I started giving advice to friends and family about student loans after our horrible experience with the Public Service Loan Forgiveness (PSLF) program and FedLoan Servicing.
My wife and I could have saved tens, if not hundreds of thousands of dollars on my wife’s student loans if we had only understood how the Public Service Loan Forgiveness program really works. I seriously wish this list of 40 tips existed back when we made all our mistakes.
The first thing we didn’t know? Apparently, only Direct loans qualify. Because of this, we lost four years of credit while she worked at a not- for- profit hospital. Then, we filed the PSLF form and had her loans transferred to FedLoan Servicing.
Despite her payments for over 3 years on Income-Based Repayment, half of her loans only showed 1 month of payment credit. We ran the numbers, and rather than fight FedLoan Servicing any longer, we just decided to refinance and pay it back as fast as possible.
I don’t want anyone else to become a PSLF horror story like us. I started Student Loan Planner to help clients with huge student loan debt burdens come up with a plan to pay back their loans and save every dollar possible throughout the process.
These tips below have allowed me to help clients save millions on their student loans. To see how much PSLF could save you, make sure to pick up your own copy of my PSLF spreadsheet.
- 1 Public Service Loan Forgiveness Gives You So Many Ways to Save Money
- 2 What Jobs Qualify for Public Service Loan Forgiveness?
- 3 Sign Up for an Income-Driven Repayment Plan
- 4 Filing the Public Service Loan Forgiveness Form and Moving to FedLoan Servicing
- 5 How do you Qualify for the PSLF Program?
- 6 How the Public Service Loan Forgiveness Program Affects Taxes
- 7 How PSLF Impacts Investment Strategy
- 8 Protect Yourself from Changes to Public Service Loan Forgiveness in the Future
- 9 Could Public Service Loan Forgiveness be Repealed?
- 10 What do Current Legal Battles over Public Service Loan Forgiveness Mean?
- 11 Be Aware of Conflicts of Interest in the Student Loan Industry
Public Service Loan Forgiveness Gives You So Many Ways to Save Money
Public Service Loan Forgiveness is always in the headlines. A couple years ago, a number of borrowers at the American Bar Association were retroactively told they didn’t qualify. The ensuing panic and media coverage from this lawsuit inspired me to write this article.
Recently, the media made a ton of noise over the 99% rejection rate for PSLF.
You’ll want to become an expert in PSLF if you have over $50,000 in student debt so you can be fully educated about this option. Our PSLF calculator in the site menu can help too. Also, consider listening to episode 2 of the Student Loan Planner podcast where I go over in detail why the program is not broken like many in the media portray.
Perhaps you’d rather not be an expert in Public Service Loan Forgiveness and would rather hire someone to help you instead. If so, see how we help clients who owe between 50k and $1 million. Feel free to take the “do it yourself” approach with these top 40 tips. Just make sure you don’t mess anything up because it’s easy to do.
What Jobs Qualify for Public Service Loan Forgiveness?
1. Work at a 501(c)(3) employer? Good:
This is the first kind of qualifying Public Service Loan Forgiveness job. Most doctors and pharmacists qualify for PSLF through working at a 501c3 hospital. The government determines eligibility by who your employer is, not what kind of job you do. A 501(c)(3) is a tax-exempt charity that could receive a big check from a rich person who would get to deduct that donation from their taxes.
Think major academic hospitals, the Red Cross, foundations, private not for profit universities, etc. You can literally look up if your employer is a 501(c)(3) online by Googling a site like Guidestar with extensive not-for-profit listings.
2. Work for the Government? Very Good:
If you work for a local, state, or federal government or government agency, your work should qualify for PSLF. If you’re an assistant district attorney, teacher, city employee, professor at a public university, public health official, etc., you qualify.
Make sure you actually work for the governmental employer directly and not through an independent contractor arrangement. Also, don’t run for Congress thinking you can take advantage of loan forgiveness because they explicitly excluded themselves from this benefit.
3. Public Service Organizations. Less certain, and nobody knows what it means:
If I were dependent on student loan forgiveness for my financial health, the only employer I’d work for would be a 501(c)(3) or government. The form for PSLF lists another category of qualifying employment with a “not for profit public service organization.” It’s unclear why Congress included this category and what they meant by it.
