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Podcast transcript: Student debt relief with Heather Jarvis

Transcript for Student Debt Relief, Part One: Public Service Loan Forgiveness with Heather Jarvis

Below is the transcript for our show "Public Service Loan Forgiveness with Heather Jarvis." You can listen to the show here.


AMY POTTHAST: Welcome to the idealist grad-school podcast where together we explore grad-school for the public good.

I am Amy Potthast director of graduate education programs at Idealist. This episode of our grad-schools podcast is part I of a II-part series on student debt relief programs available to government and nonprofit workers including AmeriCorps and Peace Corps participants.

On this episode I'm chatting with student debt relief expert Heather Jarvis of AskHeatherJarvis.com, about public service loan forgiveness.

Meet Heather in person at the Idealist grad fair in Chapel Hill, you can learn more at Idealist.org/gradfairs.


AMY: Heather welcome to the show. Will you start by introducing yourself?

HEATHER JARVIS: Thank you. My name is Heather Jarvis and I began my expertise in student loans the natural way by borrowing $125,000 to pay for my legal education at Duke University. And since then in the past half dozen years I've been focusing on helping student loan borrowers figure out the complicated programs that are available to them especially for people who are interested in public service.

AMY: So today I asked you on the show so that we could talk about a newish program that offers some students relief for student debt and specifically today we are talking about public service loan forgiveness, which allow some borrowers to have their remaining student loan completely forgiven after meeting several criteria. So Heather I was hoping we could start with maybe you offering us an overview of public service loan forgiveness.

HEATHER JARVIS: Public Service Loan Forgiveness is a program offered by the federal government and its aim is to encourage educated individuals to enter and remain in public service positions. And the way it work is public service loan forgiveness is earned and it's earned for borrowers of federal student loans.

So the way I like to describe public service loan forgiveness to people is that you've got to earn it by making payments on your student loans and you've got to make the right kind of payments on the right kind of loans while you are in the right kind of job. And you've got to do those things over and over again every month for 120 months or 10 years.

So the requirement is that you have to make the right kind of payments, on the right kind of loan, while in the right kind of job for 10 years. And then you also have to demonstrate that you've met all the requirements of the program.

AMY: So let's take these requirements one by one you've said that you've got to work in the right kind of job, what does that mean?

HEATHER JARVIS: So the right kind of jobs are all full-time paid positions for the government, also all full time paid positions for 501(c)3 nonprofit organizations, plus certain other positions, like full time AmeriCorps and Peace Corps positions there are just a few nonprofit jobs that are not for organizations that have 501(c)3 status that may also qualify. This is a sub-set called public service organizations.

But there are no for profit entities that will qualify as public service organizations.

So it's government, it's 501(c)3 nonprofit, and it's a few other positions as well.

AMY: And how would you document your employment status?

HEATHER JARVIS: Borrowers will have to submit a certification of their employment at some point, right now the form borrowers are going to have to use is not ready but no one can earn any forgiveness until 2017 at the earliest. But there will be a form that folks can use sooner then that, in fact, we'll be able to submit it on an annual basis starting probably toward the first part of 2012.

Each payment you make has to be while you're in the right kind of job, that doesn't have to be the same job.

And you may also have periods where you are not working, or you're working in a position that doesn't qualify and that's okay too, the qualifying payment do not have to consecutive. So it's alright if there are breaks in payments that count toward your forgiveness.

AMY: A second requirement of the program is that you must have taken out the right kind of student loans. What are the right kind of student loans? Federal direct?

HEATHER JARVIS: Yeah, that's right. So it's really important for people interested in public service loan forgiveness to understand that only federal direct loans are eligible for public service loan forgiveness. So what is a federal direct loan?

Well, a federal direct loan is a federal student loan like a Stafford loan or a federal grad plus loan or a consolidation loan so it's a federal that was originated by the federal government through the federal-direct loan program. Now if you're in school today in 2011, you're borrowing Stafford loans, federal grad plus loans, consolidation loans form federal direct automatically that's the only program in town anymore.

