Public service loan forgiveness

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jmail

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Hi guys,
My son wants me to cosign or take a parent plus loan for his education because without me he can’t get his fin aid to cover the tuition.
I work for a nonprofit so I will qualify for the public service loan forgiveness program.
Should I apply now for the program? Or wait till he is done with the school and then consolidate and then apply for the program?
He is just starting the school so I am worried if I wait then the program may go away…
What is the best way to do it?
Thank you!

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Even if the program is discontinued any federal loans taken out before that point will be grandfathered in. Read the fine print.

Also, what do you mean he doesn’t qualify? It is quite difficult to not qualify for federal grad loans. Unless he has a recent bankruptcy or something similar he should qualify
 
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@Cornfed101
Thank you for your reply!
So do you think to be grandfathered in I would need to apply for the public service loan forgiveness first, right?
 
@Cornfed101
Thank you for your reply!
So do you think to be grandfathered in I would need to apply for the public service loan forgiveness first, right?
No, it's part of the loans at this point. You don't need to do anything until repayment
 
You might want to also clarify whether this actually qualifies for PSLF just because you happen to work for a (key point here, qualifying) nonprofit; I don't know if only one party on the (co)signature line is all that's needed, or if your son will need to work for a qualifying nonprofit as well. Realize that, even if it's only you that needs to qualify, you will have to continue working for a qualifying nonprofit for 120 payments.
 
What you're asking is complicated and you should get specific help about your situation. This is very complicated.

In general, if you're co-signing for a loan, then that is not a federal loan and hence not subject to PSLF or anything else. But, there is an exception which is almost certainly what you're talking about -- graduate PLUS and Parent PLUS loans. In a graduate PLUS loan your son would be the primary owner of the debt, and you would "endorse" it -- which is basically the same as cosigning. In a Parent PLUS loan, the loan is completely yours.

Both are very tricky. Repayment options are much more limited than in other federal loan programs. In fact, neither of these programs natively has any repayment options / PSLF (other than just paying them back with fees and interest at the usual rate) -- the way to get PSLF is by consolidating these loans after he has graduated, and that new federal consolidated loan should qualify for PSLF. This definitely can work with Parent PLUS loans. With Grad PLUS loans it's more complicated as it's unclear whose PSLF payments will "count".

If you endorse his Grad PLUS loans, you are responsible for the loan and any fees / penalties / etc -- so if he stops paying and doesn't tell you about it, you'll be financially (and credit report) on the hook for it.

There are many potholes here. If he doesn't complete medical school (? is this a Carribean or other non-US school) you'll have all that debt with nothing to show for it. If you do this, you'll be unable to leave your job (or retire) regardless of circumstances. If the gov't changes their loan policy and doesn't make these loans able to be consolidated, then you might not qualify for PSLF at all (although perhaps that option is baked into the loan documents to start with). There is a ton of paperwork for PSLF, and it's very easy to mess it up. You should make 150% certain your current employment would count for PLSF. Even if so, you'll still have the minimum payments to make, every month, for 10 years.

On the other hand, if your son becomes a physician in the US, they should be able to pay off these loans. If it's a Parent PLUS loan, you'd simply need to trust that they would do so, nothing would stop them from just leaving you with the balance. I guess that could be a financial strategy - they pay your minimum payment to get the rest forgiven in PSLF. There's some chance that would be considered fraud, and if discovered could be catastrophic.

Bottom line - this is nothing to mess around with unless you're 150% certain you understand the consequences. Get someone to help you with this. NOT someone from the school. Someone independent who can show you the problems. There are often free community resources to help with these types of decisions.
 
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In addition to what NAPD said, I will point out that PSLF is a retrospective application. You can submit an employment verification form at any time to get kicked over to the servicer that does PSLF, but the actual application only occurs after you hit 120 payments on an eligible repayment plan.
 
Thank you so much guys!!! I really appreciate your help!!!
 
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