Author Topic: Should I Take Advantage of Public Service Forgiveness?  (Read 1695 times)

Travian Nerd

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Should I Take Advantage of Public Service Forgiveness?
« on: August 29, 2016, 09:50:27 AM »
So, I'm entering grad school this fall and taking out loans to do it -- I know big mistake.  But hear me out first:

I finished undergrad with about $26k in debt.  I'm going to grad school for public administration -- and I can't see myself working private sector until I do consulting work after years of experience in nonprofit/public sector jobs.  With that being said, the public service forgiveness route could be a decent out for me.  I estimate I'll take out about $40k in loans for grad school (spending half of that on school and the other half will be dropped into living expenses to open up my budget for more savings/investment).  I have done the math, and if I had a $50k salary (doing about $40k now, and the raise associated with my MPA would be $10-20k annually at best in the public sector) for 10 years, I would only pay about $25k back in debt in the 10 years that are required for the PSF plan (payments are capped at 15% of my income).

So at this point, it seems like any loans I take out will be completely forgiveen if my career path stays on track.  I would essentially get a free $45K in loans to use for living expenses, which in turn opens up savings for retirement.  Am I missing something here?  It feels too easy.


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Re: Should I Take Advantage of Public Service Forgiveness?
« Reply #1 on: August 29, 2016, 10:19:09 AM »
The catch is that you have to stay in public sector employment for ten years. Many people will do better if they don't limit their employment options in that way and commit to repaying their loans in full. But if you really are committed to working in the public sector for that long, it can be a decent deal to partially compensate you for the lower salaries you'll have working in those jobs.


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Re: Should I Take Advantage of Public Service Forgiveness?
« Reply #2 on: August 29, 2016, 10:25:18 AM »
If you want to work in the public sector anyway, then sure, go for it. Just don't take out loans you don't need on the theory that they're going to be forgiven, because there's always a risk that circumstances (for example, being unable to find a public-sector job for some reason) will prevent you from qualifying for the program.


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Re: Should I Take Advantage of Public Service Forgiveness?
« Reply #3 on: August 29, 2016, 11:06:48 AM »
You will only profit from the program IF it doesn't change in the future -- so understand that you're making a gamble on PSLF continuing to be a going concern not only during your 10 year repayment but also through however long it takes you to get through school. There have already been rumblings from the Obama Administration about reducing the amount of debt that can be forgiven, or changing the tax consequences, and this is before anyone has actually qualified for forgiveness. Personally, I think it would be tough to change the program, but I am white-knuckling it through my last 5 years before forgiveness, just in case. If I had the option of paying them off, I probably would.