Student Loan Forgiveness for Law Enforcement and Police Officers

How to Qualify for Police Officer Student Loan Forgiveness

Members of law enforcement are among the many jobs eligible for the Public Service Loan Forgiveness Program (PSLF), which forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments while working full-time for a qualifying employer.

Qualification for the PSLF is based on who your employer is, not on the job you hold. If you are a full-time employee of a government agency at any level – federal, state, local or tribal – you are eligible for PSLF.

That is why police and corrections officers automatically qualify for the Public Service Loan Forgiveness Program. Other criteria that help a law enforcement officer qualify include:

• If you are part of a nonprofit organization that is exempt by the IRS under Section 501(c)(3). Labor union members and employees at partisan political organizations are not eligible, even if their employers have 501(c)(3) status.
• Even if your organization is not a 501(c)(3), but provides certain types of qualifying service such as law enforcement, you could qualify.
• This forgiveness only covers federal student loans. Private student loans are not forgiven through these processes.

Law Enforcement that Qualifies for Public Service Loan Forgiveness

Government law enforcement departments and agencies that may qualify for student loan forgiveness for law enforcement jobs include:

• Bureau of Indian Affairs Police
• Central Intelligence Agency (CIA)
• City police departments
• College and university police
• County sheriff offices
• Drug Enforcement Agency (DEA)
• Federal Bureau of Investigation (FBI)
• Federal Bureau of Prisons
• National Park Service Rangers and Police
• National Security Agency (NSA)
• Naval Criminal Investigative Service (NCIS)
• State prison facilities or departments of corrections (DOC)
• Customs and Border Protection (CBP)
• Immigration and Customs Enforcement (ICE)
• Marshals Service
• Secret Service

Steps to Loan Forgiveness for Law Enforcement Officers

You must work at least 30 hours a week for a qualified employer. You work multiple part-time jobs with qualified employers as long as the combined hours total at least 30 or more per week.

To successfully complete the process:

• Your federal student loan balance is forgiven after 120 on-time qualifying payments
• Qualifying payments are ones that include the full amount due and no later than 15 days after due date
• Payments made during the grace, deferment, forbearance or default periods are not qualifying payments
• Payments do not need to be consecutive
• Combine with Income-Based Repayment plan to significantly reduce your monthly payment
• Convert ineligible loans with a direct consolidation loan, achieve one convenient monthly payment

Make Your Loans Eligible Through Consolidation

Student loan debt consolidation involves taking out a single loan – ideally, with a lower interest rate – big enough to pay off the balances of all your federal student loans. You repay the large loan with monthly payments. Since this new loan comes from the government, you can only consolidate your federal loans, not private loans.

Only Direct Student Loans and Direct Consolidation Loans are eligible for the Public Service Loan Forgiveness program. Those loans include Federal Direct subsidized and unsubsidized loans and Federal Direct PLUS loans.

Federal Family Education Loans (FFEL) and Perkins Loans Program are not eligible, but could become eligible if you can consolidate them into Direct Consolidation Loans.

Federal consolidation eliminates the old FFEL and replaces it with a new federal direct consolidated loan. Also, a limited waiver from the Department of Education now allows borrowers to count the time before consolidation towards PSLF. Previously, this time did not count.

Fortunately, recent changes made by the Department of Education now allow borrowers to count their time before and after consolidation towards the required 10 years of service.

We’re here to help you understand your current loan situation as well as your consolidation options. Call today.

A qualified payment is any payment made under the following repayment plans:

• Income-based repayment
• Income-contingent repayment
• Pay as You Earn
• Standard Repayment (If you remain on a Standard Repayment program for 10 years, your entire debt will be paid in full. You may still want to enroll in PSLF and get credit for these qualifying payments in case you switch to another payment plan during the term.)
• Federal Perkins Loan Cancellation. This option is available for Perkins Loans only.

How to Qualify for Perkins Loan Cancellation

If you have a federal Perkins Loan, you may be able to get what you owe cancelled. However, not every police employee qualifies. To take advantage of this program:

• You must be a sworn law enforcement officer or your principal responsibilities are unique to the criminal justice system
• Those with administrative duties within law enforcement do not qualify
• You must be employed by a local, state or federal law enforcement or corrections agency or facility that is publicly funded

Full-time law enforcement and corrections officers are eligible for 100% loan forgiveness under the Federal Perkins Loan Cancellation program for service that includes August 14, 2008, and after.

Cancellation happens after 5 years, as follows:

• Year one: 15% cancellation
• Year two: 15% cancellation
• Year three: 20% cancellation
• Year four: 20% cancellation
• Year five: 30% cancellation

If you have a Federal Perkins Loan, you must apply to the school that made the loan or to the loan servicer the school has designated. If you have any questions on Perkins Loan cancellation, contact the school or loan servicer.

Other Options for Student Loan Repayment

What if you don’t qualify for PSLF? You’ve still got student loans, and you need to pay them off as effectively as possible. There are several strategies to consider for student loan debt relief.

• The first is the standard repayment plan, which pays off your loans in 120 fixed payments over 10 years. If you follow this plan, you should pay off your loans at the time they become eligible for forgiveness. The good news is that if you follow this plan, it will lower the total amount of interest you’d pay compared to longer payouts. Can you fit this into your budget? If budgeting isn’t something you’ve given much thought to, this is a good reason to start learning.
• Graduated repayment plans follow the 10-year payoff period, but they start with smaller monthly payments that grow larger over time. The payments are never less than the interest that’s accrued for that month, and the final payments are never more than three times the initial payments. This will cost more in interest over 10 years but is designed to make payments more affordable when you’re just starting your career and to increase as your salary grows.
• If you can’t afford either the standard or graduated plans, the extended repayment plan allows you up to 25 years to repay your loans. That lowers your monthly payment, and you can choose to make payments that stay the same or start low and increase over time. Because you’re paying for a longer period, you’ll pay more in interest with an extended repayment plan.
• If you’ve fallen on hard times and cannot afford your student loan payments, it is possible to postpone payments through two processes: deferment and forbearance. Deferment is preferable because interest does not accrue while you’re not paying, but not everyone qualifies. There are several circumstances that allow you to get deferment, such as losing your job, receiving state or federal assistance or undergoing cancer treatment. Forbearance is available if you don’t qualify for deferment and your financial challenge is temporary, but the interest continues to accrue. In both cases, your payments may be higher when they resume.
• Another option to lower your monthly cost is refinancing your student loans by taking out a new private student loan to replace your current debt. However, if you’re hoping to use PSLF, refinancing student loans with a private lender makes them ineligible for forgiveness and denies you access to income-driven repayment plans.

What might be of great help in your decision making is credit counseling. This is a free service offered by nonprofit agencies and helps with budgeting, offers solutions for becoming debt free and money-management tips. It involves a 30-minute interview with a certified counselor who looks at your financial situation and needs to determine what kind of plan will help you regain control of your finances.