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.
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 a 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.
Important 2018 updates to student loan forgiveness for police officers
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 Education. 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, which directly ties into the PSLF program.
In the first year of the Trump presidency, the Department of Education began to restrict the number of employment positions that qualify for PSLF. Even if you’ve maintained ongoing Employment Certification, you may want to recertify now, even if you haven’t changed jobs since your last certification. This will help ensure you still qualify.
And make no mistake, ensuring you still meet all qualification requirements is critical. A recent report from the Department of Education found that of the 29,000 loan forgiveness applications processed since October 2017, only 289 have been approved. The DOE rejected one-third of the applications due to incomplete paperwork. But the other two-thirds were rejected because the borrower failed to meet all qualification standards. Some borrowers had the wrong types of loans, while others weren’t enrolled in the right repayment plan.
This underlines the benefit of working with a third-party debt resolution specialist that knows the federal student loan system. Unlike loan servicers that are notoriously bad about providing the right information to borrowers, you hire someone to be your advocate. They understand the paperwork and can help you navigate the process to ensure you qualify.
Article last modified on November 19, 2019. Published by Debt.com, LLC