By Dr. James M. Dahle, WCI Founder
The Public Service Loan Forgiveness (PSLF) program is one of the best possible ways to manage federal loans. If you are eligible for this government program by virtue of your employment situation, you should almost surely take advantage. PSLF offers tax-free forgiveness of any remaining direct federal loans after 10 years of payments have been made.
Public Service Loan Forgiveness Requirements
Obtaining PSLF is not particularly complicated, but news stories continually show many people applying for it that do not meet the requirements. If your student loan management plan is obtaining PSLF, you should have these requirements down cold:
- Only direct federal loans are eligible
- Must be employed full-time (30+ hours/week) by a non-profit 501(c)(3) or governmental employer
- Must make 120 on-time (i.e. < 15 days late) monthly payments
- Payments must be made in an eligible program—usually an Income-Driven Repayment (IDR) program such as Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), or Income Contingent Repayment (ICR)
- Must fill out the annual employer certification forms and application correctly
Each of these bullet points represents a reason why people who thought they should get PSLF did not qualify to receive it. Your loans must qualify, your repayment program must qualify, and your employer must qualify. Payments do not have to be consecutive but they must be on-time.
After 120 eligible payments, you can qualify for 100% loan forgiveness. With the PSLF Program, it's frequently possible, especially if you have dependents, large debts, a long training period, and/or a low-paying job, to have the program pay more money than you borrowed!
Examples of Jobs Qualifying for PSLF
A significant percentage of physician jobs are qualifying employers for PSLF, including almost all resident, fellowship, and academic positions.
- Employee of a non-profit, tax-exempt 501(c)(3) organization (almost all university hospitals and many community hospitals)
- Military or Public Health Corps positions
- VA Employees
- Employee of a non-profit public health organization
This means you can't go into private practice, be self-employed, or work for a for-profit hospital or group. But there are still a lot of good physician jobs out there that would qualify. If I had a massive student loan burden and was considering IDR forgiveness, I would first try to go get a PSLF-qualifying job!
What Types of Loans Qualify for PSLF?
The program allows any remaining Direct Federal Loans to be forgiven once 120 qualifying on-time monthly payments have been made while directly employed by a qualifying employer. Direct Federal Loans include Stafford Loans, PLUS Loans, and Direct Consolidation Loans.
FFEL, Parent Plus, and Perkins Loans used to not qualify until they had been consolidated into a Direct Consolidation Loan. But in October 2021, the Department of Education began allowing those who had made payments via the FFEL and Perkins Loans (but not Parent Plus) to count those toward your 120 PSLF payments if (AND ONLY IF) you consolidate by Halloween 2022. This means FFEL borrowers will be eligible for PSLF earlier—sometimes years earlier—than they otherwise would be. Especially if they never got the memo that they needed to consolidate into a direct loan (unfortunately, if you have already received PSLF, there is no credit for FFEL loans that are already gone).
Private student loans do not qualify, including federal student loans once they have been refinanced with a private lender. Thus, it is critically important that you do not refinance your federal student loans until you know for sure you're not going for PSLF.
How Do I Apply for Public Service Loan Forgiveness?
- Fill out the PSLF employer certification form (aka the PSLF Form) each year
- Verify eligibility and qualifying payments each year with FedLoan Servicing (highly recommended, but not technically required)
Public Service Forgiveness Form
The PSLF Form should be filled out every time you change employers and at least once annually. Keep a copy. Technically, this form can be filled out retrospectively, but when so much money is on the line, it pays to be on top of all the details. Certify early and often!
The form is very easy to fill out. You fill out the first page:
And your employer fills out the second page:
Possession of years of forms certifying your participation in the program may also come in handy in the event the program changes and you wish to be grandfathered into the old terms or simply if those administering the program do not keep track of your forms as best they should. In fact, I would keep careful records of every qualifying payment I ever made, just in case.
How Do I Apply for PSLF?
It used to be that once you had made your 120 qualifying payments and filed your employer certification forms for all of the (10+) years you made payments, it was time to fill out another form, a PSLF Application. That form no longer exists. You simply need to submit enough annual certification forms (now simply called The PSLF Form) for years you made 120 qualifying payments and they're supposed to then inform you that you received it. I would follow-up with a phone call after sending in my final form, of course, just to make sure they got it and agree I qualify for it.
What Is Temporary Expanded PSLF?
Now you can even use the PSLF Form to apply for Temporary Expanded PSLF (TEPSLF). This is a potential workaround for people who were not actually in an approved payment plan such as the IDR programs. If the only reason your payments don't count is due to the payment program you were in, you really need to look into TEPSLF. You still have to meet all the other requirements (employed full-time by a non-profit, 120 on-time payments, etc.). The payments you do make, at least for the 12 months prior to getting TEPSLF, do have to be at least as large as what they would be under an IDR program.
Are People Really Getting PSLF?
Absolutely! People were a bit disheartened to not see gobs of people receiving it in 2017, 10 years after the program was put in place. But in reality, few really knew about PSLF until 2010-2011. When I have polled doctors going for PSLF in the past, there were very few expecting to receive forgiveness in 2018-2020, but increasing numbers in 2021 and large numbers beginning in 2022 and 2023. There is a Facebook Group dedicated to docs going for PSLF with 8450+ doctors in it and this was a poll done there at the beginning of 2020:
As you can see, there are very few people who have been forgiven so far in that group, but that's simply because they are nowhere near the 120 required payments. However, look at those lines of people who have 50-80 payments! By 2025 or so, every doc is going to know someone who has received PSLF. By 2030, it may be the majority of mid-career academic docs!
