Loan Forgiveness for military

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krmower

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ALTOSS said:
thanks for the great info, maj mower! i wonder if this does not interfere with ADO... for 4 yr hpsp, 4 year is already in, i guess.
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This has nothing to do with the Army - so if you consolidat your loans under a federal program like they tell you, and serve 10 years - whatever is left over will be wiped. I believe that whatever is forgiven will show up as income for that year. So it will not matter if you have an obligation or if you take any other type of bonus.
 
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Excellent information. Thanks for posting. I could me mistaken, but I don't think you can consolidate your loans with a private company and take advantage of this.
 
AFDDS said:
Excellent information. Thanks for posting. I could me mistaken, but I don't think you can consolidate your loans with a private company and take advantage of this.
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You are correct. You must consolidate through a federal program. I am in the process of changing my consolidated loans with a bank over to a qualifying program.
 
Hmm...does being in the reserves/national guard count as "full time employment"?

It would be too good to be true if it is...
 
teeth63a said:
Hmm...does being in the reserves/national guard count as "full time employment"?

It would be too good to be true if it is...
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Unfortunately, the answer is no. In order to take advantage of the public services loan forgiveness program, you must work full time, generally 30 hrs/week or more. Moreover, the program started in 2007, and it is not retroactive; the repayment only counts after 2007. So, if you started paying in 2005, the first 2 years of repayment don't count toward the program
 
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krmower said:
You are correct. You must consolidate through a federal program. I am in the process of changing my consolidated loans with a bank over to a qualifying program.
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Which program are you going with? I have a resident that would like to switch over.
 
Anyone understand how this would work with someone who's on the Navy HSCP program? The four years while in school count as active-duty time? If one were to start making payments on the loans while in school on the HSCP would the 10 years be up after a 6 year commitment in the Military? Thanks.
 
Smills91 said:
Anyone understand how this would work with someone who's on the Navy HSCP program? The four years while in school count as active-duty time? If one were to start making payments on the loans while in school on the HSCP would the 10 years be up after a 6 year commitment in the Military? Thanks.
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My understanding is that it is once you consolidate your loans and begin working in one of the approved agencies. So dental school loans couldn't be consolidated until you graduate (also since you are not working as a dentist it would do you no good).

I am not sure how undergraduate loans would work if you had consolidated them. It's possible as an HSCP you could count the time towards undergrad - but not dental school.

I don't think anyone on the board is going to know for sure - I would recommend contacting Dept. of Education for further clarification.
 
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Smills91 said:
Anyone understand how this would work with someone who's on the Navy HSCP program? The four years while in school count as active-duty time? If one were to start making payments on the loans while in school on the HSCP would the 10 years be up after a 6 year commitment in the Military? Thanks.
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Well, first of all, the details of the program itself is uncertain for now. The dept of ed still in the process of making some kind of application that would "lock you in" for the program, for tracking and other purposes. After all, it'd totally suck if the govt decides to exclude all military personnel in healthcare profession, or worse yet repeal the whole program altogether in your 9th year. They can, and will do that if they find, say, coupling the multi yr retention bonuses and the forgiveness program, would be considered double dipping and should not be allowed. A similar reasoning could be found where you cannot take advantage of the HPLRP and multi yr-retention bonuses simultaneously (agreement p3). Unless there is a formal contract with the government of the eligibility, anything is possible in between.

However, as the program reads, it is simple and clear. A federal loan is a federal loan; the government does not distinguish when and for what purpose you obtained your loan. Anything else would defeat the whole purpose of the program, that is, the program is not designed to discriminate against those with higher degrees over lesser degrees. If so, a dentist can get their loans forgiven while a USPS delivery guy can't? That would be a classic 5th amendment violation (yes, I learned that in law school).

The program requires you to be working full-time in some type of public service area (it could even be an NGO). Yes, Army is one of them, but the term "full-time" is defined as working 30 hours of more a week. From what I understand those who are in HSCP are in fact serving active duty, but I am not sure it'd fit the definition of "full-time," although we spend way more than 30 hours studying every week. I would think that it would be considered full time, by the virtue of the active status itself.

