Public Service Loan Forgiveness

[goosefraba1]

This is a little different than other Student Loan payoff strategies.

I am a Physician Assistant working for a qualified NPO. As such, I am in a program called Public Service Loan Forgiveness wherein I enroll in either Pay as You Earn or Income Based payments. 120 on time payments and you are done. Any remaining debt is forgiven. Thus far, I have 72 payments remaining. I pay $1080 a month (on $160k in loans) currently. If I were to have tried to pay this off in 10 years regular way, my payments would be around $1,800 a month. The other bonus, is that the payments can actually decrease if you have a child (we have our second on the way).

Anybody else enrolled in this program?

[EarlyInJourney]

Yup, I'm in PSLF.  I (should) have about 3.5 years left, working for a public library. 

Yeah, the normal "pay off the student loans ASAP" strategy really does not apply if you're in the program!  I'm currently paying about $400/mo on a $56K loan balance. 

The pay as you earn formulation is another big reason I'm socking away as much as I can into a tax-deferred 457 B - trying hard to keep my AGI (and thus my loan repayment) as low as possible.  I'm still dreading the new monthly amount next year (don't know it yet), because I got married this summer, and my wife makes more than I do.  Unless we file taxes separately (which may or may not make sense), I'm looking at a steep increase.

Hmm, from what you say about child-bearing decreasing the payment amount, my wife and I clearly need to start breeding, ASAP... ;-)      (seriously, though, that's next on the ol' bucket list)

I am seriously annoyed with Fedloan (my loan "servicer").  They move -really- slowly in dealing with or responding to -anything-.  They need to hire twice as many employees, or just come out and admit they're trying to screw over as many people as they can get away with...

[thesavoryhello]

I'm working on PSLF too, it's my third year of payments while working in low income public schools. I'm currently paying $103/month on $115K of student loans. If everything works out, I will pay significantly less than the full balance of my loans, even if it takes me more than ten years to do ten years of public service.

My biggest fear about the program is finding out that I somehow don't qualify, despite getting my payments certified each year. It seems like some of the people from the first wave of public service forgiveness who didn't originally qualify have now been able to get their loans forgiven, but not all.  If I weren't doing PSLF I would be making much bigger payments. As it is, my loans are accruing a lot of interest. As someone who never thought they would even take out a loan, I hate knowing that in the back of my head. I think it would probably be better if I just didn't think about it.

[SwordGuy]

Have all of you actually verified that you've received all the payment credit you believe you should have?

I've read quite a few incidents where people got cheated out of years of payments.

Double-check and fix any problem as early as possible.   Then verify each year.

[goosefraba1]

Have all of you actually verified that you've received all the payment credit you believe you should have?

I've read quite a few incidents where people got cheated out of years of payments.

Double-check and fix any problem as early as possible.   Then verify each year.

Yes, I still call in every 6 months or so to make sure that everything is going as planned.

The problem that people were having before was when they would pay through their original creditor and then wait until the very end to switch to Fedloan servicing. Then they would go through the headache of showing evidence of employment through a 501c3 x 10 years. From everything that I have read, as long as you are making the monthly payments AND have switched to Fedloan servicing, that it is pretty smooth sailing.

Now what I have not heard as of yet is whether or not the forgiveness counts as taxable income that last year.

[rubybeth]

Have all of you actually verified that you've received all the payment credit you believe you should have?

I've read quite a few incidents where people got cheated out of years of payments.

Double-check and fix any problem as early as possible.   Then verify each year.

Yes, I still call in every 6 months or so to make sure that everything is going as planned.

The problem that people were having before was when they would pay through their original creditor and then wait until the very end to switch to Fedloan servicing. Then they would go through the headache of showing evidence of employment through a 501c3 x 10 years. From everything that I have read, as long as you are making the monthly payments AND have switched to Fedloan servicing, that it is pretty smooth sailing.

Now what I have not heard as of yet is whether or not the forgiveness counts as taxable income that last year.

The amount forgiven is not taxable: https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service/questions

Be sure you keep track of all documentation for this program. I am very concerned that it will be cut. I hope that people are grandfathered in, like my sister who is midway through making eligible payments.

[Car Jack]

If you have not watched the news, this is quite disheartening.

https://www.marketwatch.com/story/this-government-loan-forgiveness-program-has-rejected-99-of-borrowers-so-far-2018-09-20

99% of PSLF applicants are rejected.

[ringer707]

I'm also on PSLF. I'm a prosecutor with $150,000 in loans. I'm currently paying $300/month and am three years into payments. I recertify every year and so far have had no issues.

I have seen the recent news articles about a lot of people getting rejected, however it seems like in a lot of those cases it's been people who have not been on the correct payment plans, haven't actually made 120 payments and just submitted their paperwork by guessing they were close, etc. I haven't taken many of the recent news reports as an indication that my loans will not be forgiven. I have read anecdotal reports from people on Reddit indicating that they did get their loans forgiven with the program. I think we'll see a lot more about it now that we're moving beyond the first year of actual forgiveness.

[goosefraba1]

Thank you Ruby! Yes, I believe that the program will be scrapped at some point, but I couldn't imagine it to be legal not to honor the service agreement. Staying hopeful that it all gets approved in the end.