Combination VA EDRP and PSLF question

[DRG23]

I'll be starting up a VA gig in a couple of months as my first attending job. I have >$400k in loans and am going for PSLF, and I'm about 5 years out from qualifying. This works out well because VA offers $40k/year in loan reimbursement for payments made over the course of 5 years, so I could essentially qualify for PSLF without making payments (I'd still make payments of course, but with the reimbursement it would be net zero).

My plan is to make income based minimum payments on a monthly basis and then paying a lump sum of money to get to a total of $40k at the end of the 12 month period (as long as $40k is paid in 12 months it gets reimbursed, it doesn't matter the payment schedule). However, I'm worried that if I make a lump sum payment it will put me in "paid ahead" status and my monthly payments will pause, thus not qualifying for PSLF.

My question is has anyone going for PSLF made additional payments on their loans outside of their monthly minimums without it affecting qualifying payments?

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[RangerBob]

As you point out, making an additional payment can put your loans in “paid ahead” status and you’d actually lose out on the ability to make your monthly PSLF-eligible payment.

That’s easy to workaround—most if not all servicer apps/websites should allow you to make a targeted payment that doesn’t put you in paid ahead status.

Whether it’s worth it or not is another question, as it doesn’t accelerate your PSLF eligibility. And the benefit may be taxable-if so, it would actually cost you money.

If it’s nontaxable then you have nothing to loose. Money now is better than questionable money later. Who knows what future administrations may do to hamper/slow down the PSLF program. It’s in our MPN so it won’t go away, but that doesn’t mean future politicians can’t make the process more strung out/painful.

 

[DRG23]

Thanks for the response! Fortunately, EDRP is nontaxable and I plan to take full advantage, as I'm not confident in putting all my eggs in the PSLF basket

 

[RangerBob]

Thanks for the response! Fortunately, EDRP is nontaxable and I plan to take full advantage, as I'm not confident in putting all my eggs in the PSLF basket

Smart idea. You never know if you may want to change jobs to a non PSLF-eligible job before your 10yr are up.