Public Service Loan Forgiveness! Trivia Quiz

1. It is much better to sign up for a qualifying income-driven repayment plan and send in your paperwork for PSLF to your lender at the VERY beginning of your service, than at the end, in order to get the maximum number of qualifying payments for forgiveness

True. Signing up for PSLF and a qualifying repayment plan at the VERY beginning of your service could mean all 27 of your payments could count.

False. It doesn’t matter when you sign up.

In order for your Volunteer service to count towards PSLF, you must be on a qualifying repayment plan. The income-driven plans (Pay As You Earn, Income-Based Repayment, and Income-Contingent Repayment) qualify for PSLF and will most likely mean your payment will be $0 per month while serving and will most likely mean a greater outstanding balance for forgiveness. If a PCV waits until the end of their service to sign up, it will likely mean a lower number of qualifying payments for PSLF.

Explanation

In order for your Volunteer service to count towards PSLF, you must be on a qualifying repayment plan. The income-driven plans (Pay As You Earn, Income-Based Repayment, and Income-Contingent Repayment) qualify for PSLF and will most likely mean your payment will be $0 per month while serving and will most likely mean a greater outstanding balance for forgiveness. If a PCV waits until the end of their service to sign up, it will likely mean a lower number of qualifying payments for PSLF.

2. Signing up for an income-driven repayment plan for PSLF while serving as a Peace Corps Volunteer will likely mean that my payments are $0 per month.

Yes, most likely.

No, probably not.

Under a qualifying repayment plan, such as one of the income-driven repayment plans, your payments could be as low as $0 while serving as a Peace Corps Volunteer since Volunteers do not make a significant income, but it depends on your loans and other factors. You should still contact FedLoan Servicing at (855) 265-4038 to see what your payments would look like.

Explanation

Under a qualifying repayment plan, such as one of the income-driven repayment plans, your payments could be as low as $0 while serving as a Peace Corps Volunteer since Volunteers do not make a significant income, but it depends on your loans and other factors. You should still contact FedLoan Servicing at (855) 265-4038 to see what your payments would look like.

3. All types of loans, as long as they are federal, qualify for PSLF.

True. PSLF works for all federal loans.

False. Only loans you have received under the Direct Loan Program are directly eligible for PSLF. Other federal loans may qualify if consolidated. You need to call FedLoan Servicing (855) 265-4038 to see if and how may you qualify.

While it is true that loans received under the Direct Loan Program are directly eligible, other federal loans may qualify if consolidated. Be sure to research the effects consolidating your loans may have. If you consolidate a Perkins loan, you will not be able to take advantage of the partial Perkins loan cancellation benefit. Also visit https://studentaid.ed.gov/sites/default/files/peace-corps-and-loan-repayment_1.pdf for more information.

Explanation

While it is true that loans received under the Direct Loan Program are directly eligible, other federal loans may qualify if consolidated. Be sure to research the effects consolidating your loans may have. If you consolidate a Perkins loan, you will not be able to take advantage of the partial Perkins loan cancellation benefit. Also visit https://studentaid.ed.gov/sites/default/files/peace-corps-and-loan-repayment_1.pdf for more information.

4. An RPCV asks, "I COS'ed 5 months ago. Is it too late to get some of my time as a Peace Corps Volunteer to count towards the 120 qualifying PSLF payments?"

Yes, it is too late. You must sign up at the beginning or during your service.

No, it is not too late. You can use a portion of your Readjustment Allowance after completing your service to make a lump-sum loan repayment for it to count towards PSLF.

There are two ways that you can qualify for PSLF as a Volunteer. If you did not sign up for a qualifying payment plan at the very beginning or during your service, you have six months from your close of service to sign up for PSLF. However, you are required to make lump-sum payment to do so and may only result in up to, but no more than 12 qualifying payments for PSLF.

Explanation

There are two ways that you can qualify for PSLF as a Volunteer. If you did not sign up for a qualifying payment plan at the very beginning or during your service, you have six months from your close of service to sign up for PSLF. However, you are required to make lump-sum payment to do so and may only result in up to, but no more than 12 qualifying payments for PSLF.

5. All I need to sign up for PSLF is to get a document proving my earnings.

True

False.

You should contact your lender directly to see what your payments would look like as a Volunteer. You also need to have the Department of Education’s Employment Certification form completed and signed by a certifying official either by someone at Staging, the CFO/VPS office at Peace Corps HQ or someone at post. Once sent, you then need to follow up and make sure it is received and processed by your lender. More details can be found here: https://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service

Explanation

You should contact your lender directly to see what your payments would look like as a Volunteer. You also need to have the Department of Education’s Employment Certification form completed and signed by a certifying official either by someone at Staging, the CFO/VPS office at Peace Corps HQ or someone at post. Once sent, you then need to follow up and make sure it is received and processed by your lender. More details can be found here: https://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service

6. An invitee or applicant can request documentation about their earnings for proof of an income-driven repayment plan for PSLF as soon as they receive their invite to serve.

True. Invitees can request paperwork directly from HQ.

False. Invitees have to wait until their staging event to get proof of their service and earnings.

According to policy, Peace Corps is unable to certify someone is volunteering until they attend their staging event. The PCT should bring any PSLF paperwork to staging for the Certifying Officer there to sign off on it and attach a Certification of Service. The PCT or their POA should follow up with their lender within a week of the request to ensure it was received and processed.

