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Student Loan PSLF Program

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Anonymous
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Student Loan PSLF Program

Hi all, I'm new to myFico.  I'm about to start with an employer where I would qualify for the PSLF (Public Servant Loan Forgiveness) program.  My wife and I are also starting to consider buying a home.  My question is, I know that the program once you are successfully enrolled will remove the loans from your credit report.  Does this removal also boost my credit score with the three different bureaus?

Message 1 of 8
7 REPLIES 7
Shooting-For-800
Senior Contributor

Re: Student Loan PSLF Program


@Anonymous wrote:

Hi all, I'm new to myFico.  I'm about to start with an employer where I would qualify for the PSLF (Public Servant Loan Forgiveness) program.  My wife and I are also starting to consider buying a home.  My question is, I know that the program once you are successfully enrolled will remove the loans from your credit report.  Does this removal also boost my credit score with the three different bureaus?


It does not remove them from your report, it combines them all.

 

You may actually take a hit since the old loans are closed and new one is opened for the total amount.

 

Although, I think student loans are mostly passive.

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Message 2 of 8
Anonymous
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Re: Student Loan PSLF Program

Hi bobbabooie! No, it doesn't actually remove it, but that can actually be a good thing. For credit scoring, o e of the components is mix of types of credit, and a student loan is an installment loan. If you don't have another installment loan like an auto loan, then keeping the student loan on your report will help your scores. 🙂
Message 3 of 8
Anonymous
Not applicable

Re: Student Loan PSLF Program

I enrolled in the program ~6 months ago. The loans are not removed from your reports, nor are they consolidated unless you consolidate them. My loans moved providers, but the dates on my CR are still the dates I pulled out the loans.
Message 4 of 8
Anonymous
Not applicable

Re: Student Loan PSLF Program

I'll also add that my loans have lowered my scores a bit because I'm on an income based repayment plan where my payments don't cover my interest accrued. So my amount owed is higher than the original loan amount. Per Credit Karma, it's causing a little score dip.
Message 5 of 8
dynamicvb
Valued Contributor

Re: Student Loan PSLF Program


@Anonymous wrote:
I enrolled in the program ~6 months ago. The loans are not removed from your reports, nor are they consolidated unless you consolidate them. My loans moved providers, but the dates on my CR are still the dates I pulled out the loans.

They have to be consolidated into Direct Loans or any of the payments you make towards any of them won't count towards forgiveness. So even if you have 2 direct loans and say a pell loan, then any payments you make towards the direct won't count. If you are trying to get this forgiveness then you need to consolidate them all into direct. Does not matter if they are unsub or sub, but they must be direct.

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Message 6 of 8
Anonymous
Not applicable

Re: Student Loan PSLF Program

All of my federal loans are direct loans (I have 7), so no need for consolidation. But if others looking into the program have other types of federal loans, than yes, you would need to consolidate into a qualifying loan.
Message 7 of 8
Anonymous
Not applicable

Re: Student Loan PSLF Program

I'm chiming in a bit late, but here it is.

When you enroll in the PSLF, your loans will be managed by FedLoan Servicing. This might create a new tradeline (s) on your credit report but it should report using the original loan dates, etc.

Your loans will not be consolidated unless you consolidate them. Be very sure you know what you are doing; this actually set many people on the PSLF back years. It's true, the loans involved must be direct loans. However, the loans must be on certain payment plans, the majority of which must be an Income-driven repayment plans but it can also be standard repayment plan. It's not clear how many years on standard repayment will count, so it's best to avoid it if you can.
If you've already been making payments on an IDR plan, but haven't applied for PSLF it doesn't matter. The application you turn into the servicer isn't the actual application. This only gets turned into the Dept of Education at the end of the 10 years, with your documents (including employer certifications). As such, they can count payments you made before you applied with your servicer. If you've already been making these payments, they will get RESET through consolidation. Yes....you will have to start from scratch.
Consolidation itself simply means that you combining 2 or more (or in rehab 1 or more) of your loans. So for example, if you have 6 loans and 2 are not direct loans, it would benefit that person to either exclude the loans from the PSLF or consolidate the 2 into a direct loan. I can't recall off the top of my head whether one of the loans involved is required to be a direct loan already but there is no reason to set more of your loans off track than necessary. They will have two different PSLF plan forgiveness dates.
I could be wrong but I've done a lot of reading on this very issue due to the fact that so few PSLF were approved. It's worth a read if your considering PSLF to research the ways that people were disqualified or delayed.
I can provide links to some of the articles I found if you'd like. I'm open to corrections.
I wish you all the best of luck with your student loans and of you have any questions feel free to ask away.
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