Perhaps they wanted to cover employers who provide service to the public but are not 501(c)(3) or government. There’s big disagreement over what qualifies right now. As you might have heard, the American Bar Association sued the Department of Education after their lawyers were denied. Basically, the law seems open to interpretation here. However, if I owed over $100,000, I’d only work for an employer that definitely qualified for PSLF.
4. What Jobs Don’t Qualify: Political Organizations, Labor Unions, and Churches / Synagogues / Mosques:
There are a lot of people doing good work at not for profits in these categories. Unfortunately, none of them qualify for Public Service Loan Forgiveness. So if you’re writing memos at the Republican or Democratic National Committee, preparing policy briefs for the AFL-CIO, or preaching for a local congregation, PSLF doesn’t apply. There’s a loophole for folks working for tax-exempt faith-based ministries whose primary work isn’t proselytizing. That means if you’re the full-time cook at the Catholic soup kitchen you qualify but if you’re the priest, you don’t.
Sign Up for an Income-Driven Repayment Plan
5. PSLF gives you four choices to pay based on income:
These are Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income Contingent Repayment (ICR). All four programs ask you to pay a percentage of your income towards your student loans. That percentage doesn’t change no matter how high the total balance is. The percent of your income required under each plan is 15%, 10%, 10%, and 20% respectively. You get a deduction of 150% of the Federal Poverty Line before they multiply by that percentage to determine the payment.
6. Most people should choose between PAYE and REPAYE:
PAYE and REPAYE both ask you to pay 10% of your income to your student loans. If you’re going for student loan forgiveness, then obviously you want to pay as little as possible to maximize the amount forgiven. Choosing between PAYE and REPAYE depends on your marital status, joint income, and how certain you are that you’ll pursue the program.Almost everyone pursuing PSLF should be using the REPAYE or PAYE programs.Click To Tweet
If you’re single, uncertain you want to do PSLF, and don’t make a ton of money, I’d choose REPAYE. If you are married, make a significantly different income from your spouse, and are fairly certain about pursuing PSLF for 10 years, I’d choose PAYE. Either plan is likely a good decision.
7. If you aren’t eligible for PAYE, then it’s probably REPAYE, then IBR:
Some folks are not PAYE eligible. If you had loans before 2007 or didn’t take out any loans after 2011, then you aren’t eligible. The only reason to choose IBR over REPAYE is if you are married, or you make a very high income and already have several years of PSLF payments. In that case, it might make sense to use IBR while filing taxes separately or because of the Public Service Loan Forgiveness cap in payments. There are also some rare situations for married borrowers living in community property states such as California and Texas who might be better off using IBR instead of REPAYE. However, most people going for PSLF should be using PAYE. If that’s not an option, then go with REPAYE.
8. Don’t forget that IBR and PAYE have payment caps even if you’re a high-income earner:
If you’re single, uncertain you want to do PSLF, and don’t make a ton of money, I’d recommend choosing REPAYE. If you are married, make a significantly higher or lower income than your spouse, and are fairly certain about pursuing PSLF for 10 years, I’d recommend choosing PAYE. Either plan is likely a good decision.
Way too many high income professionals make a huge mistake with PSLF when their incomes increase. They incorrectly believe that they will not be eligible for an income based repayment program and refinance. I’ve seen this cost borrowers over $400,000 before. If you’ve already built up more than five years of PSLF credit, be extremely careful before refinancing. I’d highly suggest getting a second opinion before you do something irreversible like sell your loan to a private lender.
*Update: FedLoan has been messing up lately by sending out letters to high income borrowers telling them they’re no longer eligible to make payments based on income. That causes panic and borrowers will call and ask what to do now that they aren’t eligible and the clueless phone rep tells them to switch onto something else. That is a mistake. You never get kicked off of IBR or PAYE, you merely have your payments capped. You need to ignore the letter and your payments should be capped. If they aren’t then you need to escalate to a supervisor.
9. Literally no one alive should be using Income Contingent Repayment (ICR):
This plan is by far the most terrible option for someone pursuing Public Service Loan Forgiveness. Income Contingent Repayment requires you to pay 20% of your income. This is more than any other plan, and remember the goal is to pay as little as possible to maximize the forgiveness benefit. If anyone is on ICR, please send us an email at firstname.lastname@example.org and take a look at switching.