But a year ago and farther in the past there were two different sources of federal student loans so you might have gotten your federal student loan from the federal direct program or you might have gotten it through a different program called the federal family education loan program or the FFEL program and that's fine, but if you did, then you need to take a specific action in order to make that loan eligible for public service loan forgiveness. So borrowers with FFEL loans must consolidate or re-consolidate into the federal direct loan program.

AMY: How difficult is it to do that?

HEATHER JARVIS: Most borrowers have no difficulty qualifying for a consolidation loan. There is no credit check or anything like that. But you do have to fill out some forms so there are some hoops to jump through. It's not tricky but it does require a process.

So the website is LoanConsolidation.ed.gov and that's the federal direct consolidation site. And you'll see there that you have to be able to provide a lot of specific information about your student loans.

So the first thing people should always do when thinking about their loans is gather up the information and that's best done on the National Student Loan Data System or NSLDS.ed.gov so get the information about your loans and then you can complete the consolidation process and this is important because only federal direct loans are eligible for public service loan forgiveness.

And, Amy, it literally keeps me up nights just thinking of people who are working in public service positions right now and who could be making payments towards forgiveness of their student loans but who are not simply because they haven't gotten the information that they need to consolidate into federal direct.

AMY: And so then there's another kind of loan which are just private loans that would be like if I went to my local credit union and they had a student loan product, which they don't, but if they did, and I got a loan through them, that would never count. Like I couldn't consolidate that through federal direct right?

HEATHER JARVIS: Yes, that's right, so there are these private loans, commercial loans, or alternative loans that cannot be eligible under any circumstances. But don't assume that because you have a loan from a bank, like citibank that it is necessarily a private student loan it may be or it may be one of those FFEL loans that we talked about as being a federal loan that could be consolidated into federal direct. So it's important to check and be sure.

AMY: So okay, so let's say, this program went into effect in 2007?

HEATHER JARVIS: Yes that's correct October 1st of 2007.

AMY: So let's say that starting in 2007 I've been paying back my student loan, which was a FFEL loan and so that's four years of paying with the right kind of payment, which we're still going to talk about, and the right kind of job because idealist is a 501(c)3, but now, in 2011, I'm consolidating my FFEL loan into federal direct will these past 4 years of re-paying my FFEL loan count toward public service loan forgiveness?

HEATHER JARVIS: No, they would not. It is not possible to make a payment that counts toward forgiveness on a FFEL loan; you have to get all the pieces right at the same time.

So you have to make the right kind of payment on the right kind of loan while you're in the right kind of job in order for the payment to count. 2 out of 3 isn't good enough.

AMY: Okay, so if you were a job seeker right now with student loans the first thing to do might be to go ahead and make sure your student loans are direct loans while you're still looking for a job in the hopes of getting like a nonprofit, or another qualifying job.

HEATHER JARVIS: Yeah, first thing you should do is go ahead and find out what kind of student loans you've got and see whether it makes sense for you to get started on the consolidation process. Um, but if you just got out of school you may still have some of your grace period left and if you consolidate straight away that will put your loans into repayments.

So you'll want to be aware of that timing issue. But then yes you'd want to be in federal direct with your loans as soon as you started working full time in public service to get started on forgiveness as soon as possible.

AMY: Okay. Are there any other things people should consider as far as timing and consolidation?

HEATHER JARVIS: Well, the other thing people want to think about is you cannot consolidate while you're still in school. There was a period of time when you could do that, but at this point you need to be out of your school program before it's appropriate to consolidate and it takes about 60-90 days for the consolidation to go through.

AMY: Alright, so the final requirement of public service loan forgiveness is that you have to make the right kind of payment, what does that mean?

