PSLF is becoming a real thing

[Andrew StudentLoanAdvice]

Just read the recent news that PSLF is beginning to gain traction. Couple of takeaways:

• Since the waiver change in October 2021 70,000 borrowers have had about 5b in student loan debt forgiven
• The current administration projects as many as 550,000 could benefit from the changes
• The PSLF success rate is on the rise

Who in the WCI community has received PSLF recently?

[TheDangerZone]

Good to hear that borrowers who actually fulfilled all the requirements are getting their applications approved. With more attention being paid to success stories, tales of physicians making healthy six figures and getting their loans forgiven could probably generate plenty of attention and hot takes. Is there any chance high income PSLF borrowers could get cut from the program?

[drmka26]

I've been calling FedLoans to update my qualifying payments every 2 weeks but they seem to be clueless. Or don't care.

I have about 2.5 years of perkins payments before my consolidation that will now qualify under the new waiver (as the perkins loans were part of the consolidation). All they say is, "just wait and see...we have a big back-log..." but wont commit to saying if they will count or give a time line on when the payment count will be updated.

Anyone in a similar boat?

[Andrew StudentLoanAdvice]

Good to hear that borrowers who actually fulfilled all the requirements are getting their applications approved. With more attention being paid to success stories, tales of physicians making healthy six figures and getting their loans forgiven could probably generate plenty of attention and hot takes. Is there any chance high income PSLF borrowers could get cut from the program?

There's definitely a chance new borrowers who will be high earners could get phased out. I doubt they will retroactively change PSLF law for existing borrowers though. And even if they did there's a pretty good case for borrowers to hire an attorney to fight the department of education over it.

[Andrew StudentLoanAdvice]

I've been calling FedLoans to update my qualifying payments every 2 weeks but they seem to be clueless. Or don't care.

I have about 2.5 years of perkins payments before my consolidation that will now qualify under the new waiver (as the perkins loans were part of the consolidation). All they say is, "just wait and see...we have a big back-log..." but wont commit to saying if they will count or give a time line on when the payment count will be updated.

Anyone in a similar boat?

Many of my clients are in the same situation as you. It's frustrating that some had their applications processed very quickly and others are being told they need to wait at least six months. I'd keep documentation on what they are telling you.

[Tangler]

I would have done PSLF had it existed. No doubt. Take advantage of what you can. However, what incentives does this create? Does it encourage the Universities to lower prices? Doe it discourage people from borrowing too much? Also, money is fungible, money spent to forgive debt borrowed by students is unavailable for other uses.
Go for PSLF but realize there is never a free lunch.

[TheDangerZone]

There's definitely a chance new borrowers who will be high earners could get phased out. I doubt they will retroactively change PSLF law for existing borrowers though. And even if they did there's a pretty good case for borrowers to hire an attorney to fight the department of education over it.

Thanks. The federal government has done things before that were both unprecedented and skirted pre-existing terms.. and involving lawyers and courts certainly sounds like a long multi year process to me. I’m very fortunate to enjoy these zero dollar payments but will continue building up my side fund just in case.

[MPMD]

i think this is really important and should be a time for reflection for people who were so invested in saying PSLF was a scam -- one of which is a mega-star financial radio host.

[FunkDoc83]

I love hearing about people paying off their loans or getting forgiveness. Makes me kind of wish I had entered the program near when it started, but at the time I did not have confidence in the government coming through. Guess I was wrong. I don't regret paying off my loans the more traditional way, it is still a huge burden lifted.

[CordMcNally]

I love hearing about people paying off their loans or getting forgiveness. Makes me kind of wish I had entered the program near when it started, but at the time I did not have confidence in the government coming through. Guess I was wrong. I don't regret paying off my loans the more traditional way, it is still a huge burden lifted.

It's pretty situation specific. I came out much further ahead in only a handful of years by not going for PSLF.

[Zaphod]

Still doesnt do anything for anyone not included in their arbitrary cutoffs or if you happened to make a smart decision of refinancing/consolidating loans.

[StarTrekDoc]

PSLF helps areas where there's traditionally a pay gap between public / private sectors. Academia consistently pays 20%+ lower. PSLF helps close that gap and a very good recruiting tool for all our divisions.

The key for physicians is getting med schools and especially residencies to remind of PSLF opportunity during most residencies to start the clock.

They certainly may curtail the program as more high dollar balances show up. Instead of future income caps, I can see total caps - $ per year loan origination.

[Turf Doc]

it's amazing to me that people thing this was not going to be a real thing when its clearly spelled out in the documents that were signed. i can see them getting rid of it eventually but if that happens i dont think itll affect anyone who already took out loans. even if most physicians don't "need" it, its good for the people who have taken out so many student loans and chose a specialty/job that pays low enough that theyre only hope is PSLF. Scary place to be but at least theres an option.

[The White Coat Investor]

I would have done PSLF had it existed. No doubt. Take advantage of what you can. However, what incentives does this create? Does it encourage the Universities to lower prices? Doe it discourage people from borrowing too much? Also, money is fungible, money spent to forgive debt borrowed by students is unavailable for other uses.
Go for PSLF but realize there is never a free lunch.

I don't think anyone here is arguing it's good policy. This one is certainly popular in doctor circles though! Even more so than things like the BDR and MBDR which also aren't very good policy.

I would love to see a statistic of the % of PSLF dollars that have gone to medical school loans. It would not surprise me to see it was 90%.

[The White Coat Investor]

it's amazing to me that people thing this was not going to be a real thing when its clearly spelled out in the documents that were signed. i can see them getting rid of it eventually but if that happens i dont think itll affect anyone who already took out loans. even if most physicians don't "need" it, its good for the people who have taken out so many student loans and chose a specialty/job that pays low enough that theyre only hope is PSLF. Scary place to be but at least theres an option.

Me too. I've been writing about it since the 2nd or 3rd month of this blog back in 2011. While I told people to keep a PSLF fund in case of legislative risk (or more likely personal risk of changing jobs), I never doubted that those who met the requirements would eventually get forgiveness.