Financing your education at SIPA – Part 7

Our last post about financing your education focused on student loan repayments options to consider when you’re first thinking about taking out a loan or when you’re weighing your repayment options as you prepare to graduate from SIPA (or any other institution).

One new initiative that we’re excited about at SIPA is the Public Service Loan Forgiveness Program.  Under this program, student borrowers who pursue careers in the non-profit or public service sectors can have their outstanding loan balance forgiven after 120 months of repayment.  This forgiveness program applies to Federal Direct Loans (also known as Stafford Loans), Graduate PLUS loans, and Federal Direct Consolidation Loans.  It is not available for Federal Perkins Loans or any type of private loans.

If a student borrower qualifies for the Income Based Repayment program (available to borrowers with lower incomes during repayment), the Public Service Loan Forgiveness Program can save a borrower a considerable amount of money; depending on the amount borrowed, maybe tens of thousands of dollars.  As many SIPA students seek out such employment before, during and after graduation, this is an initiative that we want all SIPA students who borrow to be aware of.  For more information, visit any of these websites:

www.studentaid.ed.gov/publicservice

http://www.myfedloan.org/manage-account/loan-forgiveness-discharge-programs/public-service-loan-forgiveness.shtml

http://www.finaid.org/loans/publicservice.phtml

These 120 monthly payments need not be consecutive; for instance, if you start working in the non-profit sector immediately after graduating, work for a while in the private sector but then return to non-profit, you could still qualify.  However, you do have to make 120 monthly payments while working in the non-profit sector.  Your loan servicer will need verification of employment.  Note: while paying off your loan quickly (in 10 years or less) will save you money by minimizing interest, it will also prevent you from being able to take advantage of Public Service Loan Forgiveness, because if after the 120 monthly payments you have no remaining balance, there will be no outstanding loan amount to be forgiven.  It cannot be applied retroactively to loan amounts already paid off.

Non-profit or public sector employment may include any of the following:

–       A Federal, State, local, or Tribal government organization, agency, or entity;

–       A public child or family service agency;

–       Volunteering full-time in the Peace Corps or AmeriCorps;

–       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;

–       A Tribal college or university; or

–       A private non-profit organization (that is not a labor union or a partisan political organization) that provides at least one of the following public services:

Emergency management

Military service

Public safety or law enforcement

Public interest law services

Early childhood education (including licensed or regulated child care, Head Start, and state-funded pre-kindergarten)

Public service for individuals with disabilities and the elderly

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)

Public education or other school-based services

Public or school library services

This employment must be full-time (an average of at least 30 hours a week) and while in most cases the exact nature of the work does not matter, it cannot include religious instruction or worship, or any kind of proselytizing.  Work for a labor union or partisan political organization also does not count as public service for purposes of this program.

There are circumstances in which your student loans can’t be forgiven but at least you would be able to halt payments temporarily.  This is called either deferment or forbearance, and is applicable for enrolling at least half-time in a degree program, serving in the military (including the National Guard or Reserves), unemployed or experiencing economic hardship, or serving in the Peace Corps.  In some cases, interest may continue to accrue on your loans, which you would ultimately be responsible for, but deferment or forbearance may help a borrower out during times that making loan payments would create a hardship.  For more information, visit these sites:

http://studentaid.ed.gov/repay-loans

http://studentaid.ed.gov/repay-loans/deferment-forbearance

If you choose to borrow student loans to attend SIPA, online entrance counseling will be provided so you can get more details about your rights and responsibilities as a borrower.  But if you have questions at any time or would like to learn more about borrowing, feel free to contact us at sipa_finaid@columbia.edu.