Public Service Loan Forgiveness (PSLF) is real! My path and tips!

 If you having been trying to get Public Service Loan Forgiveness (PSLF), I am sure you have seen the dismal rates of acceptance that made the news. Yes, early on, fewer than 1% of applications were approved. BUT I am here to tell you, it IS possible to get loan forgiveness by working in public service. I know, because I did it. My loans were discharged in May 2021.

However, it's not a slam dunk. You need to plan. You need to make sure you understand the rules - make sure you have the right loan type, the right payment plan and the right kind of employer. Do not rely on anyone else to educate you on the program, read the rules yourself. And then read them again.

My PSFL Path

I finished graduate school in December 2008. Yeahhh, the economy was total crap. It was a rough time to come out of school and I had...I am not exactly sure but somewhere around $80,000-90,000 in student loans from undergrad and graduate school. It was A LOT, especially as my first job was a paid internship that only paid $12/hr. 

Honestly, at the time getting paid anything for an internship was a big deal. I had applied for at least 100 roles - jobs and paid internships - to get this position. It was tough job market.

At the end of my 6 month internship, I was hired on and I think my salary was $31,000/yr plus benefits, like health insurance. Thankfully nonprofits have always offered me good health benefits, even if I made low salaries for many years.

On a standard ten year payment plan, my payment would have been 900+/mo and I was also paying rent on an apartment in a expensive city, so I could go to my internship and later job. Honestly, I probably could've qualified for food stamps if I had checked and looking back, I should have checked.

Thankfully, part of PSLF was enrolling in income-based repayment plans. The first few years I was working, my payments were very low but I was making them. This is the important thing, always make the payment! I have heard that some people even had $0 payments but the lowest I remember mine being was $120/mo.

These first few years working were some of my darkest financial days. A lot of the frugality and investment focus I have now can be attributed to these lean years. I remember there were times when I needed groceries and only had $15 to stretch until pay day and there were a few times when I put my loans into forbearance for a month or two because I just didn't have any money.

Eventually, I left my first job. I had spent a full year applying to many other positions (the economy was still bad and entry level roles were in short supply) and eventually I was able to get a role one level higher at another nonprofit - my salary went up 30%! It was amazing, and when I got my second paycheck I bought a TV!

My student loan payments also started going up - but were still no where near the 900+ they would have been on standard repayment. I remember as my income was rising them going up to 250, then 400 then 650 but this was good, it meant I was doing better, I was making more money. 

However, my loan balances still continued to rise because I wasn't paying enough every month to cover the interest on my loans. I think my balance peaked around $103,000. This was a stressful time as it was around the same time other people started applying for PSLF and news was everywhere about the rejection rates. I was about 6 years in and worried I would be denied too, even though I had been submitting my paperwork regularly and tracking my progress.

About 4 years before I was approved for PSLF, I was promoted to manager and with the salary increase, I was seeing some dent in my loan balances. About two years before I was approved I started paying the standard payment (~960/mo for me) because I was no longer eligible for income based repayment. My last year, I benefited from the COVID relief and $0 payments and for me, it came at the perfect time because that was the year I was paying the most!

I was nervous the whole last year!

After just under 11 years of working at nonprofits I reached the 120 payments I needed and I applied for forgiveness. My application was immediately rejected for not having made enough payments. Seriously! I submitted again. I was rejected because they "couldn't verify my employer" - I had been at this same employer for over 7 years by that point and had submitted my employment certification many times. Sigh. I sent the same paperwork in again. 

This was super annoying.

In total, it took five months for my application to be reviewed and approved. I was shocked when I logged into my account and saw that my loan balances were zero!

Tips for PSLF Success

Submit your paperwork early and often

I see so many people posting in online groups saying they are 4, 6 or even 8 years in and they haven't submitted an employment certification. Do not do this. If something is wrong you want to know, os you can fix it before you've made payments for years. Submit the employment certification within a few months of starting your first job, this will make sure your job qualifies but also your payment plan and your loan type. I would recommend submitting your form at the following times:

• When you first start your very first nonprofit job
• Every year you are employed
• If you are leaving a job for a new one, get a form signed before you go
• Within a few months of starting a new job - make sure it qualifies

I was lucky that I only had 3 employers in the 11 years I worked on my PSLF but when I went to my second employer, I didn't get an employment certification before I left. About a year later, I was contacting them to try and get my form signed and it was a whole thing. Many people had left and I didn't know who to contact and it was a while before anyone got back to me with the form. It's much better to get your form as a parting gift!

I cannot emphasize this enough, it's the most important thing you can do.

Avoid forbearance

So yes, I had some months when I couldn't afford to make my payment for whatever reason, it happens but you want to avoid this. Ideally you want to be making your payments early in your career when you are lower earning than down the line when you make more money and your payments are larger. Those months I skipped my little $120 or $200 payments, I ended up paying over $900 later on.

Auto-pay

Do everything you can to make sure you not only pay but on time. Setup auto-pay for your loans to make it easier for you.

You can do this! Hopefully it will be a little easier in the future for more people to benefit.