If you qualify for student loan forgiveness for police officers, your debt may be forgiven after 120 payments.
Fact: Police patrol officers make $61,270 annually, according to the Bureau of Labor Statistics.
Depending on where you live and work, your department may require an associate’s or bachelor’s degree. Even if your precinct only requires a high school diploma or GED, a degree in criminal justice or law enforcement may help you advance. If you want to get ahead in your career, a degree could be critical to your success.
The only problem with that is that getting that a degree can be costly. If you fund your education solely or primarily through student loans, you may be setting yourself up for financial distress.
Fact: A February 2017 Forbes article revealed the average student in the Class of 2016 graduated with $37,172 in debt.
Student loans payments aren’t structured to fit your budget
When you take out federal student loans, the lending decision is not based on your credit. That’s a good thing because it means you can get as much financing as you need to fund your education. However, it also means that things like debt-to-income ratio don’t come into play during the approval process. You can basically over-borrow compared to the average income for your career field.
That can become a serious issue once you leave school and the repayment period begins. You end up with higher payments than you can afford on your salary. So, you borrow to advance your career, but can’t afford the payments with the salary you get.
Only two states in the U.S. mandate higher education for police officers. Which states are they?
a) New York and Florida
b) Massachusetts and Virginia
c) Minnesota and Wisconsin
d) California and Colorado
Tip: Both states require a 2-year associates degree, all other states require a high school diploma or GED, but individual departments can set their own education requirements.
c) Minnesota and Wisconsin
Fact: 15% of all police departments require at least a 2-year associates degree.
Student loan forgiveness is the solution
The Public Service Loan Forgiveness (PSLF) program is the federal government’s answer to this imbalance. It’s an acknowledgment that the debt public servants like police officers incur is excessive debt relative to their average earnings.
That’s why the federal government under George W. Bush created PSLF in 2007 – roughly 10 years ago. It establishes a system whereby law enforcement officers can qualify to have a portion of their student loan debt forgiven.
How Public Service Loan Forgiveness Works for Police Officers
- First you must enroll in a hardship-based federal repayment plan. There are three plans that qualify:
- You must also certify that you work in an accredited public service law enforcement career.
- You make payments for 10 years on the repayment plan. These programs run 20-25 years, so PSLF cuts the term by half or more.
- After you 120 payments, the loan servicers forgive the remaining balances on your loans without penalties.
You get credit for paying your loans off as if you paid the full amount. It’s good for your credit score and gets you out from under your debt early.
3 Things to Know about PSLF for Police Officers
#1: You must work in the public sector 100% of the time
It’s important to note that not all law enforcement professionals qualify; you must be employed in public service. If you get a degree in criminal justice and work at at a private correctional institute, you don’t qualify.
Keep in mind that this requirement applies over the course of your repayment plan. You must maintain employment in public service throughout the 10 years. If you transfer into the private sector you can keep your repayment plan. However, you won’t qualify for PSLF.
#2: You get certified for PSLF early
StudentAid.gov offers an Employment Certification Form to help people confirm they’re in a qualifying employment position. The government does not require you to use this certification during your repayment plan. However, they recommend that you certify annually or anytime you switch jobs.
You need to take advantage of this certification and keep it current. Otherwise, you may get to your 120th payment only to find you don’t qualify for forgiveness.
#3: Repayment plan eligibility depends on your income
As the name implies, enrollment in a hardship-based repayment plan requires you to prove you have financial hardship. This means your Adjusted Gross Income (AGI) must be at a certain level compared to the Federal Poverty Line (FPL) for your state for your family size. In general, your AGI must be 150% or less of your state’s FPL.
For example, let’s say the FPL in your state is $20,000 for a family of two. You are a patrol officer with one child in your household, you must make $30,000 or less to qualify. Bear in mind that eligibility relies on AGI. The same kinds of claims that reduce your liability on your tax returns can help you qualify for the right federal repayment plan. In this example, qualified childcare deductions would reduce your AGI. So, you might make more than $30,000 and still qualify.
An Important Update for 2017 Police Loan Forgiveness!
Public Service Loan Forgiveness, like any federal program, is subject to change by Congress or the current administration. PSLF specifically falls under the Department of Eduction. This means that the DOE, under the direction of Betsy DeVos, could decide to alter or cancel PSLF. They could also change the federal repayment plan system.
In many cases, when a federal program changes or ends, anyone already enrolled can continue in the program. This is the case with homeowners enrolled in HAMP. Even though the program ended January 2017, if you applied in December your modification would go through.
The catch, in this case, is that you don’t apply or qualify for PSLF until 10 years after you pay through a federal repayment plan. In fact, since the program started in 2007, the first police officers should have their loans forgiven this year. There is some concern PSLF eligibility may be in question, regardless of whether you certified annually.
Still, if you just graduated or left school, we recommend getting on track for PSLF as early as possible. Enroll now in an IBR, ICR or PayE program. Get your certification for working in a qualifying public service position. This gives the best chance of ensuring you qualify.