I’ve worked with several clients who were incorrectly placed on ICR. Clearly, the people they used for student loan help didn’t know what they were doing. If you’re convinced that ICR is the best plan available and you have Direct loans originated in your name only, I want to write a blog post about you.
*One huge exception: If you have Parent Plus loans, then your only option to receive PSLF is to consolidate into a Direct Consolidation loan. However, you only have access to the ICR payment plan, which requires you to pay 20% of your discretionary income. You also must work an additional 10 years at a qualifying government or not for profit employer. There’s a huge gap in the number of parents eligible for PSLF and those actually receiving it. If you’re working for a government or not for profit employer and have Parent Plus loans over $50,000, definitely contact me.
Filing the Public Service Loan Forgiveness Form and Moving to FedLoan Servicing
10. Certify your employment status right away to create a paper trail for PSLF from the beginning:
If you’re going for PSLF, you want to get the process started ASAP. The first thing you can do is fill out the free Public Service Loan Forgiveness form. This is also known as the Employment Certification Form (ECF). Send it in and wait a couple months to hear back. There is no benefit in putting this off.
11. Send in the employment certification form at least annually, but preferably semiannually because it’s free and FedLoan Servicing sucks:
Once you begin tracking your progress towards the 10 years needed for student loan forgiveness, you’ll want an extensive, documented paper trail. I anticipate a lot of folks will have trouble at the end of their 10-year employment verifying their status. We lost three years of credit towards PSLF thanks to FedLoan Servicing. Hence, I hold their competence in very low esteem.
To avoid problems, send in the ECF annually at the minimum. FedLoan sucks and the PSLF form is free, so send it in every 6 months to create a solid paper trail. It forces the folks tracking the loan program to communicate often with you about your growing progress towards the 120 months needed for forgiveness.
*Update: FedLoan now allows you to complete and upload the PSLF certification form online, and borrowers tell me it’s a vastly better option than mailing in the paper form.
12. Explicitly tracking progress towards PSLF automatically moves your loans to FedLoan Servicing, so you might as well get it over with:
Loan servicers are pretty bad as a group. Unfortunately, the federal government gave a monopoly to FedLoan Servicing for managing accounts for borrowers working towards Public Service Loan Forgiveness. That means if you’re happy with your loan servicer, you’ll lose that when you send in your employment certification form. The benefits of tracking your progress toward PSLF sooner outweigh the inconveniences of a slightly more annoying loan servicer. No servicer is worth having an inaccurate paper trail when applying for PSLF.
How do you Qualify for the PSLF Program?
13. You have to have only Federal Direct loans if you want them forgiven:
If you work at a qualifying employer but your application for PSLF is rejected, the reason is probably that you have non-qualifying loans. If you took out loans in 2010 or earlier, you need to pay extra close attention to the type of loans you actually have. Most loans after 2010 will be made under the Federal Direct program. Loans from 2010 or earlier are likely on the old FFEL loan program, which doesn’t qualify for PSLF. You can fix this with a loan consolidation that converts everything into a Direct Consolidation loan. However, this resets the PSLF payment time clock since legally, it’s a new loan.
There are actually 17 different types of federal student loans that qualify for PSLF. Most need to be put into a Direct Consolidation loan. Some of the ones run through the Department of Health and Human Services don’t even show up on the NSLDS database. You have to request that they manually get added. In that case, the new Direct loan would qualify for PSLF.
14. Everything else doesn’t qualify, but sometimes you can turn it into a Direct loan that does qualify:
Federal student loans on the Federal Family Education Loan program (FFEL) do not qualify for PSLF. Neither do private loans, loans made to you by grandma, Health Professions loans, Perkins loans, or any other kind of loan. If you have a Direct student loan, it will say “Direct” in the name and will qualify for PSLF. If the loan description just says “Stafford Unsubsidized” or “Perkins” without “Direct” in the front of the name, it almost certainly isn’t eligible for Public Service Loan Forgiveness.
Remember that consolidation is a remedy for many kinds of ineligible loans. You just don’t get to carry over any credit.
15. 120 Monthly Payments on income-driven repayment, and no you can’t rush it:
You need 10 years of credit towards the PSLF program to have all your debt forgiven tax-free. The more precise definition is you need 120 months of income-driven payments at a qualifying employer. Those 120 payments have to be made monthly, and you can’t make extra payments and speed up the clock.