The program also requires you to make payments under a qualified loan consolidation program, which there is only one now. You should be able to consolidate all your loans and start making payments and it'd do just fine. However, the catch is that any subsequent loans that are not part of the original consolidated loans will not be covered under the program, even if you re-consolidate later. That portion would require another 10 years of repayment. After some calculations, I found that one can truly take advantage of this program if your income is substantially low (say $40k a year) or your outstanding loan amount is great (say $200k). If you have less than say $100k, you would pay most of it within the 10 year period, and you might find yourself in a situation where the amount you'd be making in the private sector would be greater than the benefit of staying in the public sector (if you are considering leaving). I was in shock for a moment when I found out that if you make $30k for 10 years and have $200k outstanding fed loans, you could pay only $70k and get away with it. That's over $350k tax-free income! Yes, the amount forgiven under PSLP is TAX-FREE. (NB if you couldn't pay off your loans in 25 years under income contingency or based payment plan, that amount would be DISCHARGED and may be TAXABLE) It's almost too good to be true...:thumbup::thumbup::thumbup:
 
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Hi ALTOSS,

I am a veteran of the US Navy with over 9 years of prior service. I am considering whether to take the Navy's HPSP or HSCP. For years I have been planing on taking the HPSP; however, the HSCP sounds like a much better deal when it is combined with the PSLFP. This is especially true in my situation because I would get paid as an E-6 with over 8 years ($3051) + BAH ($1797) and furthermore I was already planning to retire (10.5 yrs left to retire). Am I missing something here?
 
RJF8INOC said:
Hi ALTOSS,

I am a veteran of the US Navy with over 9 years of prior service. I am considering whether to take the Navy's HPSP or HSCP. For years I have been planing on taking the HPSP; however, the HSCP sounds like a much better deal when it is combined with the PSLFP. This is especially true in my situation because I would get paid as an E-6 with over 8 years ($3051) + BAH ($1797) and furthermore I was already planning to retire (10.5 yrs left to retire). Am I missing something here?
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I think you're in pretty good position here. BTW, everything I say is for your entertainment purposes only, I'm not giving any legal or tax advice here.

Having said, I guess it all depends on how much fed loan you already have, and how expensive the school is. The program would only kick start if you start repaying your CONSOLIDATED loans, not how long you have served in the military (although you'd have my utmost respect for your service). If you already have 200k+ loans (wow) even b/f dental school, I'd say, yeah, go ahead and take advantage of the thing. But if you aren't (most likely), then the program would not work for you well. I think PSLFP is an excellent program indeed, but I cannot stop thinking about the fact that 10 years is a very long time, and anything could happen to that program while you're hoping to take advantage of it during that 10 year period. The air would clear a bit once they come up with some sort of contract, but before that, it'd be too early to tell.
 
I saw a footnote on the linked page stating that your consolidation of your loans must be in the 10 year standard consolidation loan and that generally most loans are paid off within the 10 years, thus rendering the program useless to anyone who makes more than 30-40,000 a year. Under a graduated extended loan, this would make sense for military personnel, but since dentists in the military make upwards of 70-90 thousand over those years, they'll likely have any loans they have paid off during the 120 payments on a standard consolidation loan.

Am I correct with this assessment?
 
Smills91 said:
I saw a footnote on the linked page stating that your consolidation of your loans must be in the 10 year standard consolidation loan and that generally most loans are paid off within the 10 years, thus rendering the program useless to anyone who makes more than 30-40,000 a year. Under a graduated extended loan, this would make sense for military personnel, but since dentists in the military make upwards of 70-90 thousand over those years, they'll likely have any loans they have paid off during the 120 payments on a standard consolidation loan.

Am I correct with this assessment?
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I don't think so. I have paid off half of my loans and only have about $14k left. When I filled out the consolidation info, the information I was told was that the amount I still had left, my loan would be paid off over the next 15 yrs. The pay-off time is based upon the amount you owe.