HEATHER JARVIS: So the repayment plan that most people in public service will need to and will want to choose is income-based repayment. And under income-based repayment, your payment amount is tied to, you guessed it, your income.

AMY: So the right kind of payment is income-based repayment — because, after 120 full student loan payments, you wouldn't have any outstanding balance to forgive.

But with income-based repayments, you are paying less per month, so that after 120 payments loan forgiveness is still possible.

And the income based repayment program is closely related to public service loan forgiveness but because it's complex in it's own right.

We are going to talk about that more in Part Two of this show. So listeners, if you're interested about income-based repayment which you probably should be, check out Part Two of this same show.

So just focusing on public service loan forgiveness, Heather are there other things people need to be aware of to make the program work for them?

HEATHER JARVIS: So people need to be aware that there will be paper work to submit, and there will be documents to keep track of, so recall that you earn public service loan forgiveness by making the right kind of payments, on the right kind of loans, while you are in the right kind of job and you have to have shown that you did that 120 times.

So it will be up to the borrower to show that he or she worked in qualifying employment when making these payments. And so you will have to prove your income.

As we said there's going to be a form that you will need to submit and there will also be a forgiveness application and borrowers should be aware that they must make these qualifying payments on time, if a payment is 15 days or more late, it won't count towards loan forgiveness, and you have to remain in your qualifying public service job while your loan forgiveness application is processed. It's funny you actually have to be employed in public service not only for the 120 months but at the moment the forgiveness is granted.

AMY: Oh, interesting.

HEATHER JARVIS: Yeah, so don't say take this job and shove it as soon as you've reached that 120th payment, you've got to wait to get that loan forgiveness document in your hand before you run off, to you know, the islands.

AMY: (Laughing) Unless you're running off to the islands as the Peace Corps volunteer?

HEATHER JARVIS: That's true. That's a good point. People do need to be careful about these little details because there are many and they matter.

AMY: So, how about as a wrap up, would you mind reiterating the 5 steps to easy public service student loan forgiveness.

HEATHER JARVIS: Sure, the first thing you have to do is make the right kind of payments. Number two - on the right kind of loans. Number 3 - while you are in the right kind of job. Number 4 - 120 times, and number 5 - you have to prove it.

So you've gotta make the right kind o payment, which are income based repayments for almost everyone, on the right kind of loans, which are federal direct loans only, while you are in the right kind of job, which is full time paid work for the government or a 501(c)3 nonprofit, plus certain other positions including full-time AmeriCorps positions and Peace Corps positions and you've got to do that 120 times, which it takes 10-years or longer to do and you've got to do it by demonstrating that you've met all the requirements of the program and by submitting whatever forms you are asked to submit by the department of education.

AMY: Well, thank you Heather and I really encourage people to go to your website.

HEATHER JARVIS: Thank you Amy. I appreciate it.

AMY: Okay, bye.

HEATHER JARVIS: Bye.

AMY: Alright Idealist listeners, if you want to hear more from this interview, check out Part Two on income-based repayment.

Meet Heather in person at the Idealist grad fair in Chapel Hill. You can learn at Idealist.org/gradfairs.

You can also watch a webinar featuring Heather and learn more about financing your grad school education at the idealist grad school resource center at Idealist.org/gradschool.

I'm Amy Potthast, thanks for listening. To find more good things to do go to Idealist.org. Today's show was produced with the help of Millicent Zimdars. If you have enjoyed our podcast please show your support by going to itunes and leaving a review and a rating of this podcast and others you've liked. You can also send us feedback to podcast@idealist.org.


Transcript for Student Debt Relief, Part Two: Income-Based Repayment with Heather Jarvis

Below is the transcript for our show "Income-Based Repayment with Heather Jarvis." You can listen to the show here.


AMY: Welcome to the idealist grad-school podcast where together we explore grad school for the public good.

I am Amy Potthast director of graduate education programs at Idealist. This episode of our grad-schools podcast is Part Two of a two-part series on student debt relief programs.