Sometimes when you make extra payments, it puts your loans into paid ahead status. We often have to work with folks in this situation, so pay the minimum and no more.
16. No need for consecutive payments or working all 10 years with the same employer:
Luckily, those 120 payments do not need to occur at one employer or consecutively. You could work 3 years at a not-for-profit then work in the private sector for a couple years, and then work in government for 7 years, after which you’d finally qualify for PSLF. That feature encourages mobility of the labor force but only within the not for profit and government sector.
Remember that PSLF is not a payment plan. REPAYE, PAYE, and IBR are payment plans. You could continue payments and move between part-time and full-time status, all while slowly building credit towards the 10 years of full-time credit needed.
17. You can get credit while on Maternity Leave or other Family Leave:
Under the terms of the Public Service Loan Forgiveness program, you can take up to three months of leave from your job per year. The technical term is the Family and Medical Leave Act (FMLA). If you’re taking time away from your job, ask your HR person if that qualifies as FMLA leave. If it does, then you’ll want to continue income driven payments as it will cut down the time needed until your loans are gone. Please do not use forbearance or deferment.Make income-based payments and get 3-month credit toward PSLF on maternity leave.Click To Tweet
How the Public Service Loan Forgiveness Program Affects Taxes
18. You need to minimize Adjusted Gross Income:
Your income driven repayments depend on how much money you make for tax purposes. Minimize your taxable income with pre-tax contributions to get more PSLF forgiveness. The easiest way to do this is to max out all pre-tax accounts. If you’re married, you can also have you spouse do the same. This will lower your AGI as a joint economic unit. The most common pre-tax accounts I’m referencing are the 401k and Health Savings Account.
If you have more than a $3,000 loss on investments, you can write that off against ordinary income. There are other write offs as well available for real estate investing that I’ve seen borrowers utilize if they have side hustles or other business income outside their main job.
19. Few people going for PSLF should file taxes separately if they’re married:
If you have a spouse with a high income and little or no student loans, you might be tempted to file taxes separately. This subjects you to a tax penalty in most cases. Instead of doing this, a borrower could switch to another income-driven repayment plan. Additionally, they could max their pre-tax accounts. This switch and save strategy often eliminates the need to file separately. Make sure to run the numbers before filing taxes separately. It usually isn’t worth it, but sometimes it can save money if you’re making a similar income to your spouse.
I want to make a note that one of the most common and expensive mistakes we see is borrowers filing with the wrong tax status as married couples. That’s one of our strong suits is helping you decide what filing status is best for your student loans.
Your CPA is likely to be clueless about this. We’ll give you the exact info and questions to ask so you can figure out which choice is better. In some cases, you can even amend returns to get money back if you made a filing mistake. We’ll alert you if we think that’s something you need to talk about with your CPA.
20. PSLF is the greatest tax-free student loan forgiveness benefit available today:
Remember that unlike private sector IDR student loan forgiveness, PSLF is a tax-free benefit. Private sector employees with big loans must save for the future tax penalty. In contrast, not-for-profit or government employees don’t have to cover this extra cost.
Many borrowers love the idea of working for 10 years and being totally finished without the worry of a big lump sum payment to the IRS. I sympathize.
21. PSLF is equivalent to a phantom pre-tax annual bonus for 10 years:
If you have $250,000 in med school loans and would pay back $300,000 with private refinancing, but only $100,000 with PSLF, then that’s a $200,000 benefit over 10 years. Adjust this benefit for taxes at a high marginal rate such as 40%. After the adjustment, you’ve saved over $330,000 in pre-tax compensation over that 10 year period, or $33,000 per year.
You should add this pre tax salary equivalent to any compensation you earn for a qualifying job to compare it to a position in the private sector. For example, in the case above if you earned $200,000 at a 501c3 hospital, you’d add $33,000. That $233,000 salary is what you’d need to earn in the private sector just for those two jobs to be equivalent financially.
In many cases, the non profit or government job has better hours and/or benefits. So you might need to earn significantly more in the private sector to make the two jobs at a break even level.
22. Use the annual tax adjusted Public service loan forgiveness benefit to compare job offers:
When comparing opportunities in the public and private sector, it’s important to adjust for the indirect PSLF bonus for taxes so you can compare job offers. Take a med student with the $330,000 pre-tax Public Service Loan Forgiveness bonus from tip #21. That’s worth $33,000 per year over 10 years. Add the yearly value of PSLF into annual salary before comparing them to their private sector counterparts.
