You are doing a great job as a foster parent.
There is not a doubt about that.
Yet, you are knee-deep in student loan bills that need to be paid off. What relief is there for you as a foster parent?
In this post, we touch on various loan forgiveness programs available to you as a foster parent and we will also look at income-based packages that can be applied towards outstanding student loans.
Sadly, there isn't anything specific to foster parents (but there should be for all the good you do). However, there are various programs that potentially apply and you can take advantage of.
Check out these potential program.
Public Service Forgiveness Program
The Public Service Forgiveness Program (PSLF) is a popular program that forgives the remainder of your Direct Loans once you have made 120 monthly payments on your loan while working for a qualifying employer.
If you work for the government, non-profit organizations or have volunteered for the Peace Corps, Americorps or VISTA, you may qualify for the PSLF.
Other qualifications for becoming eligible for the PSLF are :
- Full-time employment with a qualifying employer
- PSLF only applies to Direct Loans but not lona programs like the Perkins Loan unless you consolidate them into a Direct Consolidation Loan
- On-time payments made on or no later than 15 days after the payment due date each month
- The 120 qualifying payments do not have to be consecutive - an example would be if you were at one point working for an organization that was not considered a qualifying employer. You however need to reach 120 qualifying payments with a qualifying employer to be eligible.
If you think this is a program that would benefit you, you should fill out this form to determine your eligibility
Federal Perkins Loan Cancellation
If you don’t qualify for the PSLF, another program you can take advantage of is the Federal Perkins Loan Cancellation.
This program was designed to ease the burden of student loan repayments on public servants. If you work in any of the following public service positions, you could qualify for the Federal Perkins Loan Cancellation program.
- Firefighter
- Faculty member in a tribal college or university
- Librarian with a master’s degree in library science at a school that qualifies for Title 1 funding or a public library
- Teacher - special education teachers, math/science teachers, bilingual teachers or teachers in fields where there is a shortage and teachers who teach disabled children in a public schools
- Speech Pathologists with a master’s degree working in a Title 1-eligible school
- Medical Technician
- Full-time emoyee of eligible public or private nonprofit child or family service agency which directly provides services to high-risk children (people under the age of 21 who have suffered emotional or physical abuse/neglect or children with severe mental or behavioral disturbances) from low-income families or communities
- Full-time staff member in a pre-kindergarten or child-care program, or in the educational part of a preschool program carried out under the Head Start Act
- Police/Corrections Officer
- Member of the Peace Corps/Americorps/VISTA programs
- United States Armed Forces
Under the Federal Perkins Loan Cancellation program, as long as you qualify, up to 100% of your loan can be cancelled over a period of 5 years.
The catch to this program is that the college you attended is the entity that deems you eligible to receive the benefit.
To find out more information about how to get the process started with this program in particular, we highly recommend you call or visit your school’s bursar’s office or the financial aid office.
Direct Loan and FFEL Program Loan Forgiveness
If you work as a full-time teacher in a designated school or education agency that serves children from low-income families for five consecutive years, you can qualify for the Direct Loan and FFEL Program Loan Forgiveness program.
This program gives you up to $5000 to put towards Direct Subsidized and Unsubsidized Loans and/or Federal Stafford loans.
Repayment Programs Based On Your Income
Now let’s take a look at loan repayment programs that work with your income. While these are not forgiveness programs, they can provide you some financial relief.
Revised Pay As You Earn (REPAYE)
- Payments are 10% of your monthly discretionary income
- How much you pay is adjusted based on income changes
- You can receive this benefit for up to 25 years
- Applies to Direct loans, Direct PLUS loans made to students and Direct Consolidation loans that do not include Direct or FFEL loans made to parents
Pay As You Earn (PAYE)
- Payments are 10% of your monthly discretionary income
- Payments are adjusted based on income changes
- You can receive this benefit for up to 20 years
- Applies to Direct loans, Direct PLUS loans made to students and Direct Consolidation loans that do not include Direct or FFEL loans made to parents
Income-based Repayment (IBR)
- Payments are 15% of your monthly discretionary income
- Payments are adjusted based on income changes
- You can receive this benefit for up to 25 years
- Applies to Direct loans, Federal Stafford loans, all PLUS loans made to students and Direct Consolidation loans that do not include Direct or FFEL loans made to parents
Income-contingent Repayment (ICR)
- Payments are 20% of your monthly discretionary income
- Payments are adjusted based on income changes
- You can receive this benefit for up to 25 years
- Applies to Direct loans, Direct PLUS loans made to students and Direct Consolisation loans (Direct Consolidation loans given to parents may be eligible under this program)
Standard Repayment Plan
- Payments are fixed at $50 per month
- You can receive this benefit for up to 10 years
- The great advantage of this program is that you will pay less interest over time as compared to the other programs described above
- Applies to Direct loans, Federal Stafford loans, all PLUS loans and Consolidated loans (Direct and FFEL)
Closing Thoughts
Undertaking the noble task of providing a safe haven for children as a foster parent makes you a modern-day saint. You deserve to receive financial respite for your student loans and hope this you find at least one thing on the list we just provided that fits your situation.
Are you a foster parent ? How have you tackled your student loans? I would love to hear about your experiences in the comments.
Sharon says
We have had our three grandchildren placed with us, ages 11, 10 and a new born placed when he was two days old! We had our 11 year old grandson for a year before CPS became involved and officially placed his sister with us; and then the baby in April.
On paper we make a lot, however we are both in our 60s, still work full time, and we both commute one hour each way to work. We pay a nanny $2200 per month for day care and have had to reduce our retirement contributions.
Unfortunately I have $100.000 + of student loans for my MBA. Like I said, on paper I don’t qualify for anything under $1,000 per month. So basically, we don’t know what we are going to do.
Robert Farrington says
You didn’t state how much you make, but there are repayment plan options that can lower your payment. Based on my total guesses, even if you’re making $200,000 per year combined, you can get an extended plan payment about $900 per month.
If you’re only making about $100,000 per month, you can get an income-driven repayment plan that will be around $500 per month. This is based on being married and having three children in your custody.
Income-driven repayment plans have the added benefit of potential student loan forgiveness in the future.
Alyson says
My husband and I are both ‘working’ as full time foster parents with 5 special needs children at home. We have adopted one and are going to work on the next two soon, but as I resigned to help my husband take care of the kids at the end of last year money has been tight. I also have 2 adult kids in college, and my student loan debt just reached $230K. Are there any philanthropists looking to sponsor the work we do with these kids?
Kelly says
Just like the above we are also foster parents. We have had 84 kiddos come through our doors. 1 we adopted 10 years ago and will be adopting another in October and we also have 4 biological kids. I think it is sad that we can’t use our “jobs” as “work” since 2001 there hasn’t been a day that we haven’t had at least 1 extra kiddo here. But that isn’t considered work? But a Lawyer can qualify? That just doesn’t make since.
I am not saying we foster parents should be entitled to special treatment or anything. But believe it or not being a foster mom is the hardest job I have ever had. You “work” 24/7, on call 24/7 having to be ready at the drop of a hat to go pick up a kiddo at the police station. They are scared, they are neglected, they are abused, they don’t know what is going on and they don’t know you, yet they have to come home with and live with you until further notice.
Luckily for me I “only” owe $54,000, but that’s $54,000 I don’t know where I am going to get.