Social workers with student loan debt may be eligible for loan forgiveness. The Public Service Loan Forgiveness Program (PSLF) was created to encourage social workers and other public service employees to work in high-need fields by forgiving their federal student loans.
In this blog post, we will discuss the eligibility requirements for loan forgiveness and the application process.
Most people who graduate from an MSW program have more than $30,000 in student debt. And graduates from undergraduate programs have an average of $29,000 in debt.
There are many options that social workers can use to make their student loan repayment more affordable.
Income-Driven Repayment Plans for Social Workers
If you are a social worker who is repaying their loans, and they are federally-issued loans, look at the income-driven repayment plans.
The first step is to find out if you have a Partial Financial Hardship. This is done by looking at your salary and the amount of your standard 10-year repayment plan payment.
If you can’t afford your loan payments, the government has several programs that can help. You can find a list of all these programs on the Federal Student Aid website.
Income-Driven Repayment Plans are available in three varieties, dependent on when you took out your loans and the sort(s) of loans used to pay for your education.
Income-Driven Repayment plans can help you lower your monthly payment in the short term. However, it is important to remember that these plans usually result in you paying more money over time.
Income Contingent Repayment
The ICR plan is available to borrowers who took out their first loan on or after July of 2006.
Under the ICR plan, your payments will be 20% of your discretionary income or what you would pay under a standard repayment plan over 12 years, whichever is less.
Your loan term can be extended to 25 years.
Income-Based Repayment (IBR) is a repayment plan that caps your loan payments at a percentage of your income. The loan term is extended to 20 or 25 years, and any remaining loan balance is forgiven after that time.
Next, you must have to qualify for federal student loans to be eligible for IBR. You must also have a partial financial hardship, which is determined by looking at your salary and the amount of your standard 10-year repayment plan payment.
If you are a social worker who qualifies for IBR, it’s important to remember that extending the loan term will increase the amount of interest you pay over the life of the loan.
But, if you can’t afford your loan payments, IBR can be a great way to make your loan more affordable.
Public Service Loan Forgiveness for Social Workers
Once you find out if you are eligible for one of these three plans, explore Public Service Loan Forgiveness.
This program, authorized through the College Cost Reduction and Access Act of 2007, will help you pay off your student loan.
If you work for a non-profit organization or government agency, after 10 years of making on-time “qualified payments”, your remaining loan balance will be forgiven tax-free.
If you are a social worker, your employer might be eligible for the tax exemption. But if you are not sure or want to find out more, contact us.
Make 120 Qualified Payments
The PSLF program requires an initial certification, available here, and then requires you to make 120 “qualified payments” through your servicer, who should track these payments and determine your eligibility. Qualified payments are payments made after October 2007 on a Direct Loan.
If you have other types of federal loans, like FFEL or Stafford loans, you might be able to consolidate them to become eligible for the Direct Loan program.
Parent PLUS Loans and private loans are not eligible for this program, unfortunately.
State Level Loan Forgiveness for Social Workers Programs
In addition to your Public Service Loan Forgiveness benefit, there are several state-level programs that give money to social workers who work in a needy area.
The majority of these loan repayment programs provide $5,000 to $7,500 in yearly loan repayment for work in a qualifying field or profession.
Private Student Loan Holders & Parent PLUS Loans Holders
Unfortunately, private student loans are not eligible for Public Student Loan Forgiveness, and Parent Plus loans do not qualify.
Refinancing Private Student Loans for Social Workers
If you have private student loans, you might be able to consolidate them and refinance them at a lower interest rate.
This could save you money in the long run and make it easier for you to afford your loan payments.
Need Help With Your Student Loans?
We can help you if you are feeling overwhelmed. We have helped people like you for a long time to get out of default on their federal student loans.
Please call us now to talk more about your situation. We will work with you to create a plan that takes your current financial situation into account and also helps you plan for the future.