• Information updated December 2017 from original podcast/post published August 2017

Teachers, How Safe is the (PSLF) Public Service Loan Forgiveness Program from the GOP Chopping Block?

It’s not safe at all.  House Republicans just introduced legislation to kill it.

The Shocking End to the Public Service Loan Forgiveness Program

The Shocking End to the Public Service Loan Forgiveness Program

What’s New?

Back in August, I released the podcast below, talking about the PSLF for teachers.  At that time I encouraged teachers to sign up for it if they had not already done so.  I pointed out that the first applicants would become eligible for forgiveness in October of 2017.  I also felt like that might set off a firestorm of attention towards the program.  Well, it did.

What Happened Since Then?

Rep. Virginia Foxx (R-N.C.) and Rep. Brett Guthrie (R-KY) of the House Committee on Education and the Workforce introduced the 542-page legislation known as the Promoting Real Opportunity, Success and Prosperity through Education Reform (PROSPER) Act.

The 542-page behemoth contains a ton of BS but specifically what I want my fellow teachers to be aware of is the immediate elimination of the PSLF.

What Exactly is the PSLF?

The Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance on your federal Direct Loans after you make 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying public service employer. There are a lot of details and a lot of hoops to jump through but it will (hopefully) provide many teachers with the student loan debt relief they need.

What’s the Latest News about the PLSF?

I’m including a couple of articles that spend some time focusing on the PSLF portion of the PROSPER Act.  The Forbes Article states that those currently enrolled in PSLF would be safe.  It states that there would be no new enrollees after June 2018. But honestly, the people who write these bills don’t even know all the details.  The article below is from studentdebtrelief.us and it includes some good discussion around the PSLF.

PROSPER Act – How Does It Impact Student Loan Borrowers?

I’m a Teacher, What Should I do?

My first and foremost suggestion for teachers just coming out of college is this.  Don’t look up until you have paid those student loans off.  Ride a bike, eat noodles, work two side hustles, just do whatever it takes to get the Federal Government out of your life.  If I had it to do over, that’s what Brenda and I would do.

But Brenda and I didn’t do that and we enrolled in the PSLF in 2010.  Then we learned how money works for the first time in our lives and we got busy getting out of debt.  By 2015 we are out of debt but we were also 5 years into the PSLF at that point.  So, it was a gamble for us.  Do we continue the PSLF or do we just pay off the student loans?  We decided to gamble.  Time will tell if we shot craps.

Final Thoughts

Depending on your specific details and life circumstances, I still suggest getting signed up and everything in place to participate in the PSLF.  If you want to give it a shot, what have you got to lose at this point?  For Brenda and me, it’s not going to make or break us.  It will be the difference in buying a motorhome to travel in after retirement or paying off the Federal Government.  I sure would rather have the motorhome!

  • Original post from August 2017 below, concerning teachers and the PSLF

Listen to the Original Podcast about the PSLF

Disclaimer: “Completion of Dave Ramsey’s Financial Coach Master Training does not create an employment or agency relationship with Ramsey Solutions or its affiliates; it does not constitute a license or credentials to engage in legal, tax, accounting, investment, or other professional practice; nor does it constitute an endorsement or recommendation of the Coach by Dave Ramsey.”

The Secret to Student Loans Forgiveness for Teachers

The Public Service Loan Forgiveness, PSLF, is a fairly decent options for teachers to have their student loans forgiven.  If you have considered getting in the PSLF, I believe now is the time to do it.  The reason is, the first student loans will be forgiven starting in October of 2017.  Once this starts to happen the public interest and media coverage will skyrocket! Therefore, I look for the government to intervene and start making some changes to the program.  So to increase your odds of taking advantage of the opportunity, be enrolled before this happens. student loans forgiven

Is PSLF right for you?

If you think the PSLF program PSLF is what you need, there are some things to consider first. student loans forgiven

In order for it to work out to be financially beneficial for teachers, you need to use the PSLF program in conjunction with a qualifying IDR plan (Income Dependent Repayment).

IBR, for example, caps your monthly repayment amount to x% of your income. For teachers is usually a little to nothing each month.

You will then need to file the paperwork and make the contacts then track your progress and pray the program holds together

Now, don’t put all your eggs in this basket, have a backup plan!  And here’s what I suggest…

  1. Put money back each month based on a 10-year repayment program.  A ROTH IRA would work great for this.
  2. The loans are forgiven in 10 years. OR if the worst has happened, you now have the cash on hand to pay them off
  3. Therefore if the program has held together, your loans are forgiven and you’ve built a nice ‘bonus savings account’.