Also, when the government reports things like “only 1% of those who applied received it”, they often fail to mention that the vast majority of those who applied didn't qualify for it and didn't even fill out the PSLF Forms correctly. It would be a real shame to see people bail out of going for PSLF after reading that statistic when it is so misleading. We have had numerous docs on The White Coat Investor Podcast and Milestones to Millionaire Podcast who have received PSLF. Here are a few examples:
- A Public Service Loan Forgiveness Success Story
- Pediatric Intensivist Gets PSLF with No Hassle
- Family Physician Receives PSLF
Here are a few examples off of Facebook:
So yes, emphatically yes, this program is real and real docs receive PSLF all the time. There is no reason you should think you could not receive it if you qualify.
How to Make Sure You Get Your Student Loans Forgiven Through PSLF
Let's review the requirements and my recommendations one more time:
- Enroll in a qualifying payment program
- Work full-time for a qualifying employer
- Make 120 ON-TIME monthly payments
- Keep careful records
- Certify early and often
Avoid errors and find helpful tips for receiving forgiveness by reading Don't Give Up on PSLF.
A typical physician with a typical medical school debt burden wouldn’t have any debt left to forgive after making 120 monthly payments under the standard 10-year repayment plan. The secret to actually receiving economic benefit under this program lies in enrolling in one of the other programs.
The Income-Driven Repayment (IDR) programs such as Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE) will all help you do this. PAYE and REPAYE have the lowest required payments—10 percent of discretionary income, which is defined as the difference between your income and 150 percent of the poverty line for your geographic area and family size. (Note that the payments have nothing to do with the amount or interest rate of your debt.)
During residency, REPAYE is often the best program to enroll in because it may actually waive up to 50% of the interest on your loan, lowering your effective interest rate.
PAYE is often a better program after residency because doctors usually no longer qualify for a REPAYE subsidy and unlike REPAYE, PAYE caps payments at the 10-year standard repayment plan amount. The amount left to be forgiven after 10 years of payments is often just the difference between what you would’ve paid under the standard repayment plan and what you did pay under an IDR plan, plus the effects of compound interest for a few years.
So, a typical medical student may graduate with $250,000 in debt, which grows to $300,000 during residency (IDR payments don’t even cover the interest on the debt). The borrower then pays it down to perhaps $150,000 as an attending, at which point the rest is forgiven. The more payments you make that are less than the standard payments (i.e. payments you make in residency and fellowship), the more debt that is left to be forgiven after 120 total payments.
Strategies for Maximizing the Amount Forgiven Through PSLF Program
Doctors use a few strategies to try to maximize the PSLF amount forgiven.
- Enroll in an IDR program and start making payments late in your fourth year of medical school—essentially increasing the percentage of payments you make while your income, and thus your payments, remain low.
- Complete a direct federal consolidation right after medical school graduation and opt-out of the 6 month grace period. This will allow you to start making IDR payments 3-4 months earlier. This means 3-4 more IDR payments as a resident vs a high-paid attending.
- Contribute to tax-deferred retirement accounts during residency, which further lowers your income and your required payments.
- If married to a high earner, it may be advantageous to file your taxes as “married filing separately” while enrolled in an IDR program. Even though this often increases your combined tax burden, it can significantly reduce your student loan payment in IBR and PAYE.
- Choose a longer training period, which can help maximize forgiveness. A physician who spends seven years in residency and fellowship may need to make full payments for only three years as an attending before receiving forgiveness.
Private student loans are never eligible for PSLF, and the best strategy for managing those usually involves refinancing to a lower rate as soon as possible (usually shortly after medical school graduation or as soon as you can receive an interest rate lower than the effective interest rate after REPAYE subsidy is applied) and paying them off early in your career. Several lenders allow very low payments during training, just like the federal IDR programs.
Caution!
Refinancing your federal direct loans can be a big mistake if you later end up working for a 501(c)(3) after residency graduation.
Another common error is putting your loans into forbearance or deferment during training, which prevents the accumulation of lower IDR payments that would later allow for significant forgiveness under PSLF. If you make IDR payments throughout residency and work full-time for a 501(c)(3) after residency, going for PSLF instead of refinancing the loans generally works out better mathematically than refinancing, even if the interest rate is higher. It is very difficult for me to think of a situation where forbearance or deferment is the right move for anyone, but it is especially terrible for someone who ends up qualifying for PSLF. It is a very expensive mistake and I am sick of informing doctors that they have made it. So please don't make it!
Is the PSLF Program Going Away?
Many students, residents, and attendings worry Congress will change the rules and take PSLF away. That is a significant risk—both the Obama Budget of 2013 and the Trump Budget of 2018 proposed doing away with the program as we know it. The Prosper Act (never passed) would have also caused significant changes to the federal loan programs if it had become law. However, in the past when federal student loan programs were changed, those currently in the program were usually grandfathered into the old program. Just having a student loan probably puts you into the program, but certainly having filled out at least one PSLF Form would put you in.
