As I’ve written about before, I graduated law school in 2014 with over $160,000 in student loan debt (see my student loan story here).
Up until I left my most-recent job a few months ago, I had worked in either the government or non-profit sector since shortly after I finished school.
Many of my colleagues participate in the Public Service Loan Forgiveness Program (PSLF), a program designed to assist employees in the public service field in paying off student loan debt.
The gist of PSLF is that if you work in the public service field for 10 years while making the required minimum payment on your loans each month, after 10 years the balance remaining on your student loans is forgiven.
The program has been in the spotlight recently, mostly because almost all of the people who enrolled in it 10 years ago have been denied loan forgiveness.
Even though I technically could have qualified for PSLF from the outset of my legal career, here’s why I didn’t rely on it:
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I Didn’t Want to Wait 10 Years to be Out of Debt
The first and foremost reason that I didn’t attempt to take advantage of PSLF, is that I wanted to be out of debt as fast as I possibly could be.
Regardless of how you feel about the program, one fact about it is inarguable – you have to wait TEN YEARS to even try to get loan forgiveness.
Personally, this never sounded appealing to me.
Even with a daunting $160,000 in loans to pay off, I still felt like I could reach financial freedom in much less time.
While I support this program in theory (and any other program that promotes and encourages public service work), I didn’t feel like it was right for me.
Which leads me to my next point…..
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I Didn’t Feel Like I Was Really The Intended Recipient
Even though I worked in public service throughout my career, I never felt like I was the person this program was designed to help.
Every year of my legal employment I made roughly around the median salary for a single person in the U.S.
I had awesome benefits and retirement plans.
Although my debt to income ratio was out of whack, I didn’t worry about making the payments I needed to get by. I had a lot of privilege and opportunities that others do not have.
There are people working in the public service field earning far less than I ever did, who do need assistance making ends meet.
From my understanding, one of the main purposes of the program is to encourage qualified individuals to take jobs in the public service field they may not otherwise take due to financial concerns.
For example, if a lawyer was public-service oriented, but worried about his or her financial situation and law school debt, PSLF would allow him or her to take a lower paying job over a job in private practice because of the promise that student loan debt would be forgiven in 10 years.
Again, while I support this program, and agree that those who devoted their career to public service and were promised debt forgiveness should get it, I personally did not feel that I was an appropriate candidate.
Another top reason that I didn’t rely on the PSLF program is…
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I Didn’t Trust It
I remember when I was first confronted with my large student loan bill and began brainstorming ideas about how I could pay it off asap.
PSLF came up as an option.
I distinctly recall reading through the long list of rules and caveats regarding the PSLF program with one resounding word echoing in my mind: “Loopholes.”
Not loopholes that would benefit me in getting my debt forgiven early, but loopholes for the “powers that be” to say I’m not qualified for forgiveness.
According to recent reports, the agency handling the PSLF program has denied 99% of applicants. This has actually prompted a group of senators to call for an investigation into the program.
I can’t imagine having worked in public service for the last ten years relying on this program to help me out, only to be told that I do not meet the requirements for forgiveness.
People in this situation are stuck with not only a very large principal amount of loans to be paid off, but also a huge amount of interest that has been accruing over the previous ten years while they have been paying only a small amount on an interest-based program.
And speaking of this…
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I Worried About Interest
Coupled with my mistrust of the program was a fear that if I didn’t qualify, I was going to be stuck with a ridiculously gigantic bill plus interest.
The way the program works is that you must sign up for an income-based repayment program, so you pay a fraction of what you would have under a standard, 10-year repayment plan. After making 120 qualifying payments under your income-based plan, you are “eligible” for repayment.
Now, while I didn’t attempt to qualify for PSLF, I did take advantage of the income-based repayment program so that I could target specific loans to pay off faster (see the 7 strategies I used to pay off my loans here).
For me, this meant that instead of paying the standard monthly payment of over $1700 (to pay the loans off in 10 years), my monthly payment was under $200.
In other words, I wasn’t even making a dent in the interest that had accrued on my loan, let alone making any progress whatsoever on the principal balance. I was gaining more interest each month than what I was paying off.
Had I made the minimum payments required of me over ten years, I would have added tens of thousands of dollars in interest to my final bill.
I thought of this as a consequence of potentially being denied for the program after ten years.
It was not a risk I was willing to take.
My last “reason” is not so much a reason, but more of a reflection made in hindsight…
Paying Off My Loans Felt Like a Big Win
While I can’t deny that there have been times that PSLF has looked enticing to me, I am so thankful for all of the knowledge and experience I’ve gained in paying off my loans by myself.
I’ve paid off over $100,000 in the past 5 years. In that time, I have learned so much about personal finance, budgeting, spending and saving money wisely, and overcoming financial obstacles.
On top of this, I anticipate being debt-free in approximately one year from now.
This means I will have paid off my loans 4 years earlier than if I had relied on PSLF (and been in the 1% of people granted forgiveness).
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In the End
While PSLF is a program with good intentions, and I genuinely hope that many more of those who have followed its requirements get their debts forgiven soon, I am at peace with my decision to forgo the potential benefits of the program.
Even though I may have been able to take advantage of it.