How PSLF Impacts Investment Strategy
23. Put $19,000 per year into your 403b, 401k, or Thrift Savings Plan:
If you’re an employee, max out your traditional pre-tax retirement account. The current max for 2019 is $19,000. For most public sector or not for profit employees, you will use a 403b. For federal employees, the Thrift Savings Plan (TSP) is the account to use. Sometimes you might actually have a 401k and still be in a qualifying job.
I suggest choosing index funds with rock-bottom expenses of 0.2% per year or less. Consider putting in 100 minus your age in stock index funds and the rest in a bond index fund. So if you’re 30, you’d put 70% in stocks and 30% in bonds.
If you’d rather have a service do this for you, I suggest Blooom (referral link). You can use that link to get a free 401k checkup to find out if you’re paying hidden fees. One veterinarian emailed me after signing up for their service and said he found he was paying a 1% hidden fee every year.
To get personalized recommendations for how to invest in your retirement account, it’s only $10 per month. Most roboadvisors won’t manage employer retirement accounts. I’d pair Blooom for retirement accounts with Betterment for taxable investment accounts and IRAs to make sure all your money is getting professionally managed for a super low fee.
24. If you’re eligible for a 457, put another $19,000 in that:
I’ve had clients who worked as employees at a state or municipal employer or hospital system that had both a 457 and a 403b. In that case, you can put up to $19,000 per year in both accounts. That’s a max of $38,000 in pre-tax income you can remove from your AGI. That amounts to $3,800 in savings per year for those pursuing Public Service Loan Forgiveness using PAYE or REPAYE.
25. By going for PSLF, you get an indirect matching contribution for your retirement:
Most people save in their retirement accounts because they receive an employer match. However, that match does not go any higher if they choose to contribute more. In contrast, the Public Service Loan Forgiveness match is 10 cents on every $1 of contributions all the way up to the maximum.Don't leave free money on the table by losing out on the 'PSLF match.'Click To Tweet
What I mean is that these contributions reduce your taxable income, which reduces the required PSLF payments since REPAYE, IBR, and PAYE require less in monthly payments with lower taxable income. The government doesn’t directly contribute money to your retirement account if you contribute the max pre-tax amount. Rather, it just takes less out of your pocket in mandatory student loan payments.
26. Don’t forget about Health Savings Accounts (HSAs).
They can also reduce AGI: If you’re single, you can contribute $3,500 to an HSA. Married people can contribute $7,000 to the family HSA. If there aren’t already enough reasons to love a triple tax-exempt account like an HSA, you also receive an indirect match from the federal government of 10 cents for every dollar contributed. To make the math easy, say you put in $5,000 to an HSA for your family and your income after adjustments for the federal poverty line is $100,000.
PAYE or REPAYE would require yearly payments of $10,000 towards your federal student loans. After saving $5,000 in an HSA, your income is $95,000 and you have to pay $9,500 on your student loans. Because you eventually get student loan forgiveness tax-free, this balance doesn’t matter so HSAs are pure savings. This might be one of the coolest and most overlooked areas where someone going for Public Service Loan Forgiveness can save money.
Protect Yourself from Changes to Public Service Loan Forgiveness in the Future
27. Create a sizable non-retirement investment account as PSLF insurance:
Even those who express doubt about PSLF must acknowledge the large chance that the program will not be repealed for those who currently have outstanding student debt. That means you should not be paying extra for loans that might be forgiven. However, many clients of mine express deep concern about carrying six figures of debt. They worry this burden might eventually come back to haunt them. You can cure this worry.Save at least 1% of your total loan balance per month as PSLF repeal insurance.Click To Tweet
Place these savings in a taxable mutual fund or brokerage account. Over time you’ll build savings at a faster rate than inflation. Assume for a moment Public Service Loan Forgiveness repeal does happen. You’d be able to cash in the savings and start paying down the debt aggressively.
28. Choose a low-cost index fund provider to implement this side investment account:
Make sure your investment account charges less than 0.5% per year in total fees for investment expenses and advice. Low fees have a powerful wealth-building effect. I suggest Vanguard for do-it-yourself investors. Most Vanguard investors pay between 0.05% and 0.2% per year in fees (I get $0 if you click on that link and set up an account).