Some worry about the morality of not paying back borrowed money when you have the means to do so. My response? Hate the game, not the player. I see loan forgiveness no differently than using a tax-advantaged retirement savings account or taking the child tax credit. We have no duty to leave money on the table that we legally qualify for, even if we disagree with federal student loan policy.
Since PSLF was instituted in 2007, the first borrowers are now starting to receive forgiveness after making their 120 monthly payments. As the years go by, you’ll see more and more physicians receiving this federal benefit. Managing your student loans well will increase your financial security and allow you to take better care of your family and patients.
Save Up a PSLF Side Fund
A good way to hedge legislative risk (or even career risk—such as you want to leave your 501(c)3 job or work part-time for some reason) is to make large student loan payments as an attending that would allow you to pay off your loans within two to five years after residency completion, but make those payments to your own investing account. Then, if something happens to PSLF, you can simply take those funds and pay off the loans. If you do receive forgiveness, you can use that money to bolster your retirement nest egg or other savings goals. The idea behind a PSLF Side Fund is that if for some crazy reason Congress changes the law AND doesn't grandfather you in, the bureaucrats can't find record of all those payments you made, you take a non-qualifying job, or you cut back to part-time, you now have a pot of money you can instantly use to pay off your student loans. If PSLF does materialize, then you can use that money for a house down payment or add it to your retirement stash.
Do I Still Have to Live Like a Resident Even If I'm Going for PSLF?
Short answer: Yes. Long answer: Getting rid of your student loans quickly is only one of the purposes of the 2-5 year Live Like a Resident period. The other purposes include:
- Saving up a real emergency fund
- Paying off credit card and auto debts
- Saving up a down payment for your dream home
- Catching up to your college roommates with regard to retirement savings
- Learning the true limitations of the after-tax income of a physician
- Putting yourself on track to have financial freedom by mid-career that you can use to maximize career enjoyment and longevity
- Saving up a PSLF Side Fund, just in case something happens to PSLF or your career
So yes, you should still live at least somewhat like a resident for a little while after you finish your training, even if you're going for PSLF.
PSLF vs. Refinance
Many wonder if they should go for PSLF or refinance their student loans. It's really a pretty simple proposition.
- Private loan → Refinance
- If you work for a qualifying employer or think you might → Don't Refinance
- Debt to income ratio of 1.5+ and not working for a qualifying employer → Consider IDR Forgiveness and Get Advice. Or better yet, go get a job at a qualifying employer!
- Debt to income ratio of < 1.5 and not working for a qualifying employer → Refinance
It's really no more complicated than that.
To learn more about if refinancing or PSLF is right for you check out Refinance Student Loans and Pay Off or Go for PSLF?
If you do choose to refinance, please do so through our links. It helps support the site and gets you a much better deal than you would get going directly to the lenders.
Compare Refinancing Rates and Get Cash Back!
Hypothetical PSLF Situations
Many medical students with a high loan burden will use these programs (especially REPAYE/PAYE) to reduce payments during residency. You may be able to reduce your payments by hundreds or even thousands a month. But even these reduced payments count toward the 20-year mark for PAYE forgiveness, the 25-year mark for REPAYE forgiveness, and the 10-year mark for PSLF forgiveness.
If you will be training for a long time, such as a surgery residency with or without fellowship, or just about any specialty with an additional fellowship, you ought to give serious consideration toward trying to reduce your payments as much as possible using REPAYE or PAYE and then working for a PSLF-qualifying employer. Three to five years of slightly reduced pay is well worth having a couple hundred thousand dollars worth of loans forgiven. Many nonprofit positions pay just as well as private practice in many specialties.
If you will be in a relatively low-paying specialty, such as primary care or a pediatric subspecialty, and have a high loan burden, there's a good chance you'll be able to get significant loans forgiven and you would do well to work for a PSLF-qualifying employer if you can possibly get a job there. It may be worth the equivalent of an extra one, two, or even five years of after-tax salary!
When choosing residencies, fellowships, and your first job, an important consideration is whether your employer qualifies under the PSLF program. This may be the most important benefit on the table and is likely worth taking a lower salary.
Should You Take Out Extra Loans in Expectation of PSLF?
The moral hazard (an economic term, not a judgmental one) behind any forgiveness program is that its presence will cause people to do things they otherwise would not. Many people are now asking if they should take out the maximum debt possible during school since it is going to be forgiven anyway. I can see why they would be tempted to do so, but I think it is a mistake for a number of reasons:
#1 Bad Things Happen
Think of all the bad things that could happen over the next decade plus that would keep you from receiving PSLF. I'm not just talking about death and permanent disability (in which case federal loans are canceled, although that cancellation would be taxable). What if you don't match? What if you lose your job due to malpractice issues, fraud issues, discrimination issues, or due to an accusation of harassment?
#2 Life Changes
What if you get married and your spouse needs to live in a town where there is no PSLF qualifying job available to you? What if you want to go part-time to raise kids? What if you just hate being an academic?
