Student Debt 101: You Asked, We Answered

By Jessi Morales
This first appeared on

Do you have federal student loans? Are you working on paying those student loans back? Does the process seem daunting and confusing? If you’re violently nodding your head yes right now, don’t worry. You’re not alone! Even though the process may seem confusing, it doesn’t have to be scary.  The Department of Education, the Consumer Financial Protection Bureau (CFPB), and your student loan servicer (the company that handles the billing and manages your federal student loans on behalf of the Department of Education) are all just a phone call or click away. Their job is to figure this stuff out for you so you don’t have to!

While all the aforementioned groups should be able to answer your questions, sometimes it’s tough to even figure out what questions you should be asking. Because of that, we’re compiling some of the most commonly-asked questions about student debt—crowd-sourced from folks with student debt.

For more tips and updates on student debt, follow @genprogress and @higherednotdebt on Twitter.


What should I do if it feels like I am only paying down interest?

When you pay back your student loans, your payments are applied in the following order:

1) Late charges (if you have any)
2) Accrued interest – Your interest is building up every day.  Accrued interest is the amount of interest that has added up between your last payment and the time that your current payment is due.
3) Principal amount – Whatever amount remains after covering the interest that has accrued (added up), will go towards your principal balance.

If you offer to pay more than your required payment that month, you can ask your servicer to apply that extra money to your principal balance, otherwise it will be counted towards your future (the following month’s) payment.

Income-Driven Repayment (IDR) Programs:

Can I still qualify for income-driven repayment programs if I don’t have a job?

Yes! If you do not have a job you may still be eligible for an income-driven repayment program, and your payments could be as little as $0. These payments count as qualifying payments toward PSLF progress as well as towards your IDR plan progress. Having a payment of $0 is better than loan deferment or forbearance. If your servicer tells you they need to put you on deferment or forbearance because of a mistake they made with calculating/processing your information, make sure to ask about how that interest may capitalize or affect your loan amount.

Public Service Loan Forgiveness (PSLF):

If I am paying back my student loans on an income-driven repayment program, can I also qualify for public service loan forgiveness?

Definitely! Think about Public Service Loan Forgiveness (PSLF) and income-driven repayment plans as completely different programs. So you can (and often should) take advantage of both income-driven repayment options and public service loan forgiveness.

Income-driven repayment programs determine your monthly payment based off of your income. If, on top of that, you’re also enrolled in a PSLF program, after a certain number of months your loans will be forgiven. In fact, every on-time payment you make (you have to pay the total amount shown on your bill, if that is zero dollars, then those count too) on an income-driven repayment plan, while working for an eligible employer, counts as a qualifying payment towards your forgiveness.

Who exactly is eligible for PSLF? Are all teachers and nurses eligible?

In order to qualify for PSLF you must be considered a full-time employee, meeting the requirements defined by your employer (those requirements must be an annual average of at least 30 hours a week).  According to the Department of Education: “If you are employed in more than one qualifying part-time job at the same time, you may meet the full-time employment requirement if you work a combined average of at least 30 hours per week with your employers.”

If you’re a full-time employee, the next step is determining if your organization qualifies as a public service organization. Here’s a list of organizations that qualify, according to the Department of Education:

  • A government organization (including a federal, state, local, or tribal organization, agency, or entity; a public child or family service agency; or a tribal college or university)
  • A not-for-profit, tax-exempt organization under section 501(c)(3) of the Internal Revenue Code
  • A private, not-for-profit organization (that is not a labor union or a partisan political organization) that provides one or more of the following public services:
    • Emergency management
    • Military service
    • Public safety (EMS, firefighter, etc.)
    • Law enforcement
    • Public interest law services
    • Early childhood education (including licensed or regulated health care, Head Start, and state-funded prekindergarten)
    • Public service for individuals with disabilities and the elderly
    • Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations)
    • Public education (including faculty at a public college or university)
    • Public library services
    • School library or other school-based services

If you’re unsure about whether or not you qualify for PSLF, contact your loan servicer.

I was a teacher for six years, switched to advertising for five years, and then returned to teaching where I have been for five years. Am I eligible for Public Service Loan Forgiveness?

Broadly speaking, payments toward public service loan forgiveness do not need to be consecutive to count toward your 120 qualifying payments. That being said, only qualifying payments made after October 1, 2007 will be counted. If you are currently a teacher at a public school, the payments you have made within the past five years while employed there may be eligible. Contact your servicer for more information specific to your situation.

What questions should I ask my student loan servicer?

Sometimes it’s hard to know where to start. Here are some questions you might want to ask your student loan servicer:

  • What income-driven repayment (IDR) plan(s) am I eligible for? Which IDR plan that I qualify for would give me the lowest monthly payment?
  • Am I eligible for pubic service loan forgiveness?
  • If the question of consolidation comes up:
    • What is consolidation?
    • How would consolidation affect my interest rates and former payments that I have made?
    • How would loan consolidation affect my time towards having my debt forgiven with             public service loan forgiveness?
      • If you feel the outcome is not a good one, you can ask whether or not you should consider working towards loan forgiveness on the qualifying loans and not include the loans that don’t qualify.
  • What do you have listed as my income when calculating my monthly payments?

What if I feel that my servicer has made a mistake? Who can I contact?

If you believe your servicer has made a mistake or would like to file a complaint against them, you always have the option to file a complaint with the Consumer Financial Protection Bureau.

Generation Progress and Higher Ed, Not Debt do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisers before engaging in any transaction.

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