Important PSLF Public Service Announcement!

by | May 29, 2018


– What’s going on everybody? Justin Harvey here, hope you’re doing well. I want to quickly address a really interesting development that happened last week with regards to the Department of Education freeing up $350 million for student loan forgiveness. Some of you may have heard about this. And it pertains to the Public Service Loan Forgiveness Program. So you’re probably aware, PSLF repayment plans are these four; Repaye, Paye, IBR, and ICR. These are all income driven repayment strategies. That means they adjust based on how much money you earn. And if you make qualifying payments for 10 years on any of these plans you will get tax free forgiveness at the end of that time if you work for a qualifying employer.

Now, there are a handful of other  repayment plans that do exist that do not qualify for PSLF forgiveness. Meaning if you make 10 years worth of payments on these other plans, graduated, extended, consolidated standards, or consolidated graduated these plans do not qualify for PSLF. So 10 years worth of payments, nothing’s gonna happen. However, the Department of Education noticed that there was a significant cohort of people who, unbeknownst to the borrowers, were making loan payments under the wrong repayment plans, these plans.

It’s obviously a very complex thing trying to understand the different repayment plans and what qualifies for which forgiveness strategy and borrowers have been making payments for 10 years on these plans thinking that they were gonna get forgiveness only to, 120 months in, discover that they in fact were not on a qualifying plan. And so their balance, which in many cases continued to grow over that time, was not gonna be forgiven and had to be paid off or had to be forgiven under a longer forgiveness strategy. So what the Department of Education is doing is freeing up $350 million for people who have been paying back their loans under any of these strategies. So if you have been making payments for 10 years thinking you’re qualifying for PSLF, but you’re not, under any of these plans then there is on a first-come-first-serve basis money available for you to potentially pursue PSLF. Even though you weren’t on a qualifying strategy. So I’m gonna put the link in the comments, there was a press release recently by the Department of Education, just came out last week, that gives you a little bit of detail about how to pursue forgiveness under those plans if that qualifies for you.

So that’s the first thing I would want you to know is you can potentially have an opportunity for forgiveness if you’re in this camp and you’ve been making payments under these plans. The second thing is a more general reminder. Anybody out there, especially physicians who have accumulated significant debt due to med school loans, it’s very important, make sure you’re on a qualifying payment strategy if you’re pursuing PSLF. And furthermore, it may makes sense to take to a student loan expert to make sure that the strategy that you’re picking is actually the optimal one. Because you can be pursuing PSLF under a strategy that’s gonna be more costly than it needs to be and you could leave thousands or maybe tens of thousands on the table unnecessarily. So that’s all I’ve got for today, check out the press release from the DOE, see if you might be eligible to receive some loan forgiveness, and hope everybody has a great day.



Herein contains my one-take thoughts on financial concepts, behavioral investing, money management strategies, financial media, and letting you “behind the curtain” on my efforts to help move my physician clients toward financial independence.  Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Website Disclaimer page for a full disclaimer.

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