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Here's what can go wrong on your way to student loan forgiveness

Category: Finance

Jason Edwards has been a full-time professor at a state university for more than a decade. He recently wrote a book on Bill Clinton's foreign policy rhetoric, and he runs a personal finance blog.

Still, he can't figure out public service loan forgiveness.

In 2006, Edwards graduated from Georgia State University with a doctorate in communications and around $100,000 in student loans.

About a year into the repayment of his loans, he switched from the standard 10-year repayment plan to an extended repayment plan, which lowers the borrower's monthly payments but stretches out their repayment timeline. That made sense for him because, as a professor just starting his career, his salary was not high.

When he learned in 2013 that he was a candidate for public service loan forgiveness, he was ecstatic. His student loans would be paid off within a decade, rather than 25 years. But then the bad news came — even though he worked in a public service job, and held federal loans, the extended repayment plan he'd enrolled in disqualified him from the relief. "It's painful," Edwards, 45, said. More than a decade after graduating, he still owes around $50,000.

There's some 14 ways to repay your student loans but, to qualify for public service loan forgiveness, you need to be enrolled in one of these four income-driven repayment plans:

  1. Income-contingent repayment
  2. Income-based repayment
  3. Pay-as-you-earn repayment
  4. Revised pay-as-you-earn repayment

(The standard repayment plan also qualifies, but under it you'd have paid off your loans in 10 years, anyway.)

Edwards soon switched into a qualifying income-driven repayment plan, but the clock on his 10 years to forgiveness was reset. Years of payments had been thrown away.

Then, a ray of hope. Congress authorized a $350 million "fix" to the public service loan forgiveness program earlier this year, which gave people who had been enrolled in graduated or extended repayment plans another shot at qualifying. He's already applied, and been denied, though he believes he's eligible and is battling it out with the Education Department. "I will not give up," Edwards said.

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