#3 You Gave Your Word
When you signed your student loan promissory note, you stated that you would use the money only for school. So why are you borrowing more than you need for school? Honesty seems like an important attribute for a future physician. It is not only illegal but unethical to fraudulently stick the taxpayer with additional costs; that money could have been used to help someone else. Ethics also seem like an important attribute for a future physician. Here's the relevant section of the Master Promissory Note for federal loans:
#4 Legislative Risk
Remember the principle of easy come, easy go. The government can change this program at any time. What a shame it would be if you intentionally paid as little as possible in hopes of getting the loans forgiven, then the government changed the program or you lost your job or became disabled. While I think this is a very unlikely scenario, unlikely things do happen from time to time.
Best PSLF Scenario
Imagine a medical student who attended not only an expensive medical school but also an expensive undergraduate institution. Let's imagine this doc racked up a cool half-million in loans and is married to a stay-at-home spouse and has 4 kids. Our doc has decided to become a pediatric nephrologist. Without the IDR programs, this doctor would make payments of perhaps $3,800 a month. Instead, they pay $0 a month.
Meanwhile, their debt burden is increasing at over $40K a year. So after residency, the student loan totals $625K. Enter fellowship. As a fellow, the salary is now $70K a year and so the doctor is now making payments of $310 a month, or a total of about $11K a year. Meanwhile, the debt load continues to increase. The doc now owes something like $750K. After fellowship, our doc obtains a job at a PSLF-qualifying employer which pays $180K a year.
The payments are now $1,055 a month (still reduced thanks to REPAYE). After four years of making those payments, paying a total of about $50K, the doc still owes about $685K, all of which will now be forgiven, tax-free.
Pretty sweet windfall. Fair? Probably not, but when have benefits from the government ever been fair? No wonder the rates on student loans have gotten so high when there are benefits like this attached to them.
Should YOU Go for Public Service Loan Forgiveness?
- If you work for a 501(c)3 as an attending and have any sort of significant federal loan burden, you should go for PSLF.
- If you are not sure if you will work for a 501(c)3 yet, don't do anything that would jeopardize your ability to get PSLF (like refinancing your federal loans).
If you still aren't sure whether you should refinance or go for PSLF, we recommend you hire Andrew Paulson at StudentLoanAdvice.com to help you run the numbers and make a decision.
If you are sure you should refinance, please do so through the links in the chart below. It helps support the site and gives you a better deal than you would otherwise get.
Variable 4.54% - 11.72% APR
Fixed 3.95% - 9.19% APR
† Bonus includes cash rebates and value of free course. Borrowers who refinance more than $60,000 in student loans using the WCI links will be enrolled in The White Coat Investor’s flagship course, Fire Your Financial Advisor for free ($799 value). Borrowers will still receive the amazing cash rebates that WCI has negotiated with each lender. Offer valid for loan applications submitted from May 1, 2021 through June 30, 2023. Free course must be claimed within 90 days of loan disbursement. To claim free course enrollment, visit https://www.whitecoatinvestor.com/RefiBonus.
What do you think? Are you going for PSLF? Why or why not? Have you obtained it already? Tell us how it went! If you have not yet obtained it, how many payments do you have left until you get it? Comment below!
I’m a 3rd year emergency medicine resident. I have been doing forbearance up until now. I have about 500 K in debt. Considering EM attending average pay of 250-300 K in my area, would you think finding a 501c3 hospital to work for is worth it? My interest rate on my loans is 6.8%. I’m debating refinancing with SoFi or trying the 10 year PSLF program. Any advice?
Your mistake was going into forbearance. As a general rule, what is left to be forgiven after 10 years is the difference between a full/attending/10 year payment and the lower IDR payments. The fewer tiny IDR payments you make, the less there is to be forgiven. Since you were in forbearance for 2.5 years, going for PSLF is MUCH less attractive than it would otherwise be. You can run the numbers, but I’ll bet you choose to refinance and bust you butt and pay it all off. If you can put a little over $100K toward the loans each year, you can pay them off in less than 5 years.
I’m working at a non-for profit currently as a full time employee Monday-Friday 8-4 (40 hours/week) with qualifying loans under REPAYE. If I wanted to moonlight on some evenings or Saturdays, will I still be eligible for PSLF since my moonlighting employer would be for profit? Do I put the moonlight employers information on the PSLF Employment Certification Form (my moonlighting job wouldn’t qualify) or just continue filling it out normally with the non-for profit’s information?
If I wanted to work at my non-for profit full time for 3 days a week with 12 hours per day per, would I still be able to meet the PSLF hour requirements? Thank you.
Yes. The form does ask hours worked, the employer better not put 20 there.
https://studentaid.gov/sites/default/files/public-service-employment-certification-form.pdf
The form says this:
Full-time means working for one or more qualifying
employers for the greater of: (1) An annual average of at
least 30 hours per week or, for a contractual or employment
period of at least 8 months, an average of 30 hours per
week; or (2) Unless the qualifying employment is with two
or more employers, the number of hours the employer
considers full time.
So better make sure the employer puts 30+ on that line. Seems a reasonable requirement to me. Hard to argue < 30 is full time.
I see a lot of people who think 30 hours is sufficient, but the form says the GREATER OF 1) at least 30 hours per week or 2) the number of hours your employer considers full time. Doesn’t that mean if your employer checks “Part time” and writes 30 hours per week that you have not meet the qualifications? I don’t see how 0.75 FTE is sufficient unless your employer will still check the “Full time” box – mine will not unless I am 1.0 FTE.
