Public Service Loan Forgiveness Program
If you are a doctor or other professional with student loans, you are a likely candidate for the Public Service Loan Forgiveness (PSLF) Program. Established in 2007 by the United States Government, the PSLF is a great way for doctors to do nonprofit work in the community and world, and have their loans forgiven after 120 months (ten years) of timely payments. Take a look at the information below, and call or email Hands For Life to see how you can find out if you are eligible for the PSLF Program.
There are a number of different ways you can pay back your student loan. Here are a few:
Fixed Monthly Repayment
- Default Repayment Plan
- Fixed Payment for 10 years
- Income not considered
Pay As You Earn
- Payments are capped at 10% of your discretionary income based on your AGI and family size
- 20 Years
- Any amount that is forgiven after 20 years is subject to income taxes
Income Based Repayment Plans
- Monthly payments are based on your income from the previous year
- Typically, 20 or 25 years
- Any amount that is forgiven after the 20 (or 25) years is subject to income taxes
Income Sensitive Repayment
- Based on gross monthly income
- Lowers payments for 12 months at a time
- 5 years, then defaults to Fixed Monthly Repayment
How Do These Numbers Compare?
*The numbers below are based on a total debt of $150,000.00 with an interest rate of 6.8%. Additionally, the numbers are calculated based on an initial income of $50,000 (right out of college) and an annual income growth rate of 5%.
| Repayment Plan | Fixed Monthly Repayment | Income Based Repayment | Public Service Loan Forgiveness |
|---|---|---|---|
| Years of Repayment | 10 | 25 | 10 |
| Monthly Min. Payment | $1,726.20 | $415.56 | $415.56 |
| Monthly Max. Payment | $1,726.20 | $1,589.94 | $696.31 |
| Total Amount Paid to Student Loan Servicer | $207,144.85 | $266,322.00 | $65,522.60 |
| Total Accrued Interest | $57,144.85 | $239,290.33 | $102,00.00 |
| Interest Actually Paid | $57,144.85 | $200,286.29 | $65,522.60 |
| Principal Actually Paid | $150,000.00 | $66,035.70 | $0.00 |
| Total Remaining Balance | $0.00 | $83,964.30 | $150,000.00 |
| Total Unpaid Interest | $0.00 | $39,004.04 | $36,477.40 |
| Total Forgiveness | $0.00 | $122,968.34 | $186,477.40 |
| Income Tax (35%) After Forgiveness | $0.00 | $43,038.91 | $0.00 |
| Total Paid Out of Pocket | $207,144.85 | $309,360.91 | $65,522.60 |
Note: It is also important to note that only certain types of student loans qualify for these programs. Your student loan must have been obtained under the Direct Loan program. If you have other federal student loans, you can consolidate them under the Direct Loan consolidation program, and they may qualify for forgiveness.
How to Qualify for Student Loan Forgiveness?
Candidates must adhere to certain qualifications in order to be considered for the loan forgiveness programs. First, candidates must be a full time employee for a public service or nonprofit organization. Full time employment means that an employee works an average of 30 hours per week. Candidates must also make 120 scheduled monthly payments to their loan servicers on time while employed. Candidates have to be employed in a public service or nonprofit capacity the entire time they are making payments. At the end of the 120 month period, candidates will qualify for student loan forgiveness.
Learn More About Student Loan Forgiveness
If you are interested in participating in the Public Service Loan Forgiveness Program with a Hands For Life chapter, email us at info@handsforlifenonprofit.org or call our offices at 619-335-4331. This may be a great way to serve your community and get out from beneath your student loan debt.