this on our own.

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