For folks who want sophisticated portfolio and investment management and don’t like the idea of investing themselves, I suggest Betterment (referral link). If you set up an account through that link, you get a month to one year managed free.
Most Betterment customers will pay between 0.30% to 0.45% per year total. It really comes down to how much you want to be involved in managing your investments. Both places will leave you thousands of dollars richer in the long term compared to going with a typical investment company that charges at least five times more.
29. Consolidating your loans could be a dangerous step if you’re going for PSLF:
There are a ton of fly-by-night student loan consolidation factories on the internet that charge gobs of money to complete student loan consolidation forms as their one-size-fits-all solution. That could be a horrible decision. Current loans have PSLF in the promissory note. There are two reasons someone going for PSLF should consolidate their loans. First, if they have non-Direct loans that don’t qualify for PSLF, consolidation is probably a good idea.
These non-Direct loans include FFEL, Health Professions, Perkins loans, and some others. Secondly, if borrowers want to start qualifying PSLF payments faster, they could consolidate right after graduation. By consolidating the day after you graduate, you can shorten the normal grace period. Do not consolidate loans for which you have already made PSLF qualifying payments. Doing this will eliminate any existing progress towards forgiveness.
Could Public Service Loan Forgiveness be Repealed?
30. Some Democrats want to see PSLF means tested:
This is the single most realistic threat to the program’s use by current borrowers. This is especially true for individuals with six-figure student debt burdens. President Obama proposed a $57,500 Public Service Loan Forgiveness cap in 2015 as a max benefit. The administration responded to the disproportionate benefit that PSLF provides to high-income earners.
That proposal did not pass. However, I would expect something like it to come back into the conversation eventually. The primary threat for people using PSLF is means testing, not repeal. If a $300,000 borrower does not receive tax-free student loan forgiveness in 10 years, that’s probably going to be the reason.
31. Republican proposal eliminates PSLF entirely, but only for future borrowers:
That would mean that folks who don’t currently have loans outstanding could be in real danger of not having PSLF as an option. Currently, one party controls the White House and Congress. Grad students just starting their programs might have some legitimate worries. Borrowers with current loans and those about to finish school have significantly less to worry about. The Republican plans for the repeal should grandfather them into PSLF.
*Update: The Republicans have attempted to pass the PROSPER ACT, which would do away with PSLF for borrowers who start a program of study on or after July 1, 2019. It would grandfather in anyone who is already graduated or enrolled in school on that date.
32. Yes PSLF could be repealed, but it’s highly unlikely so don’t abandon the program:
Could PSLF be repealed? Yes, it could. However, Public Service Loan Forgiveness has a diverse and powerful set of backers. We have the absurdly high cost of grad school to thank for that. Therefore, the chance that current borrowers who already have loans don’t receive PSLF at all is unlikely. This is primarily due to political reasons.
The program causes labor market distortions that are yet to be realized. It also creates a huge disparity between private and public sector employees. For those reasons, I do expect that the PSLF program’s days are numbered. However, I would put the odds that current borrowers don’t receive the full benefit at 10% to 20%. That number includes the risk posed by means testing PSLF.
What do Current Legal Battles over Public Service Loan Forgiveness Mean?
33. Do Not Trust FedLoan Servicing:
The Department of Education really hurt some lawyers at the American Bar Association when they overruled FedLoan Servicing on their incorrect ruling that their employer qualified for loan forgiveness. The lawyers lost two to five years of credit towards Public Service Loan Forgiveness thanks to the error. These lawyers are currently suing FedLoans, arguing that FedLoan rulings should be binding as an agent of the federal government. Regardless of the results of that suit, you clearly should not trust FedLoan Servicing. Verify your own status yourself for PSLF and make sure you’re taking the right steps.
34. Be aware of Government and 501(c)(3) job openings as a backup employment plan:
As I mentioned earlier, the Public Service Loan Forgiveness employment certification form explicitly lists all 501(c)(3) organizations and local, state, and federal government employers as qualifying for PSLF.Based on current PSLF lawsuits, I would only work at a 501(c)(3) or government employer.Click To Tweet If you’re working at a not-for-profit employer that’s not the government or a 501(c)(3), keep track of possible job openings in case FedLoan Servicing pulls the rug out from under you and voids your progress towards PSLF.