I had selected the standard payments. I know there was also a loan calculator on the website. Hopefully I understood it right. For me I will only be writing off around $3-5k if I am right. If not I am no worse off than before.
 
I have a feeling that for most of us who have taken the HPSP or similar will have very, very minimal loan repayments while we are fuffilling the initial obligation that will probably be paid off before 10 years.
 
teeth63a said:
I have a feeling that for most of us who have taken the HPSP or similar will have very, very minimal loan repayments while we are fuffilling the initial obligation that will probably be paid off before 10 years.
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I just got my loan consolidation stuff back today - whish I had done this 2.5 yrs ago when it started. I have just over $12,000 left on my loans. They will be consolidated at 3.5% for 15 yrs. This is higher than my interest rate now (2.75%) but my payments will drop 40% from my current payments, and after 10 yrs I will have paid off $10,000 - able to drop the other $2,000 - I know it's not a lot - thus the reason I wish I hadn't been paying my loans down aggressively when I first got out, and why I wish I had done this in 2007.

The point is, if it works for my little amount - If you have over $12,000 in loans and consolidate - staying in 10 yrs would have a benefit for you.
 
Smills91 said:
I saw a footnote on the linked page stating that your consolidation of your loans must be in the 10 year standard consolidation loan and that generally most loans are paid off within the 10 years, thus rendering the program useless to anyone who makes more than 30-40,000 a year. Under a graduated extended loan, this would make sense for military personnel, but since dentists in the military make upwards of 70-90 thousand over those years, they'll likely have any loans they have paid off during the 120 payments on a standard consolidation loan.

Am I correct with this assessment?
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the graduated extended loan repayment does NOT count toward the forgiveness program, since under that plan the loan payment duration is longer than 10 years, and by default you are fixing the amount of loan that would be forgiven after 10 years of repayment, should you stay on it.

income based or income contingent repayment plans, however, DO count toward the forgiveness program, b/c even though the repayment period is more than 10 years, it's not guaranteed, because you may make much higher income in later years, in which case your repayment amount would also rise accordingly. for example, if your gross income is around $150M, your repayment even under IBR would be around 24000 a year (for a $200M loan). it works like govt's safety measure.

and of course, the 10 year repayment program really defeats the whole thing to begin with, unless you change your plan later on. also, if you want to pay down your debt in 10 years, why would anyone even consolidate, if not for convenience reasons? your repayment kicks in right away w/o grace period, consolidation almost always increases the interest rates (b/c of the 1/8th % round ups), and if your loan amount is high, that small difference would be significant when it comes down to 10 years of repayment.

everything i said is from the dept of ed website.
 
krmower said:
I just got my loan consolidation stuff back today - whish I had done this 2.5 yrs ago when it started. I have just over $12,000 left on my loans. They will be consolidated at 3.5% for 15 yrs. This is higher than my interest rate now (2.75%) but my payments will drop 40% from my current payments, and after 10 yrs I will have paid off $10,000 - able to drop the other $2,000 - I know it's not a lot - thus the reason I wish I hadn't been paying my loans down aggressively when I first got out, and why I wish I had done this in 2007.

The point is, if it works for my little amount - If you have over $12,000 in loans and consolidate - staying in 10 yrs would have a benefit for you.
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It sounds like your looking only at the principal amount. Have you taken a look at how much interest you're paying? Would it be better to stick to your original loan and just pay it down rather than refi for another 15?

And unfortunately, most of us can't take the interest credit anymore cause of our high AGI.
 
teeth63a said:
It sounds like your looking only at the principal amount. Have you taken a look at how much interest you're paying? Would it be better to stick to your original loan and just pay it down rather than refi for another 15?

And unfortunately, most of us can't take the interest credit anymore cause of our high AGI.
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All I can tell you is my situation. I am very proficient at looking at loans having the school loans and 2 mortgages.