It’s a good point, but it would be kind of a jerk move for the employer to check “part-time” and then write 36 hours there! There’s no cost to the employer to help the employee out here. I agree it’s worth meeting with the “authorized official” in advance to make sure they’ll check that full-time box or else asking for a few more hours of work.
I know this is a repost, but I like what I’m seeing. Thoughts:
1. Y’all who hate on the PSLF as a viable way to deal with debt, please stop immediately. I know at least 2 people personally who “chickened out” of PSLF due to frequent airing of unfounded misgivings (after years of making MINIMUM payments on their large loans) and will be hundreds of thousands of dollars poorer for it. You are causing real harm by spreading baseless anxiety about the program. It has some risk as noted in the post, but nothing like what I myself have heard circulated.
2. Attention med students: I had no idea one could consolidate federal loans and skip the “mandatory” 6 mo forbearance after med school. I was also informed by my loan servicer that you could NOT make payments as a med student, and that you had to actually graduate before starting payments; the info in the post suggests otherwise. Due to this lack of knowledge, I seem to have screwed myself out of 6-12 months of “free” payments, which equates to ~ $10,000-20,000. Happy to have the PSLF program, but not happy to be misinformed about how works by my loan servicer and not coming across this tid-bit of information during my extensive personal research.
It was actually almost entirely re-written, but for SEO purposes, it was “republished” today.
1. Totally agree.
2. Bummer. I’ve been writing about it for years and had a guest post years ago that detailed how it do it precisely. You can certainly consolidate as soon as you graduate and start the clock ticking. I haven’t heard of someone doing it prior to that date though.
Re: bummer, yes, it is. I didn’t find WCI until I googled “how to be rich” as residency was winding down. I didn’t come from a doctor family or rich parents, and had neither intuition nor knowledge about these things. I didn’t even know what I didn’t know.
I appreciate what you’ve helped me learn on the site; most info out there is targeted toward the general population or towards financial professionals and it was hard to find useful information for the small segment of society that is we doctors. And that is to say nothing of the extraordinary amount of what I now know is mostly worthless information flooding the information superhighway (eg, what individual stock went up or down today, guesswork on what this or that geopolitical event might mean for the market, what Elon Musk or other celebrities recently tweeted about…).
I should have be more clear when I wrote, “This is addressed by consolidation.” Consolidation allows you to waive the Federal Direct Subsidized/Unsubsidized Loan grace period.
This may have already been addressed but I recently listened to a M2M episode about a doc receiving forgiveness easily and you were musing about why the percentage of docs receiving forgiveness is so low. Every time someone submits an ECF form now they are counting that as an “application” for loan forgiveness, even if the borrower knows they do not have enough payments yet. I learned this last year when I submitted my annual form and received a letter saying I had been denied PSLF due to not enough payments and I called to see what was up. So these stats are just not going to be accurate because the denominator will be way higher than the number actually applying for forgiveness.
You are exactly correct. That is the main problem with the “99% not getting forgiveness” statistic that was being thrown around in 2018.
Thank you WCI for everything. Great post!
Recently graduated from a FM residency and planning to work as a hospitalist by August 2021! It’s been a long journey, and thank you for being a part of it! I am currently going for PSLF (new employer meets the criteria for PSLF). I have consolidated my federal loans after medical school and have completed about ~40 payments (I unfortunately didn’t know we could skip the 6 month grace period at the time). However, my medical school just recently reminded me that I received the LDS loan (loans for disadvantaged students) during medical school. I recently just learned that it is considered a federal loan (during the end of my residency). I did not consolidate this with my other federal loans , as I did not know it qualified at this time. I contacted fed loan and they informed me that if I plan to consolidate it, it would be a different loan and the payments would start over on that particular loan, but the my other payments would continue as is. Wanted to mention it in case anyone else had the same issue. I am debating enrolling that LDS loan in PSLF.. as I am four years behind compared to my other federal loans versus refinancing that LDS loan.
Good Luck to everyone who is also pursuing PSLF and those who are slaying the debt game!
P.S the FB group for PSLF is a great group, very encouraging.
Hi Tracy,
Congrats on your graduation from residency! Your LDS loan isn’t currently eligible for IDR or PSLF. In order for it to become eligible, you would need to complete a direct federal consolidation. Once consolidated, you could enroll in IDR and start getting payments to count towards PSLF.
Don’t consolidate your LDS loan with your other federal student loans that are IDR and PSLF eligible. If you do, you’ll lose your 40 payments and have to start over on all of them. Seen this type of thing happen far too often.
If you consolidate your LDS loan, you would make 120 payments until PSLF. Which you need to examine versus just deciding to private refinance it.
Thank you very much Andy!
Definitely do no want to lose those 40 payments by consolidating the LDS with my other loans. It’s sad that it happens too often where the counts restarted because of mistakes like that. I was debating making the 120 payments for the LDS vs refinance it and aggressively knock it down. I recently (in the last 2 weeks) refinanced my private loans through WCI links and go a great rate of 2.45% fixed, which beats the 5.7% I had on the private loans. I was initially hesitant to refinance the LDS loan, because I know that the minute you do, it will no longer qualify for PSLF.
Again, thank you so much for your insight! I really appreciate it!
Hi again!
With the new update, does it mean that if I consolidate my LDS loan now with my other federal loans… I won’t lose my ~42 payments and that my count will continue and not start over? Thank you in advance!