Explanation

According to policy, Peace Corps is unable to certify someone is volunteering until they attend their staging event. The PCT should bring any PSLF paperwork to staging for the Certifying Officer there to sign off on it and attach a Certification of Service. The PCT or their POA should follow up with their lender within a week of the request to ensure it was received and processed.

7. Say your loan qualifies for PSLF, can you defer your loan and also sign up for an income-driven repayment plan?

Yes, and you should.

No, you cannot do both.

You cannot defer your loan and be on an income-driven repayment at the same time. If you plan to pursue a career in public service and have qualifying loans, etc, then it would make sense to sign up for an income-driven repayment plan (repayments would likely be $0/month since Volunteers do not make a significant income) so that your time in Peace Corps counts towards PSLF. Deferment is different from being on an income-driven repayment plan. Visit www.peacecorps.gov/loans for more information.

Explanation

You cannot defer your loan and be on an income-driven repayment at the same time. If you plan to pursue a career in public service and have qualifying loans, etc, then it would make sense to sign up for an income-driven repayment plan (repayments would likely be $0/month since Volunteers do not make a significant income) so that your time in Peace Corps counts towards PSLF. Deferment is different from being on an income-driven repayment plan. Visit www.peacecorps.gov/loans for more information.

8. Someone calls/emails and is interested in serving, but they say, "I have student loans, what are some options for student loan benefits?" In addition to referring them to www.peacecorps.gov/loans, how can you respond?

Ask them to contact their lender to see if your federal loans are eligible for an income-driven repayment plan. Encourage them to research PSLF if that makes sense for your specific situation and refer them to https://studentaid.ed.gov/sites/default/files/peace-corps-and-loan-repayment_1.pdf and http://files.consumerfinance.gov/f/201409_cfpb_pslf_guide_peace-corps.pdf

Ask them to contact their lender to see if your loans are eligible for deferment.

Share information about the partial Perkins loan cancellation benefit.

Let them know they can sign up to have payments made from your Readjustment Allowance once they swear in as a Volunteer (after 3 months of pre-service training). They can sign up to do this “allotment” of up to 75% of your Readjustment Allowance ($243.75 as of 10/1/14) through post. The PCV or their POA need to make sure all the information is correct and the payments are going through properly.

All of the above.

Review the email template and phone script for different options that may be available to Peace Corps Volunteers. Provide the interested party with these resources and www.peacecorps.gov/loans.

Explanation

Review the email template and phone script for different options that may be available to Peace Corps Volunteers. Provide the interested party with these resources and www.peacecorps.gov/loans.

9. In order to qualify for PSLF, you need to be on a qualifying repayment plan. The income-driven repayment plans are the ones that are most likely to result in an outstanding balance after you make 120 qualifying payments. It may also mean that your payment during Volunteer service could be as low as $0 per month. Which of the following is NOT a qualifying income-driven repayment plan?

Income-Based Repayment

Income-Contingent Repayment

Pay As You Earn

All of the above are qualifying repayment plans

For more information on income-driven repayment plans, please visit these two links: https://studentaid.ed.gov/repay-loans/understand/plans/income-driven and https://studentaid.ed.gov/sites/default/files/peace-corps-and-loan-repayment_1.pdf.

Explanation

For more information on income-driven repayment plans, please visit these two links: https://studentaid.ed.gov/repay-loans/understand/plans/income-driven and https://studentaid.ed.gov/sites/default/files/peace-corps-and-loan-repayment_1.pdf.

10. What would be the best way to respond if an invitee or applicant asks, "I plan on working for a private company after my service and do not expect to pursue a career in public service. Should I still sign up for PSLF?"

Yes. PSLF is good for everyone.

Probably not since PSLF is only for those who plan on going on to public service.

None of the above

PSLF is only applicable to those who make 120 qualifying payments while working in a public service job (e.g. government, state and many nonprofits). For those who plan to work with a private firm or company and are not interested in public service sector jobs, PSLF will not be applicable. Information on qualifying public service sector jobs can be found here https://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service#what-kinds-of-employment.
Also, if you repay under an income-driven repayment plan, it will extend your overall repayment period if you decide later not to pursue or are not eligible for PSLF and will result in increased interest charges. In addition, although any outstanding balance left after 20 or 25 years of repayment under an income-driven repayment plan is forgiven, this amount is considered taxable income for the borrower by the Internal Revenue Service, whereas amounts forgiven under PSLF are not considered taxable income.
Refer the caller to the last section of this FAQ https://studentaid.ed.gov/sites/default/files/peace-corps-and-loan-repayment_1.pdf for a couple of different repayment scenarios.

Explanation

PSLF is only applicable to those who make 120 qualifying payments while working in a public service job (e.g. government, state and many nonprofits). For those who plan to work with a private firm or company and are not interested in public service sector jobs, PSLF will not be applicable. Information on qualifying public service sector jobs can be found here https://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service#what-kinds-of-employment.
Also, if you repay under an income-driven repayment plan, it will extend your overall repayment period if you decide later not to pursue or are not eligible for PSLF and will result in increased interest charges. In addition, although any outstanding balance left after 20 or 25 years of repayment under an income-driven repayment plan is forgiven, this amount is considered taxable income for the borrower by the Internal Revenue Service, whereas amounts forgiven under PSLF are not considered taxable income.
Refer the caller to the last section of this FAQ https://studentaid.ed.gov/sites/default/files/peace-corps-and-loan-repayment_1.pdf for a couple of different repayment scenarios.