Public Student Loan Forgiveness...is this true?

[This Wife's Life]

A co-worker told me at work today that the government will forgive student loans for those who have made 120 consecutive on time student loan payments and work for a non-profit organization(s) during that same time frame...is this for real? Are any of you planning on doing this?

https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service

[Knapptyme]

Yes, it's real. I looked into it, but because I'd rather become a SAHD, I may never qualify. It's not an option for me until October 2018, and I have to keep working there until all the paperwork goes through. By then, it's only worth about five grand. The tradeoff is paying for daycare which is much more than five grand. It's not worth it in my scenario, but I'm open to filing for it if applicable and have advised fellow colleagues likewise.

[Lski'stash]

Yes, this is true. I am enrolled in the IBR plan currently, which limits my payments to 10% of my AGI. Because I can lower my AGIby putting lots of money into my 457 account, I pay $200 a month for loans totalling more than $64,000.

The pros: it's cheap,and should get us to FI more quickly, as long as it works.

The cons: it's risky. Especially considering the new Presidential regime. I'm also totally stuck in my field for a whike, which would really suck if I ever started to hate my job.

[Paul der Krake]

If a program is advertised on a .gov website, it is safe to assume that it is not a hoax.

There have been a couple threads on this. You will probably want to read this one.

I am of the opinion that the lack of flexibility and uncertainty makes this a good option only for the heavily indebted with poor earning prospects.

[obstinate]

I would not count on it still existing after the next four years are done, but we'll see.

[mountains_o_mustaches]

It's real, but it may not be the smartest financial move depending on your income-based repayment.  120 payments is 10 years of payments.  At my current income I would more than pay back the initial loan, plus about an equal amount in interest if I spread the payments out over 10 years, so obviously no worth it.  If you have a low income it can save you money.

[Miss Piggy]

A social worker friend of mine is doing this program. Her 10-year clock started when she was approved for the program, NOT when she started making payments or when she started working for non-profits.

[mountains_o_mustaches]

A social worker friend of mine is doing this program. Her 10-year clock started when she was approved for the program, NOT when she started making payments or when she started working for non-profits.

This might be true of other loan forgiveness programs (there are some that will forgive loans if you work in underserved areas for instance), but this is not true of PSLF.  It is based on # of payments, not time working or time since applying for PSLF.


Here's straight from the source (https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service):
"The Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer."

[NoStacheOhio]

A social worker friend of mine is doing this program. Her 10-year clock started when she was approved for the program, NOT when she started making payments or when she started working for non-profits.

That may be when she signed up for an income-driven repayment plan, or she may have needed to consolidate to qualify.

[skeeder]

When I looked into it, it would cost me more in interest than paying the damn thing off. 

Make sure to do your calculations prior to jumping in.