Hi Tracy,
Correct. You won’t lose all the payment history you’ve made. As the LDS loan is consolidated into a direct federal consolidation loan all the payments you’ve made will carry over and it’s on track for PSLF!
Andrew StudentLoanAdvice
Thank you! I think I will go ahead and do that! In your opinion, do you think it is best to consolidate the LDS with the rest of my federal loans now, or should I wait until they change to a new loan servicer?Thank goodness I didn’t refinance it!
Tracy,
You need multiple loans to do a consolidation. Unless you have 2+ LDS loans then you should do a consolidation with your LDS loan and other federal loans.
The timing on this won’t make much of a difference. The servicer will probably be in a couple month backlog now and for a couple of months early next year.
Andrew StudentLoanAdvice
Am I unable to consolidate my current LDS loan with all the federal loans I had already consolidated after medical school? I am under the impression that LDS loans are a type of federal student loan that can be consolidated into a Direct Consolidation Loan. I attempted to call fedloan for more information, but they were closed today for holiday. Thank you!
Tracy,
You will be able to consolidate your LDS loans with your medschool loan’s you’ve already consolidated.
Andrew StudentLoanAdvice
Thank you so much for your help!
I’m currently in an IBR plan; by the time I graduate residency I will have made around 80 payments towards PSLF and will have around $360k total (direct sub consolidation and direct unsub consolidation) federal loans. I’ll start making around $500k/yr in August 2022 working for a 501c(3) organization. How do I make sure the payments I make in the 3.5 years after I start my job still count towards PSLF? Do I switch to standard 10 year repayment – does this still count towards PSLF? Will I be kicked out of IBR? If I stay in IBR will my payments be capped at the standard 10 year amount? Thanks!
“an” IBR plan or “an” IDR plan? If an IDR plan, is it “the” IBR plan?
At any rate, no, you don’t switch plans. The only plan someone MIGHT consider switching out of is REPAYE, but most of the time you don’t have to. I think with an income of $500K and $360K of debt, you won’t want to, but you might want to run the numbers. If you need help, check out our recommended resource:
https://www.studentloanadvice.com
Basically, if you make “too much” your IDR payments just become standard payments automatically, they don’t kick you out. However, you might not be able to switch into a different IDR program if you make too much.
In IBR, assuming that’s what you’re in (and I have no idea why you are instead of PAYE but maybe you have a good reason) yes, payments are capped. They are not capped in REPAYE though.
Thanks very much! Yes, it is “the” IBR plan. Reason at the time was, as I recall, my earliest loan disbursement was too early to qualify for PAYE (I’m a bit older) – though perhaps REPAYE would have been an option, I’m not sure. Sounds like there’s not a great reason for me to need to switch between the different IDR programs at this point anyway.
Yea, might be best to stick with IBR at this point, but if you qualify for PAYE, it might be worth running the numbers and seeing if you can switch. Payments are 10% of discretionary income instead of 15%.
I have 4 payments that FedLoan is not counting towards PSLF from when FedLoan automatically put me into forbearance when I entered a graduate degree program in fellowship, and still got autopaid. Has anyone had success getting them to count these towards PSLF, and how?
Hi Matt,
If you have documentation of payments you should send FedLoan a letter disputing what they’ve said. And mention even though they put you into forbearance, they were still requiring payment and should count those 4 towards your payment total. Make sure to attach payment documentation for those 4 payments.
Huge news on PSLF — many more people will be eligible!!! I never thought I would qualify with my FFEL loans and on extended repayment and it didn’t make sense for me to consolidate — now it looks like I can!!
https://studentaid.gov/announcements-events/pslf-limited-waiver
That is big news. Thanks for sharing.
Still confused by all of it – Navient funny business had me in the wrong/ non-qualifying plan – looks like those might count now?
Buuut….I refinanced 4 years ago – did they get rid of the ‘consolidation / refi resets the clock rule’ I couldn’t tell
Loans are at 0.6% and floating so tempted topay min until this gets sorted
Thoughts?
Just Sayin
Just Sayin,
Yes payments on past ineligible plans will now start counting as long as they were made after Oct 1, 2007.
I don’t think you’re going to have any luck since you’ve already refinanced. But you could certainly call your servicer and try to dig up past records to see if you reached PSLF.
Thanks – not sure why the refi is a ding against a borrower….so be it
UPDATE—fun to see my old comment
Falling rates really helped my floating rate at sofi – its down to 0.6% – resets every month I think. Balance is ~45k
I kept paying based on 5 year payoff – thinking PSLF wasnt an option – deferred a few months during covid to have a little extra cash.
Not certain I’ll qualify for PSLF – been at a 503 Academic Med Center for 10 years current and 5 years prior job – forbearance during residency (doooh!)
Still feeling blessed with my career – qualifying for PSLF is cherry on top if it happens – so many others actually need it –
Just Sayin
Just Sayin,
Yep definitely a bummer this wasn’t around when you were deciding between PSLF or private refinancing. Looks like you got a pretty good deal though, .06% is a crazy low interest rate!
Thanks – not sure why the refi is a ding against a borrower….so be it
Yea, I think you’re out of luck because you no longer have federal loans. Sorry. Welcome to the way the federal bureaucracy does business.
