While the availability of other federal student loan repayment plans (e.g., the Income-Based Repayment [IBR], Public Service Loan Forgiveness [PSLF], and other available loan repayment assistance programs [LRAPs]) is obviously encouraged, BJA also endorses coordination by JRJ administering agencies (to the greatest extent possible) of such programs to promote the optimum benefit to the recipient. The following provides an example of how lump sum payments and monthly payments of JRJ benefits may interplay with the PSLF program and may provide an opportunity to improve coordination:
It is BJA’s understanding that in order to be eligible for the PSLF Program, a borrower must make 120 “separate, monthly” payments. When a loan servicer receives a lump sum payment—which is to say, a payment in excess of what the borrower is obligated to pay for the month—the loan servicer assumes that the excess, while immediately applied to reduce outstanding interest and principal on the loan, is intended to cover future installments. When future installments are satisfied, the borrower is no longer obligated to make monthly payments for the number of months for which the installment has been fully satisfied. BJA understands that this may present two problems for individuals who receive both JRJ and PSLF benefits:
The second problem can be remedied by providing application of payment instructions with the payment. Specifically, the payor/borrower could state that they do not intend to apply the excess toward future installments, which will ensure that the borrower continues to be obligated to make future payments over subsequent months. Each loan servicer should provide, on the billing statement, information regarding how the borrower/payor is to provide payment instructions. Therefore, JRJ recipients may be advised (in order to maximize the amount of credit they may receive from the PSLF Program while working in employment that also entitles them to JRJ Program benefits) to provide special payment instructions associated with their JRJ Program award. Borrowers should also be able to provide these instructions for a payment that has already been applied, provided that it is done promptly after the payment is applied.
This example is provided solely for illustrative purposes and should not be construed as financial advice. All grantees and beneficiaries should independently consult with the U.S. Department of Education (and/or other sources) to learn how receipt of JRJ benefits may affect awards through the Public Service Student Loan Forgiveness Program.
Law school, state-based, and employer-based LRAPs have individual policies regarding the effect of receiving benefits from other LRAPs (which may include JRJ benefits in some cases). Applicants are encouraged to contact the LRAP administrators of the programs in which they participate to determine whether JRJ benefits influence eligibility or award amount.
As of 4/3/2018
810 Seventh Street NW, Washington, D.C. 20531
For Government Use Only