My paper states that for the $12k I am consolidating I will make 180 payments (15 yrs) of $87/ month. That means after multiplying that times 120 (10 yrs) I will have paid around 10k. Thus leaving a little under 2k for me to be forgiven of. If I did the full 15 I would pay 15k. So that is first hand knowledge from someone in the program. I picked the standard payment plan.
 
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krmower said:
All I can tell you is my situation. I am very proficient at looking at loans having the school loans and 2 mortgages.

My paper states that for the $12k I am consolidating I will make 180 payments (15 yrs) of $87/ month. That means after multiplying that times 120 (10 yrs) I will have paid around 10k. Thus leaving a little under 2k for me to be forgive of. If I did the full 15 I would pay 15k. So that is first hand knowledge from someone in the program. I picked the standard payment plan.
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Is there a limit as to how much they will forgive?
 
The program sounds great. I am an HSCP'er with lots of loans... Over $200K from undergrad/postgrad combined.
My concern would be, WHAT IF in 9 years they decide to discontinue the program. (Given the current spending spree in government, it won't take long before someone has to start cutting the budget etc anywhere they can to pay for all the welfare type programs current and new)
So, is there any way to "LOCK" into this program, or is it all just based on the hope that they will pay.
My wife and I were planning to live meagerly for a while to pay off my loans within the first 8-10 years. I qualify for 25 year repayment, under this program... but if for some reason they don't pay the left over amount after 120payments, then I get stuck with almost as much in interest as the original loans themselves. :mad:
A very sticky situation. Pay them off myself quickly, or HOPE that the government will pay it off for me in 10 years.
.... Any Thoughts???
 
nopenope said:
The program sounds great. I am an HSCP'er with lots of loans... Over $200K from undergrad/postgrad combined.
My concern would be, WHAT IF in 9 years they decide to discontinue the program. (Given the current spending spree in government, it won't take long before someone has to start cutting the budget etc anywhere they can to pay for all the welfare type programs current and new)
So, is there any way to "LOCK" into this program, or is it all just based on the hope that they will pay.
My wife and I were planning to live meagerly for a while to pay off my loans within the first 8-10 years. I qualify for 25 year repayment, under this program... but if for some reason they don't pay the left over amount after 120payments, then I get stuck with almost as much in interest as the original loans themselves. :mad:
A very sticky situation. Pay them off myself quickly, or HOPE that the government will pay it off for me in 10 years.
.... Any Thoughts???
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i addressed your concerns in the beginning of this thread.
 
nopenope said:
The program sounds great. I am an HSCP'er with lots of loans... Over $200K from undergrad/postgrad combined.
My concern would be, WHAT IF in 9 years they decide to discontinue the program. (Given the current spending spree in government, it won't take long before someone has to start cutting the budget etc anywhere they can to pay for all the welfare type programs current and new)
So, is there any way to "LOCK" into this program, or is it all just based on the hope that they will pay.
My wife and I were planning to live meagerly for a while to pay off my loans within the first 8-10 years. I qualify for 25 year repayment, under this program... but if for some reason they don't pay the left over amount after 120payments, then I get stuck with almost as much in interest as the original loans themselves. :mad:
A very sticky situation. Pay them off myself quickly, or HOPE that the government will pay it off for me in 10 years.
.... Any Thoughts???
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\

remember if you are forgiven 200K, you will be taxed on that as income. So expect to pay $50-80K during tax season. This will definitely impact people who don't save enough money to pay that off.
 
xhamburgersamx said:
\

remember if you are forgiven 200K, you will be taxed on that as income. So expect to pay $50-80K during tax season. This will definitely impact people who don't save enough money to pay that off.
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NOT TRUE. Only the remainder of your loan after 25 years of repayment would be DISCHARGED (notice not "forgiven"), and it may be taxed. Btw, w/ the new law just kicked in, this would be 20 yrs, not 25 yrs anymore. Any loans FORGIVEN under the public loan forgiveness program would NOT be considered for tax purposes. It's on the dept of ed website (I also mentioned several times in this thread). Also, the taxation on the debt being discharged is not really set in stone at all. The taxation law uses the word "may." Failure to pay income tax is a federal, criminal offense that may result in imprisonment. It'd be hard to think the govt would imprison a person who couldn't payoff his student loan debt for two decades, all because he's poor, absent criminal intent.
 