Link to PSLF Info: https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service

Contact me anytime if I can help guide you in the right direction! student loans forgiven

* Information below comes from the Department of Education and contains 4 options that might work for teachers.  PSLF is listed first.
Source used: https://blog.ed.gov/2017/01/4-loan-forgiveness-programs-for-teachers/ student loans forgiven

1. Public Service Loan Forgiveness (PSLF) Program

Forgives the remaining balance on your Federal Direct Loans after 120 qualifying payments (10 years).

View complete program details at StudentAid.gov/publicservice.

Here are some highlights: student loans forgiven

  • This program has the broadest employment qualification requirements of the federal programs listed—it doesn’t require that you teach at a low-income a public school, or even be a teacher. Most full-time public and private elementary and secondary school teachers will meet the employment requirements.
  • You must have Direct Loans. If you have other types of federal loans, like FFEL or Perkins Loans, you must consolidate in order for those loans to qualifying. To check which types of loans you have, log in to StudentAid.gov.
  • You should repay your loans on an income-driven repayment plan if you want to get the most value out of the program. You can apply for an income-driven repayment plan on StudentLoans.gov.
  • Therefore, in order for payments to count toward the 120 needed to get forgiveness, you need to make full payments no more than 15 days late and made after October 1, 2007.
  • As a result, loan amounts forgiven under PSLF are NOT considered taxable by the IRS.

To confirm whether you qualify for the program, submit this form ASAP.

2. Teacher Loan Forgiveness

Forgives up to $17,500 of your Direct or FFEL Subsidized or Unsubsidized Loans after 5 complete and consecutive years of teaching at a qualifying school.

View complete program details at StudentAid.gov/teach-forgive.

Here are some highlights:

  • You must have been employed as a full-time teacher at an eligible school for five complete and consecutive academic years, and at least one of those years must have been after the 1997–98 academic year.
  • Certain highly qualified special education and secondary mathematics or science teachers can qualify for up to $17,500 in forgiveness. Other eligible teachers can qualify for up to $5,000.
  • Your PLUS loans and Perkins loans are not eligible to be forgiven through this program.
  • Anytime you spent teaching to receive benefits through AmeriCorps cannot be counted toward your required five years of teaching for Teacher Loan Forgiveness.
  • You apply for teacher loan forgiveness after you have completed the five-year teaching requirement.

Print and complete the Teacher Loan Forgiveness Application.

 3. Perkins Loan Cancellation for Teachers

Forgives up to 100% of your Federal Perkins Loan Program if you teach full-time at a low-income school, or if you teach certain subjects.
View complete program details at StudentAid.gov/teach-forgive.

Here are some highlights:

  • This program can only forgive your Federal Perkins Loans. Check to see if you have Perkins loans at StudentAid.gov.
  • If you are eligible for this program, up to 100 percent of the loan may be canceled for teaching service, in the following increments:
    • 15 percent canceled per year for the first and second years of service
    • 20 percent canceled for the third and fourth years
    • 30 percent canceled for the fifth year
    • Therefore, each amount canceled per year includes the interest that accrued during the year.
  • To find out if a school is classified as a low-income school, check our online database for the year(s) you have been employed as a teacher.
  • So, even if you don’t teach at a low-income school, you may qualify if you teach mathematics, science, foreign languages, bilingual or special education, or different subject determined by your state education agency to have a shortage of qualified teachers in your state.
  • Private school teachers can qualify if the school has established its nonprofit status with the Internal Revenue Service (IRS), and if the school is providing elementary and/or secondary education according to state law.

To apply for Perkins Cancellation, contact the school(s) where you obtained the Perkins Loan. Each school has its own process.

 4. State-Sponsored Student Loan Forgiveness Programs

Tons of states offer loan forgiveness programs for teachers—especially if you teach in a high-need area. The American Federation of Teachers has a great searchable database you can use to find state and local forgiveness programs you might qualify for. student loans forgiven

You may qualify, as a result, for more than one of the programs listed above. In some instances though, your decision to take advantage of one program may impact your ability to take advantage of another, so for example:

  • You must have Direct Loans therefore in order to qualify for Public Service Loan Forgiveness. If you have any Perkins Loans, you may be tempted to consolidate them into the Direct Loan Program in order to make them eligible for PSLF. However, if you do that, you’ll no longer qualify for Perkins Cancellation. You may be better off leaving your Perkins Loans out of the consolidation loan so you can take advantage of both programs.
  • You may not receive a benefit under both the Teacher Loan Forgiveness Program and the Public Service Loan Forgiveness Program for the same period of teaching service. For example, if you make payments on your loans during your five years of qualifying employment for Teacher Loan Forgiveness and then receive loan forgiveness for that service, the payments you made during that five-year period will not count toward PSLF.

As you’re trying to decide which option(s) are right for you, consult your federal loan servicer. They can give you advice based on your specific situation. student loans forgiven