On this episode I'm chatting with student debt relief expert Heather Jarvis of AskHeatherJarvis.com, about income based repayment.

Income-based repayment is available to all federal student loan holders whose student loan debt is more than their income can bear, including people who are not working in public service, as well as people with almost no income, like AmeriCorps members and Peace Corps Volunteers.

Meet Heather in person at the Idealist Grad Fair in Chapel Hill. You can learn more at Idealist.org/gradfairs.


AMY: Heather Jarvis, welcome back to Part Two of our series of podcasts on student loan relief.

HEATHER JARVIS: Thank you.

AMY: So in Part One of our show, we talked about student loan forgiveness, which some people can qualify for and get the remainder of their student debt wiped clean after they meet certain requirements.

And we said that they have to make 120 of the right kind of payments, on the right kind of loans, while working in the right kind of jobs.

And in Part One we talked about what loans and jobs qualified for public service loan forgiveness.

On this episode of the podcast, which is Part Two, we are talking about the right kind of payments.

Heather can you tell me what counts as the right kind of payment to choose for public service loan forgiveness?

HEATHER JARVIS: So the repayment plan that most people in public service will need to and will want to choose is income-based repayment.

Income-based repayment is a fairly new repayment option and it's unique in several ways. It provides a way for people who have relatively high debt in comparison to their income to get an affordable, reduced monthly payment, and under income-based repayment their payment amount is tied to, you guessed it, your income, your income and your family-size, rather than on how much you owe.

So, for example, if you have an income of around $40,000 and your a single person without any dependence or without a spouse, you would pay about $300 a month on your student loan.

And that would be the case whether your debt was $50,000 or $100,000 or even more on your loan, so it's based, as I said on your income. And your income is defined as adjusted gross income as reported on your federal tax return so for most people that may be, essentially your salary, although there are certain deductions and certain additions to income to arrive at your adjusted gross income on your tax return.

AMY: And so some other considerations are family size and whether or not you're married. So, for example, I'm married and I have two little kids. What kinds of things do I have to think about if I want to make the right kinds of payments?

HEATHER JARVIS: So, Amy, you're going to need to think about whether to file your taxes jointly or separately from your husband.

A lot of us married people file our taxes jointly and we do that because we get access to certain tax benefits like paying at a lower tax rate typically, and having access to deductions like the student loan interest deduction.

But we decide whether to file jointly or separately.

And something that married borrowers ought to be aware of is that if you file your taxes jointly with your spouse, then you must use your joint income for determining your eligibility for income based repayment and for determining your payment amount. So the only way to separate your income from your spouse's income is to file your taxes separately and that can make a big difference to your student loan payment.

So I really urge people who are in public service, especially those with high student debt, and especially those whose spouses also have debt, or are also in public service, to contemplate and consider carefully whether it makes sense to file separately because for some folks it really will.

They are likely to pay more in taxes, but they are also likely to pay sometimes substantially less in student loan payments and have the ability to earn sometimes substantially more in public service loan forgiveness.

And you also asked, Amy, about your family size and that's going to have an influence as well.

So, because you have two children and a husband, your family size is 4 and so more of your income is protected and not available to pay towards your student loans. So the more kids you have, the less you pay on your student loans.

Although in my experience the more you pay for other things, like sneakers.

AMY: (laughing) Right, it doesn't exactly give you a free-pass but there's a logic to it. So was there anything else you wanted to add about the right kind of payments?

HEATHER JARVIS: Well, maybe two things to mention.

One is that you have to qualify to choose income based repayment in the first place, it isn't available to every single borrower, you have to demonstrate whats called a partial financial hardship, and that just means you have to have a debt to income ratio that is sufficiently dramatic to cause you to need access to a reduced payment.