Great information here guys. Thanks!
 
Does anyone understand this segment from the info sheet?
Capture.png


It's my understanding that if you have $150,000 dollars consolidated at 7% interested over 10 years that you'll have a montly payment of ~1750 each month. Pay that out over 120 months and that equates to having paid off the loan with no 'forgiveness' necessary. The amortization table shows the loan being paid off by May 2022 and that 209,000 was paid towards the loan making your total interest over those 10 year equating roughly towards $60,000.

Am I missing something here?
 
Smills91 said:
Does anyone understand this segment from the info sheet?
Capture.png


It's my understanding that if you have $150,000 dollars consolidated at 7% interested over 10 years that you'll have a montly payment of ~1750 each month. Pay that out over 120 months and that equates to having paid off the loan with no 'forgiveness' necessary. The amortization table shows the loan being paid off by May 2022 and that 209,000 was paid towards the loan making your total interest over those 10 year equating roughly towards $60,000.

Am I missing something here?
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Since it is not a military program, I would contact the Dept. of Education and ask them. Anyone in this forum would just be guessing.
 
krmower said:
Since it is not a military program, I would contact the Dept. of Education and ask them. Anyone in this forum would just be guessing.
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Finally called the DE and got some info about this program and an answer to my above questions.

Here's a helpful QandA of the program.

http://studentaid.ed.gov/students/attachments/siteresources/PSLF_QAs_final_02 12 10.pdf

Q4 Is income a factor in determining my eligibility for PSLF?

A4 Not directly, but you will not have any remaining balance to be forgiven after 120 payments unless, at some point, your payments have been reduced through your use of the Income-Based Repayment (IBR) Plan or the Income-Contingent Repayment (ICR) Plan (see Q&A#15). (February 3, 2010)
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So basically if you're NOT on the Income based or income contigency plan(i.e STANDARD plan), this whole program is worthless to you. Factors that get you put on the income based/contigent plans include amount of debt, family size, income level, etc. It's all need based. So those of us doing military dentistry may or may not qualify for this based on these factors.
 
Here's the link to the IBR calculator:

http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRCalc.jsp

Just plug the numbers in and see what you got. It looks like the re-evaluate these numbers annually.

Here's the ICR calculator:

http://www2.ed.gov/offices/OSFAP/DirectLoan/RepayCalc/dlentry2.html

Same applies to this, just a different formula to output what you owe each month.

If you have 200,000 or more of debt these programs could save you 40-50 thousand dollars or more of payments. Essentially kicking off the interest of the loans over the 10 years.
 
Smills91 said:
Finally called the DE and got some info about this program and an answer to my above questions.

Here's a helpful QandA of the program.

http://studentaid.ed.gov/students/attachments/siteresources/PSLF_QAs_final_02%2012%2010.pdf



So basically if you're NOT on the Income based or income contigency plan(i.e STANDARD plan), this whole program is worthless to you. Factors that get you put on the income based/contigent plans include amount of debt, family size, income level, etc. It's all need based. So those of us doing military dentistry may or may not qualify for this based on these factors.
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The ability to switch back and forth between the different repayment categories (standard, contingent, income based) will be beneficial. Early on in your career when you don't make a lot you can use the income-based, later on if you deploy and your reportable income is 0 you can use contingent.
 
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krmower said:
Not true. I read the same thing on the website when I checked it out - but it does not represent what I will experience in the program. Repayment is based upon the amount you owe. The total amount you owe determines the number of years of payback. I had $12,000 - they put me in a 15 year repayment with the standard payments. So at 10 years I will be able to be forgiven for about $2k.
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I think they've made some alterations since February. As I saw an updated document that can put you on ICRP or IBRP making the program worthwhile for anyone with student loans. The definition of standard repayment plan is over a 10 year period of time or 120 payments.
 
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