OT - MGoPSA: Public Service Student Loan Forgiveness
Hey, all. This is clearly off-topic, but I think it can be very helpful to several MGoBloggers out there, myself included.
Has anyone had any experience with the Public Service Loan Forgiveness program?
https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/publi…
Basically, it is this: If you work for a non-profit company or some other identified companies for 10 years and you make a payment on your student loans each month of those 10 years, your remaining federal student loan balance is forgiven (120 qualifying payments).
I'm going through the process of getting started with the program - BUT I should have done this 3 years ago! To all you recent and soon-to-be-recent grads: Make sure you've looked at this. It is surprising how many companies/services qualify. I didn't think my employer qualified so never looked into it. I was wrong and as a result, I might have lost 3 years (and $15-20k) of debt being forgiven.
There's a ton of weird rules. My basic question is: For anyone that's done this, how easy is it to track your qualifying payments? I'm worried about lowering my payments and not hacking away at my debt if I don't get my Ts crossed and Is dotted.
In my situation, I could have been on the Income-Based Repayment plan (which is under $300 per month for me). $300 * 120 = $36000 paid before the remaining balance is forgiven. However, for the first few years I was on other repayment plans and was making extra payments. I thought this was smart - pay down my debt as fast as possible. I've probably paid $20k towards my loans in 4 years, but none of those payments qualify for this program. However, if I knew of this program from the get-go, I would have only ever paid a total of $36k for what was $62k in loans.
For other discussion: Any college debt repayment strategies or resources anyone want to share? For you recent grads, make sure you take advantage of the time you have this summer to look into all your options!
My girlfriend, Ohio State graduate, just says thanks for this information. She is too stubborn to click on the link again. As a graduate of physical Therapy this could help tremendously for the both of us!
Get your Dave Ramsey on. Live on less than you make. Pay them off quickily and be done with them. My wife and I paid off 75K in 37 months making just slightly above the average american household income during that time. Saved 7 years of fooling with these government programs. Who knows if they will even still be around by the time 10 years are up (We both work in qualifying jobs for this program)? Now we have the cash freed up to do some things that we want to do. Is it hard work to sacrifice and get them paid off? Yes, but it is totally worth it!
is that in two years, when I'm done with school, I'll peak at my statemnt, and it will all magically be gone.
I just saved really hard for a few years and paid off my loans. Like literally bought close to nothing.
You still in BigLaw? Retiring early?
Sorry, another thought. Consider the case of the Michigan Promise Scholarship (http://en.wikipedia.org/wiki/Michigan_Promise_Scholarship in case you didn't grow up in MI), consider the stability and reliability of Congress, consider the operational efficiency of the IRS etc., consider the other unfunded liabilities Congress keeps ignoring, and decide how solid of a bet you think it is that the US of A will have your back at the end of the 10 years. Decide how likely it is that whoever owns your loan at that point will be interested in the fact that you only paid minimums, racking up interest, because you had it on good faith that the balance would "disappear" in 10 years.
I don't know about you, but that's a lot of risk for me. If I planned on $20-30K or more of liability disappearing, then it didn't, I would hate to think what that might mean for a family.
I agree, that's why I might hedge my bets: Get in the program and still throw extra at the loans. I would hope, if the program disappears, they'd gradfather those already in the program and let them finish. To not do that would be damn near (if not really) a crime.
Haha, don't forget you're talking about the guys who define what is or is not a crime...
I don't even have to be partisan in the slightest to ask if you feel comfortable trusting your financial future in the hands of the asses in Congress! You're right to attempt program eligibility while still paying ahead on loans.
Another thing folks fail to consider regarding the PSLF - most grads nowadays are job-hopping every 2-3 years for the first decade. I don't think this is all bad, because folks are getting experience and being career-savvy for the most part, contrary to the get-off-my-lawn attitude that youngsters have no commitment anymore. However, let's say you have a killer opportunity with a for-profit or a private school or whatever kind of thing doesn't qualify - do you limit your career to stay in the program? It's something to keep in mind. At a certain point of success, the PSLF could become a public set of the old "golden handcuffs." In particular, if you think you would prioritize career, you may as well aim for radical debt repayment anyway.
