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Which student loan forgiveness program is right for me?

Established in 2007, public service loan forgiveness is for people who work for a non-profit or the government.

INDIANAPOLIS — Student loan forgiveness is getting a lot of attention.

That's why it's important to understand the different programs available to federal borrowers like Tanya Merritt-Mulamba. She's spent her work-life in public service. 

"Most of my career has been focused on youth and families," Merritt-Mulamba said. 

The single mom said she went to school for social work. 

"I really just had a strong desire to help people," Merritt-Mulamba said. 

And that dedication to service means she may qualify for Public Service Loan Forgiveness.  

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Established in 2007 under President George W. Bush, PLSF is for people who work for a non-profit or the government.

To be eligible borrowers need to make 120 student loan payments and work at least ten years for a qualifying employer.

"You have to read the fine print and you have to do your due diligence to turn in your yearly certifications," Merritt-Mulamba said. "All those kinds of things."

PLSF is different than the President Biden's recently-announced one-time forgiveness, and Merritt-Mulamba wants to know: Should she apply for the new program if she's on track to get her federal loans forgiven through PSLF?

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Cecilia Clark with NerdWallet said borrowers don't have to pick between the two programs. Instead, you could cast a wide net. 

"If you are eligible for both, and you will still have debt after the one-time cancellation, you can still benefit from public service loan forgiveness," Clark said.

The Department of Education said borrowers can apply for one-time forgiveness until December 2023.

PSLF VS One-Time Forgiveness

There are a variety of differences between PSLF and the one-time forgiveness.

When it comes to income, there is no cap for borrowers seeking PSLF. To be eligible for one-time forgiveness, individuals need to earn less than $125,000.

As for Indiana taxes, there are none on PSLF. For one-time forgiveness, borrowers will owe both state and county taxes.

In terms of value, PSLF cancels the federal loan amount left after your 120 payments. One-time forgiveness is up to $10,000 in cancellation or $20,000 if you're a Pell Grant recipient. 

"If you get the $10,000 or $20,000 forgiveness, while you're still working for PSLF, it doesn't change your monthly payment," Clark said, "It's based on your discretionary income, not the amount of your loan."

Available income to help Merritt-Mulamba become debt free by 50 years old. 

"That's $2,000 extra dollars. I got to pay my mortgage (and) for me, that makes a big difference," Merritt-Mulamba said. 

PSLF Issues and Waiver

It's worth noting that PSLF came under a lot of heat for not forgiving many peoples' loans. 

To make more payments count toward forgiveness, the government temporarily relaxed some of the rules.

To take advantage of that program, a waiver needs to be filled out by October 31.

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