So kind of a simple rule of thumb is if you owe more on your student loans than you earn in a year you're very likely to qualify to choose income-based repayment and at the lowest earning levels you can earn substantially more than you owe and still qualify to choose income based repayment.

But if you earn $100,000 a year and you only owe $20,000 on your student loans you're not going to eligible for income-based repayment, which will essentially mean that you don't end up getting any public service loan forgiveness.

AMY: Because by the time your 120 loan payments go by, your loan is taken care of.

HEATHER JARVIS: That's exactly right.

AMY: Interesting. So there's not really that much of a conversation about public service loan forgiveness outside of the conversation about income-based repayment, essentially.//

HEATHER JARVIS: That's right. So income based repayment and public loan service forgiveness are separate and many people who benefit from income based repayment will not be in public service. In fact, many people who need income-based repayment will be out of work or are part-time employed or have some other difficult financial circumstance.

But nearly everyone who will earn public service loan forgiveness will also need to choose income-based repayment.

AMY: So one big, big difference between income-based repayment and public service loan forgiveness in terms of paper-work and all that stuff is that IBR, income-based repayment, is available right now, with a federal direct loan.

You don't have to wait 10 years to qualify for IBR. You could get the paper work right now and fill it out and possibly see some relief each month with how much you are paying on your loan.

HEATHER JARVIS: Yep. That's exactly right. Income-based repayment is available for you right now and you don't have to wait until you have a public service job to choose income based repayment. Certainly if you're a job seeker, using the tools on idealist, and other places to find your dream public service job, income based repayment may be just what you need to tide you over and make sure you can afford your loans while you're waiting for that great job.

AMY: So if you're in IBR and you get a raise and your income goes up, does that disqualify you from IBR.

HEATHER JARVIS: No it doesn't. So you have to have that ratio and show the partial financial hardship in order to choose IBR in the first place. But once you're in IBR you could have an income jump that would change your debt to income ration and that doesn't mean you're going to get kicked out of IBR, it just is going to effect the payment amount because each year you have to demonstrate your income and your payment amount will be adjusted based on changes to your income so you're not going to be thrown out of IBR but you will see your payment rise as your income rises. That adjustment is going to be made annually.

AMY: And, but if you lost your job or you switched careers to a much less lucrative career within public service, or not, your, that monthly payment could be readjusted downwards too? I guess.

HEATHER JARVIS: Yeah, that's right.

And it's also possible that you can have your payment adjusted on your impetus. So if you find yourself having lost your job or having had a reduction in income you can submit an alternative documentation of income form.

These forms are available on the department of educations website and you can show them that your income has changed and you may be able to accelerate the recalculation process in that instance.

It's a little unclear at this point exactly how they'll be handling such requests.

Um there's another type of loan forgiveness that's available for people in income-based repayment.

Some people will earn public service loan forgiveness, because they meet all the requirement.

Others who are in income-based repayment will not qualify for public service loan forgiveness and there are a lot of reasons that might happen most likely, probably because they're not in public service for ten years. But other people will perhaps become, God forbid, unable to work or something like that

But income-based repayment has its own forgiveness provision that is not tied to employment and does not require any public service at all. But that loan forgiveness takes 25 years to earn so borrowers in income based repayment if they make payments for 25 years and they still have money owed on their loans then they can earn forgiveness after 25 years.

AMY: Okay. So if you went to college, a really expensive college, and you made IBR payments for 25 years and you still had student loans that you haven't paid off yet, then the government would forgive your debt, but it still has to be federal direct loans, right?

HEATHER JARVIS: Well, actually, even for IBR forgiveness you can have any kind of federal student loans. So it's still not the private loans but it doesn't have to be federal direct, it can be federal direct or one of those FFEL loans that people may have gotten some years ago.

But public service loan forgiveness has to be a federal direct loan.