Military EM Doctor here with significant loan debt (160K) from undergrad and grad school before HPSP medical school. At 5 years of military service currently and my ADSO will take me through due to TY/GMO time and fellowship to 10 years. With new rules for forgiveness for the military, my understanding is I can stop doing REPAYE and place my loans on deferment and I will still get forgiveness? Does anyone else read it this way?
I’m not sure it will apply to future active duty months. Good question though.
My reading is that it will apply to payments made through October 2022 but not after that.
Andrew,
If you’ve reached 10 years of qualifying payments (ADSO included even with no payments made) placing loans on deferment or forbearance is fine.
Not sure either if you’ll need to make payment moving forward as active duty. The limited waiver says you won’t need to but this is up next October unless they pass something more permanent.
Andrew StudentLoanAdvice
Hello! Long time lurker looking for guidance with PLSF. MANY if not most of those reading are more savvy and knowledgeable than I am, so I greatly appreciate your time.
I’m a 30 yo attending (work at 501(3)c) that graduated in June with $220,000 in debt under REPAYE. Loans averaging 5.7%. My loan debt to income ratio is 0.6-0.7 and will fluctuate based different factors annually. Other debt(s) include my mortgage (400k note at 2.7% on a 500k house). I have approximately $80,000 in my savings and have maxed out my roth IRA (mine and spouse) and roth 401k for this year through my employer. In total, I have approximately 35k in retirement accounts.
During residency my loans were in REPAYE but I did not apply for PLSF for reasons I cannot comprehend (I didn’t know about you!). I am not sure if I would qualify, but made subsidized payments under REPAYE up until covid deferment and then began instead using/saving my money to put toward retirement when covid deferment (0$ required payment) started. EVEN if I was granted PLSF AND allowed to count the 4 years in residency towards the 120 payments, I would owe approximately $2400 a month for 6 more years per the federal calculator on website. I can alternatively find a 7 year note with a great interest rate and very similar payment, if slightly higher, if I just refinance.
The struggle is that I feel I am very likely to get after my loans and mortgage and pay them off in advance of the actual loan terms if I refinance (student and house). I admit I struggle psychologically with debt and relying on govt. handouts. Before med school I was an avid Dave Ramsey follower, despite knowing that sometimes the math wasn’t in my favor. I plan to always do 2x back-door IRA (if available) and my 401k annually no matter what, and divide up additional available income to put towards retirement and debt in perhaps a 60/40 split. I am very open-minded about adjusting this plan but I hate debt like its a cancer.
In short, is it crazy to just refinance? I see myself loan/mortgage debt free at 40-45 years old and aggressively saving for another 15-20 years for retirement as I gradually ease off working. I don’t necessarily see myself ever retiring completely though wouldn’t mind doing a 0.25-0.50 FTE in my twilight years. Appreciate your thoughts!
You’ll be leaving money on the table if you refinance, yes. It seems particularly dumb to refinance into a 7 year if you would get PSLF in 6 years. Why not make “payments” into a PSLF side fund in case you change your mind. If you leave the job, quit working full-time, Congress changes the rules, or you just decide you feel too guilty using PSLF, you can then take that fund and pay off the loan.
Right. I’m not certain that my current payments or lack thereof during covid have counted towards the 120. This would be a best case scenario and argument for pslf.
Matt,
If you were enrolled in REPAYE while in your residency, and your residency was considered non/profit or 501c3, those years would count. Your time as attending, as long as you’re working full-time will count. The covid forbearance will count towards PSLF.
Fill out the PSLF certification forms and send them to each of your past employers.
As Jim said earlier, you’d save ~6 figure sum by continuing on path to PSLF if you’re planning to stay at a qualifying employer.
Andrew StudentLoanAdvice
I sent off the application, thanks for the assurance. I know that the math works in favor of doing it, I just worried about the whole program being called off 5 years from now. The message I’m getting is that this is a risk well worth taking and that’s going to be the plan moving forward.
Just save up a PSLF side fund if that’s what you’re worried about.
https://www.whitecoatinvestor.com/pslf-side-fund/
Hello,
Thank you for such a great post! I’m a 4th year med student right now. Based on the provided info, I should consolidate my fedloans with an IDR plan of REPAYE. But I’m confused when should I apply to the PSLF program? I will be training for 3 years of residency and 3 years of fellowship (very much likely at the same academic institution). Will the IDR plan payments of REPAYE count throughout those 6 years towards the PLSF plan? I am also confused about the caution notification, “Refinancing your federal direct loans can be a big mistake if you later end up working for a 501(c)(3) after residency graduation.” Can you please elaborate more on this?
Thank you!
Ode
You fill out a PSLF form once a year for the next 10 years. That’s the “application”.
https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service/public-service-loan-forgiveness-application
Ode,
I would add yes to consolidating your loans right when you graduate. This puts you into repayment 4-5 months sooner, which is a significant benefit for you whether you do PSLF or end up refinancing.
Assuming your years in training are 501c3 (which most residencies and fellowships are) AND you are in REPAYE or other qualifying repayment plan (IBR, PAYE, ICR), then yes, your 6 years of training would qualify.
If you private refinance your federal student loans those loans would become ineligible for PSLF, IDR, federal death & disability discharge, etc.
