Postal Employees Qualify for Student Loan Forgiveness

Postal employees may benefit from the Public Service Loan Forgiveness Program and other discharge options offered by the U.S. Department of Education.

Full-time United States Postal Service employees can have their federal student loan debt written off after 10 years of work. The Public Service Loan Forgiveness Program is open to all borrowers who spend at least a decade working for government agencies or certain nonprofit organizations and make 120 qualifying monthly payments on their federal Direct Loans.

The PSLF Program is the main forgiveness option for most postal employees, but it isn’t the only one. The Education Department offers other student loan forgiveness programs that wipe away the remaining balance USPS employees owe on their federal loans. The best choice for you depends on your loan balance and your work history with the post office.

The US Post Office is a qualifying employer for the Public Service Loan Forgiveness Program, so postal workers are eligible for tax-free student loan forgiveness after 10 years of work.

The precise eligibility requirements of the PSLF Program, which was created in 2007, are complex. To qualify, you must work for the postal service and:

• Work full-time. Postal employees are considered full-time if they’re assigned to work schedules of five 8-hour days in a service week. Part-time workers can qualify for relief if they work two part-time jobs simultaneously with a combined average of at least 30 hours per week at a qualifying employer (for example, law enforcement, military service, public health, and so on). Use the PSLF Help Tool to check your employer’s eligibility.

• Have eligible loans. Only loans made under the Direct Loan Program qualify, including Direct Subsidized and Unsubsidized Loans, Direct Consolidation Loans, and Grad PLUS and Parent PLUS Loans. Federal Family Education Loans are eligible if consolidated.

• Make 120 qualifying payments. Payments must be made on time, for the ​full amount due, and under a qualifying repayment plan — the Standard Repayment Plan or one of the income-driven repayment plans (for example, the income-based repayment plan).

For years, these unusually complex rules and poor customer service from the program’s previous administrator, FedLoan Servicing, frustrated thousands of student loan borrowers and locked many out of relief.

But the Biden administration has ​worked to change that.

Last October, the troubled program got a temporary overhaul. The Education Department announced that for a limited time, it would soften the rules to count payments made toward the wrong loans, under the wrong plan, and those that were late or for less than the ​full amount due.

You can apply for the Limited PSLF Waiver and the PSLF Program by submitting an employment certification form to the new company handling the program, MOHELA.

Learn More: Changes to PSLF

 

Income-driven repayment forgiveness erases your remaining balance after paying a portion of your income for 20 or 25 years. IDR forgiveness is open to all USPS employees, full-time and part-time. If the loans are consolidated it’s also available to borrowers with debt FFEL Loans and Perkins Loans.

To get started, you first must enroll in an IDR plan. You can apply online at the Federal Student Aid website, studentaid.gov. You can also submit a paper application to your student loan servicer.

Once enrolled, you must make at least 240 student loan payments before the Education Department writes off your balance. If you borrowed loans for graduate school, you must make 300 payments.

On April 19, the department announced it would use one-time fixes to count past payments and some periods of deferment and forbearance toward the 240 or 300 needed for income-driven repayment forgiveness. Those adjustments are underway. Your account on the Federal Student Aid website will reflect your payment count early next year. Read more about the IDR Waiver.

Learn More: What is Income-Driven Repayment?

• If your school defrauded you, the Borrower Defense to Repayment program can discharge your student debt. In the past two years, the Education Department has discharged $7.9 billion in debt for 690,000 borrowers through approved borrower defense claims, as of June 1.

  You might qualify for this program if you believe your school defrauded you by:

  • Intentionally misled you about your education program.

  • Violating certain state laws, such as consumer protection statutes or laws related to your loan or educational services.

  You can apply for relief if your school isn’t closed and even if you’re eligible for PSLF, IDR forgiveness, or another program. But you can’t submit a claim for private student loans.

  Learn More: Borrower Defense School List 2022

 

Postal workers and other government employees who become totally and permanently disabled may get a discharge of their federal student loans. And anyone with a physical or mental disability recognized by the Social Security Administration or Veterans Administration will have their loans automatically discharged through a data match.

If your disability isn’t on file with the SSA or VA, you must still apply for a disability discharge. Ask your treating physician to complete the discharge application.

Learn More: What Disabilities Qualify for Student Loan Forgiveness?

If waiting for student loan forgiveness doesn’t make sense because your balance is low or you’re leaving the post office, you may be able to save money by refinancing your debt with a private lender.

If you have a strong income and a credit score in the high 600s, you may qualify for a lower interest rate and better repayment terms. And if you’re missing either one of those things, adding a cosigner who has both can help.

Keep in mind that if you refinance federal loans, you’ll lose eligibility for PSLF and other forgiveness programs.

UP NEXT: Who Qualifies for Student Loan Forgiveness