I am a big, big fan of killing the mindset that the typical household can or should live with a half-dozen types of debt at all times. It should be more like a business - take on debt intelligently to meet defined goals, and don't carry it longer than necessary.
'living below your means' isn't an exception, it's what the baseline should be. Like working out several times a week. No award, no trophy. It's what you should be doing.
I've been pampered by my parents my whole life...never was forced to take a job, didn't have to pay any part of undergrad, my parents still support me through medical school. And I lived like a king in college, and now in med school I live in an awesome apartment and never have to worry about money.
My girlfriend (and probably by the time I graduate fiance)...her dad was super strict about money, almost excessively so. She worked throughout high school, through almost all of college, and now she makes decent money. But she spends and spends and doesn't really have a concept of saving. Never tracks her expenses, buys whatever she feels like.
It works for us now, but when we combine our salaries once I start residency and have $160k+ of debt, life is going to be very real very fast.
Get into the habit of budgeting NOW.
Doctors are shitty investors, financial planners. And the urge to go out and buy a big house/boat/car will increase as your peer group advances through your careers. All practicing docs have cautionary tales of colleagues who over-extended themselves financially and got to see their personal, professional finances fall apart.
My wife and I had a somewhat similar tale (my folks paid for my tuition (Michigan, Wayne SOM so pretty reasonably priced, but I worked part-time through undergrad for spending money). It took us until PGY3 for me, 2 for her, to start budgeting.
We still try to live like residents as attendings....but this has allowed us to save/invest quite a bit
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You try to live it up to celebrate the end of each unit/rotation.
First thing is to just to put it all down on a spreadsheet. Break it up into categories, how much you are spending for going out/dinner/booze, rent, car, etc.
That was our big eye-opener, how much we spent on food and drink.
Once you become an attending, things (financially) become a lot easier, but would really encourage a bit more financial repression for at least a few years after graduating residency.
I've been (student) debt free for over a decade and have always kept those payments in my budget, just investing the savings. Ended up being a down payment for my house.
When I factored in raises and other guesses of income increases, the income based repayment plan required to qualify for student loan forgiveness paid off the debt before we would have reached 10 years. It turned out to be accurate and I am glad that I jumped on paying it off early (53% of our take home income) to save $20k+ in interest. Make sure to run similar long term cost/benefit analysis of banking on the loan forgiveness and also remember that the forgiven amount is taxable income.
I would continue to pay what you can to try to pay down the debt. What if the program is defunded (my sister was expecting to have her loans paid off by the state of Florida after teaching in low income schools for a certain number of years, but when she went to collect they had shut the program down) or you change jobs?
don't have any college debt. You could pay your way through school with a part time job in the 90's.
Like others, both myself and my wife lived frugally for several years, which isn't easy with two kids, but managed to pay off the rest of my loans and hers about four years ahead of schedule, which isn't bad. It's a little difficult to pay them off quite as quickly as others here when you are stocking bottles and diapers as we were at the time (this was about eight years ago, mind you), but it is manageable if you live on a budget. We've got much more flexibility now than we would have if we've simply kept making the minimums, I believe.
That's why you need to go with cloth diapers and breastfeeding!
for debt forgiveness programs in Department of Defense civilian jobs, especially for engineers. It's a good career, you help your country, and after your repaymenrt service time (typically less than 10 total) you have an excellent resume to go get a higher paying contractor job. And these are civilian jobs not uniformed military.
For one example that benefits folks going into the intelligence career field, see the Pat Robertson Intelligence Scholars Program.
I didn't make any extra payments like the OP however. That stings, sorry to hear it. Good for you to bring this to others attention though!
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17.5 k dropped but I got laid off in year four (five needed) of teaching science in a low-income place and there were no low income jobs anywhere else.