Magazine article National Association of School Psychologists. Communique

Frequently Asked Questions about Federal Loan Forgiveness Programs

Magazine article National Association of School Psychologists. Communique

Frequently Asked Questions about Federal Loan Forgiveness Programs

Article excerpt

As we begin a new school year and recent graduates are facing their first year of employment and the daunting reality of having to begin paying back student loans, questions about the eligibility of school psychologists for loan forgiveness often start popping up. This article is designed to summarize where school psychologists stand regarding loan forgiveness and to offer some answers to some of the most commonly asked questions about loan forgiveness.

Why Does the Federal Government Support Loan Forgiveness Programs?

There are a number of reasons why the federal government creates programs to forgive or reduce student loans. According to a 2005 Congressional Record Service (CRS) Report for Congress (McCallion, 2005), the four primary goals of federal loan forgiveness programs are to: (a) provide financial assistance to students to help them with the costs of college; (b) entice individuals to choose a particular occupation or field of specialization; (c) entice individuals to workfor a period of time in a certain job or underserved region; or (d) entice individuals to remain in a high-need occupation, region, or underserved facility.

As these priorities are applied to schools, current loan forgiveness programs are primarily designed to entice individuals to work in difficult-to-fill positions such as low-income school districts in rural or urban settings and in careers with a shortage of professionals. Loan forgiveness programs are also typically prioritized for students who qualify for the greatest amount of federal assistance because of their own financial need. It's important to know that loan forgiveness is not designed to provide everyone who gets a federal loan the opportunity to have it forgiven. Generally, only the neediest students or those willing to work in the most difficult settings will be eligible.

Are Only Federal Loans Eligible for Loan Forgiveness?

No. There are both state andfederal loan forgiveness programs. Generally, federal loan forgiveness programs only apply to nondefaulted, qualifying federal loan programs. Depending upon the program, only specific types of loans and/or specific payment plans maybe eligible for forgiveness.

Many states also offer loan forgiveness programs for state loans. A survey of 100 state programs in 2000-2001 indicated that 43 states had one or more of these programs (McCallion, 2005).

If your loan is from a private funding source, it is less likely that loan forgiveness is available. However, there are certain exceptions that may apply such as when a person volunteers through a specific charitable organization (e.g., the Peace Corps). Some private lenders will offer forgiveness following this type of qualifying service. Thus, it is always a good idea to ask your lender about whether you qualify for loan forgiveness before assuming that you are not eligible.

What Federal Loan Forgiveness Programs Currently Exist for School Psychologists?

School psychologists may be eligible for loan forgiveness under the College Cost Reduction and Access Act, the Higher Education Opportunity Act (HEOA), and the Patient Protection and Affordable Care Act.

College Cost Reduction and Access Act. The Public Service Loan Forgiveness Program through the College Cost Reduction and Access Act will not begin forgiving certain federal direct loans until 2017. This program was signed into law on September 27, 2007 by President George W. Bush (HR 2669) making it Public Law 110-84. The law includes the first loan forgiveness program that extends to all public service employees, including any person who works in a public school setting. Under this program, recipients of four types of Federal Direct Loans, with certain payment schedules, who pay faithfully without defaulting on their loan for a period of 120 months while concurrently working in a public sector job (including public schools) would be eligible to have all remaining principal and interest on the loan forgiven. …

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