Know Your Loan / Know Your Options

Whether you obtain a federal student loan, private student loan, or both, you’re obligated to repay the money borrowed, plus interest, regardless of if you graduate or not.

Since 2010, federal student loans are made and funded directly by the U.S. Department of Education through the William D. Ford Federal Direct Loan Program. Private loans are funded by banks, credit unions, and other types of lenders. Since private lenders consider various personal factors (including credit score, job history, and school) before approving a loan, you must apply to each individual lender. Additionally, private student loans may not offer the same benefits, flexibility, and repayment terms as federal student loans.

More on Private Student Loans relief

Borrowers can have several different types of federal loans, including Direct Loans, Federal Family Education Loans (FFELs), and Perkins Loans.  Some federal loans are owned by the U.S. Department of Education while others are owned by private companies. Borrowers may have a mix of federally and privately owned federal loans. To find out what type of loan you have, log on to your  FSA account https://studentaid.gov/fsa-id/create-account/launch and you will find your “Loan Types” in your account dashboard.

Please note that private loans will not appear on your studentaid.gov account.

The lender is the company or organization lending you the money. They “originate” the loan.

The servicer is the company that tracks loans while you are in school, collects and processes your loan payments, responds to borrower inquiries and processes changes in repayment plans, deferments, forbearances, or other activities. In most cases, the servicer is the borrower’s main point of contact.

• If your loan is for the current or upcoming school year, contact your school’s financial aid office directly.
• If your loan was disbursed in a past school year and you’re still in school, contact your loan servicer.
• If you are no longer in school, contact your loan servicer.

You can find information about your servicer on your studentaid.gov account.

The PSLF Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.

For the PSLF Application, click here.

Important*: You must be working for a qualifying employer at the time you submit the form for forgiveness and at the time the remaining balance on your loan is forgiven.

Any loan received under the William D. Ford Federal Direct Loan (Direct Loan) Program qualifies for PSLF.

Loans from these federal student loan programs don’t qualify for PSLF: the Federal Family Education Loan (FFEL) Program and the Federal Perkins Loan (Perkins Loan) Program. However, they may become eligible if you consolidate them into a Direct Consolidation Loan.

Student loans from private lenders do not qualify for PSLF.

Qualifying employment for the PSLF Program isn’t about the specific job that you do for your employer. Instead, it’s about who your employer is. Employment with the following types of organizations qualifies for PSLF:

• Government organizations at any level (U.S. federal, state, local, or tribal) – this includes the U.S. military
• Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
• Serving as a full-time AmeriCorps or Peace Corps volunteer also counts as qualifying employment for the PSLF Program.

The following types of employers don’t qualify for PSLF:

• Labor unions
• Partisan political organizations
• For-profit organizations, including for-profit government contractors

Contractors: You must be directly employed by a qualifying employer for your employment to count toward PSLF. If you’re employed by an organization that is doing work under a contract with a qualifying employer, it is your employer’s status—not the status of the organization that your employer has a contract with—that determines whether your employment qualifies for PSLF. For example, if you’re employed by a for-profit contractor that is doing work for a qualifying employer, your employment does not count toward PSLF.

Other types of not-for-profit organizations: If you work for a not-for-profit organization that is not tax-exempt under Section 501(c)(3) of the Internal Revenue Code, it can still be considered a qualifying employer if it provides certain types of qualifying public services.

Search employer eligibility for Public Service Loan Forgiveness (PSLF) on the FSA website.

For PSLF, you’re generally considered to work full-time if you meet your employer’s definition of full-time or work at least 30 hours per week, whichever is greater.

If you are employed in more than one qualifying part-time job at the same time, you will be considered full-time if you work a combined average of at least 30 hours per week with your employers.

If you are employed by a not-for-profit organization, time spent on religious instruction, worship services, or any form of proselytizing as a part of your job responsibilities may be counted toward meeting the full-time employment requirement.

Anyone from your qualifying employer’s Human Resources or personnel office. Only “wet signatures” are accepted. Please remember to check accuracy and legibility to avoid any delays in processing.

Yes. To receive the maximum credit towards PSLF you must submit one certification form for each qualifying employer.

A qualifying monthly payment is a payment that you make:

• after Oct. 1, 2007;
• under a qualifying repayment plan (an income-driven repayment plan or the standard 10-year repayment plan);
• for the full amount due as shown on your bill;
• no later than 15 days after your due date; and
• while you are employed full-time by a qualifying employer.

