Public Service Loan Forgiveness for psychologists - do you trust it?

[DrGero]

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OK, so I found out that I am very likely eligible for Public Service Loan Forgiveness (PSLF). Here's the deal:

My current loan rate is 1.625 percent. My current payment is 567 bucks a month (you can only imagine the principal).

If I do a Direct Consolidation loan (required if you want to do PSLF), my rate will rise to 1.75 percent. My payment under IBR will rise by approximately 50-60 dollars, more if I work more hours (possible down the line).

Do I do this? The immediate gain of having a Direct Loan is the Forbearance and Hardship Deferment rules are really easy-going, unlike with my current lender (a commercial bank). The downside is the rise in my loan payment.

The potential gain is a *possible* 35K worth of loan forgiveness (about 1/3 of my principal) in 10 years. In 10 years I'll be in my mid 40s, in the prime of my earning potential, with no debt (other than the minor amount my wife has left). The biggest attraction of this to me is having no student debt just a few years from now.

What's the risk I'm taking? Do people believe that PSLF will be there in 10 years, and that it will remain non taxable? Any thoughts? I've been obsessing about this and doing a lot of research ever since I found out I am potentially eligible.

 

[Shatani]

im extremely interested in responses to this queerie! im a very recent graduate and the prospect of having these huge payments is really daunting.

DrGero, how do you find out if the work you are currently doing qualifies you for this PSLF?

 

[DrGero]

im extremely interested in responses to this queerie! im a very recent graduate and the prospect of having these huge payments is really daunting.

DrGero, how do you find out if the work you are currently doing qualifies you for this PSLF?

I work for the VA which means I automatically qualify, basically I think any Federal Government job qualifies you. Otherwise, this seems to be accurate:

"Qualifying public service employment is full-time paid work in the government; a 501(c)(3) nonprofit; an AmeriCorps position; the Peace Corps; or for a private “public service organization.”

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Really, my main worry is that this program might not exist in 10 years. Which, of course, there's no way to really know. Then the question is, what do I have to lose (other than what appears to be a marginal rise in my monthly payment)?

 

[Therapist4Chnge]

Considering the negligable interest change, I think it would be a low-risk/high-reward change.

I'm looking at these things now too. It is pretty confusing, though I think I'm going to retain a 3rd party financial planner to help me. It'll probably cost me a few hundred dollars (at least), but that is worth my piece of mind.

 

[DrGero]

Edited the original post to reflect my re-assessment of the numbers....

 

[Neuropsych2be]

OK, so I found out that I am very likely eligible for Public Service Loan Forgiveness (PSLF). Here's the deal:

My current loan rate is 1.625 percent. My current payment is 567 bucks a month (you can only imagine the principal).

If I do a Direct Consolidation loan (required if you want to do PSLF), my rate will rise to 1.75 percent. My payment under IBR will rise by approximately 50-60 dollars, more if I work more hours (possible down the line).

Do I do this? The immediate gain of having a Direct Loan is the Forbearance and Hardship Deferment rules are really easy-going, unlike with my current lender (a commercial bank). The downside is the rise in my loan payment.

The potential gain is a *possible* 35K worth of loan forgiveness (about 1/3 of my principal) in 10 years. In 10 years I'll be in my mid 40s, in the prime of my earning potential, with no debt (other than the minor amount my wife has left). The biggest attraction of this to me is having no student debt just a few years from now.

What's the risk I'm taking? Do people believe that PSLF will be there in 10 years, and that it will remain non taxable? Any thoughts? I've been obsessing about this and doing a lot of research ever since I found out I am potentially eligible.

I believe it will still be in place 10 years from now. This was created mainly by lawyers and for lawyers.; A graduate of a top notch law school like Duke, Emory, or Yale might be 200,000 in debt! Even less well known schools are very expensive. Top notch lawyers are very unlikely to go into public service jobs like being judges or public defenders. They have been pushing this for years. Lawyers rule the universe and the political world is full of em. This probably won't be a drain on the federal government for many years to come. So my read on this is that it is here for the foreseeable future.