FSCA NEWS

Loan Forgiveness for Specialized Instructional Support Personnel

Frequently Asked Questions

I heard that Congress recently passed legislation that provides student loan forgiveness for certain school employees. How do I know if I qualify?

Congress gave final approval on September 7, 2007, to a compromise budget reconciliation bill--The College Cost Reduction and Access Act (H.R. 2669)--that creates a new loan forgiveness program for direct-loan borrowers who work in public-service fields for 10 years. President Bush signed the bill into law (Public Law No: 110-84) on September 27, 2007. The new law now directs the Department of Education to cancel the balance of any interest and principal due on any Federal Direct Loan - including Direct Stafford, Direct PLUS, or Direct Consolidation Loan - that is not in default for borrowers who:

• Have made 120 consecutive monthly payments (i.e., 10 years) on a Direct Loan after October 1, 2007, AND
  
• Are employed in a "public service job" and have been employed in a public service job during the 120 payment period (i.e., 10 years).
  

  A public service job is defined as a full-time job in:
  

• public health,
  
• public education,
  
• emergency management,
  
• government,
  
• military service,
  
• public safety,
  
• law enforcement,
  
  
• social work,
  
• public interest law services,
  
• child care,
  
• public library sciences, or
  
• any other job at an organization that is described in section 501(C)(3) of the Internal Revenue Code of 1986.
  

I currently work full time in a public school as a school counselor and have $10,000 in Federal Stafford Loan debt from graduate school. Am I eligible for loan forgiveness under this law?

No. Unfortunately, the law ONLY applies to individuals who have borrowed under the Federal Direct Loan Program, including Direct Stafford, Direct PLUS, or Direct Consolidation Loan.

I am a speech-language pathologist working full time in a public middle school. I have $20,000 in Direct Stafford Loans from graduate school, which I have been paying on for 5 years. Would I be eligible to have my loan forgiven under this new law?

Possibly. In order to be eligible for the loan forgiveness, you must meet some fairly stringent standards. You must:

• Have made 120 consecutive monthly payments (i.e., 10 years) on a Direct Loan after October 1, 2007, AND
  
• Be employed in a "public service job" and have been employed in a public service job during the 120 consecutive monthly payment period (i.e., 10 years).
  

In other words, the clock starts after October 1, 2007, for making the 120 monthly payments. In addition, you must be employed in the public sector job (i.e., school) during the time you are making the 120 payments.

So, any payments I made prior to October 1, 2007, will not count toward the 120 payments for loan forgiveness?

That's correct. Only payments made on your Direct Loan after October 1, 2007,
will qualify.

I am a school psychologist working in the public schools and I have a Federal Direct loan with a standard 10-year repayment plan, which I will begin repaying starting on Nov. 1, 2007. Will I receive any benefit from this loan forgiveness program?

No, since you would finish repaying your loan in the required 10-year (120-month) period, you would not receive any benefit under this program.

I am a physical therapist working in a public school with a qualifying Federal Direct loan and a 20 year repayment schedule that begins on Nov. 1, 2007. Will my whole loan be eligible for forgiveness or only part of it?

Only part of it. After you have paid, without defaulting on this loan, for 120 months while working in a public sector job also during that time, any remaining principal and interest would be forgiven after the first 120 months of repayment by you.

For information on the new loan forgiveness program, borrowers should visit the U.S. Department of Education's Direct Loan Servicing web site at https://www.dlssonline.com/borrower/BorrowerWelcomePage.jsp, or call (800) 848-0979 or (315) 738-6634, FAX: (800) 848-0984, TDD: (800) 848-0983.