Andrew StudentLoanAdvice
Ode,
I would add yes to consolidating your loans right when you graduate. This puts you into repayment 4-5 months sooner, significant benefit for you whether you do PSLF or end up refinancing.
Assuming your years in training are 501c3 (which most residencies and fellowships are) AND you are in REPAYE or other qualifying repayment plan (IBR, PAYE, ICR), then yes, your 6 years of training would qualify.
If you private refinance your federal student loans you would become ineligible for PSLF, IDR, death & disability discharge, etc.
Andrew StudentLoanAdvice
Awesome. Thank you for the response! I have a follow up questions to that. For consolidation is through FedLoan the direct loan consolidation, right? Is it possible to consolidate the loans before my med school graduation and sign up for IDR, now in March? Or do I need to have a salary? I just got married last year and filed taxes jointly. (And after we filed, the next day, I learned about the WCI and said that it would have been convenient to say married but filing seperately if for PAYE only.) Since this year I have no income, but my husband does, will that work towards an IDR starting in March-June? In June I guess that it would change due to my (hopefully I match) income resident salary. Any thoughts and advice is more than welcome! Thank you! Ode
Sounds like the delay in processing new income might hurt you where it helps most docs. I think you can recertify your income at any time though.
Ode,
You consolidate your loans on studentaid.gov. You can pick fedloan as your loan servicer during the consolidation application. You can try to consolidate your loans prior to graduation but they won’t allow you to do it until they move out of deferment (in-school status) to forbearance or grace period. I would consolidate your loans right when you graduate. They will use your most recent tax return when you enroll in the IDR plan. You can’t undo the married filing jointly return from last year, but you can look to file married filing separately moving forward to maintain a lower payment in IDR. You’ll want to pick PAYE (or IBR if ineligible for PAYE) to have the lowest payments.
Andrew StudentLoanAdvice
Got it. I was transferred to another approved government company instead of FedLoan starting this Feb18th. Would I still be able to pick fedloan during consolidation servicer? Or does it have to be through the approved company that FedLoan has approved? Thank you!
Ode,
Yes. On the consolidation application you can pick your loan servicer.
Andrew StudentLoanAdvice
If you have to be employed to make qualifying PSLF payments, why does this article suggest starting payments as a 4th year med student?
I currently have some payments that show as “eligible” pending employment certification but they were while I was in med school. I thought those would not count? (Otherwise, I am beyond 120 payments which would be great.)
KB,
You have to be employed full time, at a qualifying employer, in a qualifying repayment plan for a payment to count. Payments in med school won’t count because you aren’t employed full-time.
Andrew StudentLoanAdvice
That’s a good point. Practically speaking, almost no one can get a first payment made before July, but they do skip the 6 month waiting period. And in practice, the folks counting payments only care about getting that annual cert form and nobody seems to ask about May and June when signing it.
This is really OLD information, ignore it! There are several exceptions to qualifying payments for PSLF. Do your research.
This post was originally written in 2011. Were you really expecting us to keep 2500+ pages up to date at all times? The latest announcement changing PSLF was literally less than a week ago. How large do you think the staff is at WCI. Give us a second. Geez.
Yes, there are exceptions to qualifying payments. Paymetns in any payment program count through Oct 31. Even forbearance “payments” count now as of a week ago.
Sorry, ignore me! I was referring to old posts. However, do realize that as of last week, if you are employed at a government agency or 501(c)(3), previous months in ANY repayment plan or forbearance will count toward PSLF. I just had my residency months, months as attending at a university, and months at a government agency count. $251K forgiven!
Hello,
I am having a difficult time knowing whether PSLF forgiveness is worthwhile for our situation and would appreciate any guidance.
My wife and I each have about 250k in student loans and 5 more years of qualified payments to achieve forgiveness. Once our training ends we are both in highly compensated fields, therefore the 10% REPAYE payment will go up significantly.
Does the 10% monthly payment of REPAYE get calculated based on a married couple’s combined income? For example, if we make 800k combined, then 10% monthly payments would total to about 320k over 4 years. This is great if we both shoot for PSLF, paying 160k each for forgiveness of about 500k. But if only one of us is going for PSLF, paying 320k total for 250k forgiveness doesn’t seem to make much sense.
Is there such a thing as a PSLF calculator that takes into account all factors to help with decisions like this?
Thanks so much for help and for great resource that WCI is.
A
Based on above, maybe I am overestimating the monthly payment, using the 10% of REPAYE and pretax salary. Perhaps PAYE would result in a much lower monthly payment, or even filing taxes separately (which seems like a sacrifice). Any way to project what the monthly payments would be with these different strategies?
Based on above, maybe I am overestimating monthly payment using 10% of REPAYE. Not sure how much this would change with PAYE or even filing taxes separately.
AAA,
You’re on the right track, but I’d recommend before finishing training switching to the PAYE plan. The PAYE plan has a number of benefits the REPAYE plan doesn’t, such as a payment cap and the option to file taxes married filing separately. I wrote an extensive article on how taxes and repayment plans intersect which you should review.
https://www.whitecoatinvestor.com/student-loans-and-filing-status/
If you still feel lost, come check us out at https://studentloanadvice.com.
Andrew SLA
Thank you both for responses!
No great calculators, but there is a great Andrew at studentloanadvice.com!