It's not even really the case that like you have to be super super broke or have gone to a super, super expensive school. It's really more and more the case that many people would have taken 25 or 30 years to repay their loans under any circumstances. And what's nice about income-based repayment is that, if you do run into periods of low pay or other circumstances that you don't anticipate, it has this protection and this forgiveness provision, in the event that your not able to retire your student debt on your own after 25 years.

AMY: One thing I kind of want to talk about is just any, any kind of special information about AmeriCorps, Peace Corps, what should people who are participating in national service keep in mind and where can they learn more related to their specific circumstances?

HEATHER JARVIS: Well, good question Amy, people who are working in a full-time AmeriCorps position need to decide whether or not to take advantage of the forbearance that's available to them.

So you don't have to pay on your student loans while you're doing that. If you choose to accept the forbearance [option], the government will pay your interest for you while you're doing your service, and there's definitely something to be said for that.

On the other hand, because the employment may qualify as part of public service, some borrowers would be better off forgoing the forbearance and choosing income-based repayment.

Especially because, AmeriCorps service members do have such low incomes. They may be able to make a very low payment under income-based repayment, sometimes even as low as zero, and have the time during their service count toward public service loan forgiveness.

AMY: Whoa, whoa, whoa— so you can be an AmeriCorps - or like Peace Corps where my monthly salary was $100 - and pay, nothing? That counts as a qualifying payment?!

HEATHER JARVIS: Yup. It's great news. It really is true. In fact, we fought very hard for this during the regulatory process because there are some people whose incomes are low enough that the calculated amount due under income based repayment is zero. And it has been determined that a zero dollar payment counts as a payment because that's how much the program has determined you can afford to pay.

AMY: So do you actually have to send them something that says this is my zero dollar payment every month?

HEATHER JARVIS: No, but you want to be sure that they've sent you something that says your payment amount due under income based repayment is zero.

Um and actually, people whose payment is calculated as $5 and below will be considered to have a zero payment. And people whose payment is calculated between $5 and $10 will have a $10 payment. And everyone else will have the payment that is properly calculated for them.

But so AmeriCorps folks and Peace Corps folks need to think about hey, income-based repayment might be better for me than a forbearance.

And then AmeriCorps people also ought to think about how to best use their Education Award because, after qualifying service in AmeriCorps, people are able to earn an Education Award. And you can use it all at once, or you can direct it to be used in more than one smaller payment and the way you choose to handle your education award will also impact the number of qualifying payments toward forgiveness.

So it's very complicated potentially for AmeriCorps participants and so I encourage them to go to my website for more information. I actually have some very specific guidance for the AmeriCorps crowd.

AMY: And there's IBRinfo.org, which you mentioned earlier. Are there any other resources people should be referring to in terms of the right kind of payments or more details about IBR?

HEATHER JARVIS: So there's some more stuff on my website as well. ibrinfo.org is great. There's also a terrific calculator Mark Cantewitz on finaid.org website to do some calculating.

AMY: Well thank you so much Heather for your time and for explaining this and I really encourage people to go to your website.

HEATHER JARVIS: Thanks so much Amy. I appreciate it.

AMY: Okay, bye.

HEATHER JARVIS: Bye.


Hey, Idealist podcast listeners, want to hear more from this interview?

Check out Part One on public service loan forgiveness.

Also just as we were wrapping up editing this show, Obama made an announcement about changes to the way people pay their student loans to learn more about those changes and how they might impact you, please go to AskHeatherJarvis.com for detailed analysis.

Meet Heather in person at the Idealist grad fair in Chapel Hill. You can learn at Idealist.org/gradfairs.

You can also watch a webinar featuring Heather and learn more about financing your grad school education at the idealist grad school resource center at Idealist.org/gradschool.

I'm Amy Potthast, thanks for listening. To find more good things to do go to Idealist.org. Today's show was produced with the help of Millicent Zimdars. If you have enjoyed our podcast please show your support by going to itunes and leaving a review and a rating of this podcast and others you've liked. You can also send us feedback to podcast@idealist.org.