35. The average borrower doesn’t need to worry about lawsuits over PSLF:
The media loves to blow things out of proportion. That’s exactly what happened in my view over the latest string of PSLF lawsuits. Pay attention to the policy that matters, like whether current borrowers will be grandfathered in or if the government will impose a means-test on the PSLF benefit. Follow the tips in this article. If you do, worry a lot less about what the media says.
Be Aware of Conflicts of Interest in the Student Loan Industry
36. FedLoan Servicing probably wants to hang up on you, not help:
The federal government gave FedLoan Servicing the exclusive rights to manage PSLF borrower accounts, so they have no incentive to help you. Put yourselves in the shoes of their executives. They earn a flat fee with no penalty for poor performance and no bonus for great customer service. Hence, FedLoan wants to keep staffing costs down at their call center.
Hence, short phone calls mean lower costs and more profit. Don’t ever let a rep from a student loan servicer rush you off the phone. Furthermore, if someone gives you odd information, call back. Speak to as many reps as you need to until you find one that sounds competent. I recently discovered a secret phone number there that you should call if you’re having a ton of trouble: (717) 720-7605. Some of my readers who’ve used that FedLoan phone number instead of the generic one report getting their problems fixed in days instead of months.
37. Beware of sites that promise Obama Student Loan Forgiveness or Trump Student Loan Forgiveness.
They just want your money: If you find a vaguely federal government looking website with words “document preparation service” and hyped up language about Trump Public Service Loan Forgiveness, don’t work with them. These folks game the system to rank highly for high search volume keywords. They hire people off Craigslist and pay steep commissions, and their answer for every problem is student loan consolidation.
Moreover, the fee for this service is frequently over $1,000. There are reputable companies and websites out there that charge far lower, transparent fees. Additionally, they help optimize federal student loans with a rigorous, customized analysis. (Hopefully, after reading this, you feel that way about Student Loan Planner). Don’t pay 2-10 times as much money for a junk service.
38. Financial advisors usually won’t understand the details of Public Service Loan Forgiveness:
There are some exceptions to this rule, such as fiduciary Registered Investment Advisors who specialize in specific professions. However, as a general rule, financials advisors don’t know the intricate details of how these loan forgiveness programs work. A good advisor should admit what they don’t know. He or she would steer you to resources that can help you. If the advisor does not know how to model tax filing strategies and explain what your monthly payment will be, then you need to look elsewhere for assistance. Financial advisors are generalists. Even the highly knowledgeable ones might make five student loan plans in a month. We easily do more than ten times that.
39. Personal finance blogs make a lot of money on private refinancing:
Personal finance blogs make money from referral bonuses when people refinance their student loans through affiliate links. That includes this site Student Loan Planner. Don’t refinance if you qualify for PSLF. Luckily, I have a business case for going into extreme detail about PSLF. After all, I consult with borrowers on how to maximize the value of the program. However, other websites take a hands-off approach. Their sole revenue source is from refinancing partnerships.
Even if they are ethical, they will always have an unconscious bias towards private refinancing. If you’re on track for Public Service Loan Forgiveness, you will lose that benefit forever if you refinance simply because a friend said you should do it, or you saw the Superbowl ad. Think before you click.
40. Implement these Public Service Loan Forgiveness Tips on Your Own or Hire Me for Student Loan Help
You’ve made it to the end of my top 40 tips. Clearly, you’re going to be in far better shape than your peers. Many will save thousands of dollars from these tips. Call FedLoan Servicing now and implement these best practices directly. If you’ve benefited tremendously from this article, please hit me up and let me know. Consider sharing this on social media too to help get the word out to friends.
Maybe you skimmed this and are overwhelmed with the details. Maybe you’d rather hire somebody to analyze your loans for you or just review the plan you’re thinking of using. I’ve advised hundreds of people. There’s a good chance I’ll catch something that even the most diligent person might miss. Read how to hire us and let’s see how much money we could save on your student loans.
If you’d like to get the calculator that we use to model PSLF, enter your name and email in the form below. If you just want to share what you’re going through, use the contact button and let me know your concerns. I founded Student Loan Planner to make your life easier, save you more money, and give you back hours of time that might’ve wasted worrying about how to pay back your student loans.