iStock / Getty Images

En español | Young people getting started in their careers may be the poster children for college debt, but a growing percentage of older Americans are being bogged down by student loans.

Of the $1.6 trillion in student loan debt owed by Americans in 2020, people 50 and over accounted for about $340 billion, up from $47.3 billion in 2004, according to the Federal Reserve Bank of New York.

Such financial obligations can put a damper on retirement savings, says Ben Reynolds, founder of “Sure Dividend,” a newsletter for long-term investors. “People close to or in retirement who are unhindered with student loans don’t have the burden of maintaining those monthly payments, freeing up more money for retirement accounts and investments,” Reynolds says.

One way to relieve some of the burden is through the Public Service Loan Forgiveness (PSLF) Program, which lets borrowers who work in public sector jobs — such as government, public education and law enforcement — have their outstanding loans forgiven after they have made 10 years’ worth of payments. Here’s what you need to know to take advantage of public service loan forgiveness.

Understanding the requirements

In order to receive student loan forgiveness, you’re obligated to make 120 on-time qualifying payments, meaning the payment must be for the total monthly amount owed and paid within 15 days of the due date. Payments don’t have to be consecutive; for example, you can pause payments via deferment or forbearance and still be eligible for forgiveness.

While you typically don’t get credit for months you don’t make a payment, that’s not the case during the pandemic. To provide relief to borrowers during the COVID-19 crisis, student loan payments and interest have been suspended until Sept. 30. However, those months will count toward PSLF even if you don’t pay a cent.

You’ll also need to have an income-driven repayment plan – one in which your monthly payment is determined based on the amount of money you make. However, if some of your payments were not made under a qualifying plan, you may still be able to have your loans forgiven, thanks to an expansion of the program called the Temporary Expanded Public Service Loan Forgiveness (PSLF) Program, passed by Congress in 2018.