You can’t make a qualifying monthly payment while your loans are in:

• an in-school status;
• the grace period;
• a deferment; or
• a forbearance.

An income-driven repayment plan is an affordable monthly student loan payment based on your income and family size. There are four income-driven repayment plans:

• Revised Pay As You Earn Repayment Plan (REPAYE Plan)
• Pay As You Earn Repayment Plan (PAYE Plan)
• Income-Based Repayment Plan (IBR Plan)
• Income-Contingent Repayment Plan (ICR Plan)

More information on income-driven repayment plans

Yes, you can still apply for the PSLF program if you meet the requirements. Additionally, borrowers who missed the waiver deadline can benefit from the One-Time Adjustment announced by the Department of Education. (ED) Borrowers will receive similar benefits than those provided under the waiver.

Get started with the PSLF program by going to https://studentaid.gov/pslf. 

You may receive debt relief if you have eligible federal loans disbursed on or before June 30, 2022 and meet certain income requirements. If you meet the requirements, you may receive up to $20,000 in debt relief if you received a Federal Pell Grant and up to $10,000 in debt relief if you didn’t receive a Federal Pell Grant. Read more information here   https://studentaid.gov/manage-loans/forgiveness-cancellation/debt-relief-info.

If you meet the program requirements, yes you can apply for both.

Consider an Income-Driven Repayment (IDR) plan which can reduce your monthly payment to as low as $0. You can use the Department of Education’s https://studentaid.gov/loan-simulator to estimate payments and choose the right plan for you. Please remember that payment pauses known as deferment and forbearance,  accrue interest and capitalization and will increase your principal balance and monthly payments in the long run.

You can contact your loan servicer to discuss your options.

There are two main ways to get out of default, by rehabilitating your loan(s) and consolidating your loan(s). Read about those options here. https://studentaid.gov/manage-loans/default/get-out.

In April, the Department of Education announced the Fresh Start Initiative to help borrowers that are in default. Under Fresh Start borrowers will have the chance to reenter repayment in good standing, eliminate the impact of default and regain several student aid benefits. Read more information here https://studentaid.gov/announcements-events/default-fresh-start.

Yes. You are protected under the California Student Borrower Bill of Rights (SBOR). SBOR requires servicers to act in the best financial interest of borrowers and prohibits them from taking advantage of borrower confusion or lack of knowledge. SBOR prohibits abusive behavior and the law establishes specific industry standards for the servicing of student loans. The law applies to California borrowers with both federal and private loans.

Learn more about the California Student Borrower Bill of Rights (SBOR)

A Qualified Written Request, or QWR, is a written correspondence that you or someone acting on your behalf can send to your student loan servicer.

You can send a QWR to request information about the servicing of your student loan or to assert that the company has made an error. Make sure your QWR explains in detail what information you want, or why you think the account is in error. When you send your servicer a qualified written request, make sure to send it to the correct address. It may be a different address than where you send your payments.

Your servicer must confirm receipt of your request within ten business days and within 30 business days, provide information relating to the request and, if applicable, the action the servicer will take to correct the account or an explanation for the issue you are experiencing.

Important: Your servicer is not allowed to charge a fee for responding to your QWR.

Reference: Assembly Bill No. 38 Chapter 379

The DFPI assists with complaints from student borrowers and enforces violations of the underlying law, the Student Loan Servicing Act. If you are a California resident and are experiencing issues with your loan servicer, contact the DFPI’s Consumer Services Office via email at ASK.DFPI@dfpi.ca.gov, call toll-free at (866-275-2677), or file a complaint online.

If an unknown caller or email sender offers debt relief or immediate loan forgiveness, do not respond or provide any personal information, including your Federal Student Aid (FSA) login information, or bank account or credit card information. It may be a scammer.

No one can promise immediate and total student loan forgiveness or cancellation. You should never pay fees to enroll in federal forgiveness programs.

Your loan servicer and the Department of Education (DOE) will not contact you over the phone or email. If you have questions about forgiveness options or need help making payments contact your servicer directly.

If you believe you have been a victim of fraud or scam you can file a complaint with DFPI. https://dfpi.ca.gov/file-a-complaint/