Ask The Get Out of Debt Experts Student Loans

I Now Work for a Non-Profit. Can I Get My Defaulted Student Loan Forgiven? – Terry

“Dear Steve,

I defaulted on my student loan during the recession. (It was a federally insured loan, I’ve been paying on it for 15 years, consolidated once, and it’s still over $30,000, which is what the principal was.)

I have found a job again, and contacted the collection agency to get on a payment plan.

My new job is at a non-profit, and I’m wondering if an already defaulted loan is eligible for the kind of reduction you get when you work for I think 10 years in a public or non-profit job?


Dear Terry,

I think you’d need to be current on your loan at the time you sought to be eligible for the Loan Forgiveness for Public Service Employees program. To be eligible you’d have to work for 501(c)(3) nonprofit agency.

The guidance on this program says:

Through the College Cost Reduction and Access Act of 2007, Congress created the Public Service Loan Forgiveness Program to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, borrowers may qualify for forgiveness of the remaining balance due on their eligible federal student loans after they have made 120 payments on those loans under certain repayment plans while employed full time by certain public service employers. Since borrowers must make 120 monthly payments on their eligible federal student loans beginning after October 1, 2007 before they qualify for the loan forgiveness, the first cancellations of loan balances will not be granted until October 2017.

The borrower must have made 120 separate monthly payments beginning after October 1, 2007 on the Direct Loan Program loans for which forgiveness is requested. Earlier payments do not count toward meeting this requirement. Each of the 120 monthly payments must be made for the full scheduled installment amount within 15 days of the due date

The 120 required payments must be made under one or more of the following Direct Loan Program repayment plans–

Income Based Repayment (IBR) Plan (not available to parent Direct PLUS Loan borrowers)

Income Contingent Repayment Plan (not available to parent Direct PLUS Loan borrowers)

Standard Repayment Plan with a 10-year repayment period

Any other Direct Loan Program repayment plan, but only payments that are at least equal to the monthly payment amount that would have been required under the Standard Repayment Plan with a 10-year repayment period may be counted toward the required 120 payments.

Please post your responses and follow-up messages to me on this in the comments section below.

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Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


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