What happens if you hit 20-25 year forgiveness before finishing 10 years in public service?

Student Loans
1

My payment count shows 227. I have graduate school loans and graduated in 2009. I got on an old IBR plan in 2010, so I assumed my 25-year forgiveness would happen in 2035.

I consolidated into direct loans to get the adjusted count and switched to SAVE about a year ago.

I think my count adjustment started from when I got my first bachelor’s degree in 2005. That means I might have 5 fewer years of interest working against me, which is good. But I’ve had job changes in recent years and only around 3 years of PSLF employment. None of my payments are counting right now because of changes with SAVE.

If I stay at my nonprofit job until I get 120 payments, it would still take me 7 more years, assuming every payment starts counting now (which it doesn’t yet). That means I’d reach 300 payments (25 years) a year before I get 120 PSLF payments.

What options do I have? Can I hold off on the 300-payment forgiveness to keep working toward PSLF? I don’t want to face a huge tax bill if PSLF could help me avoid it.

2

I think you can decline IDR forgiveness if you want to keep working toward PSLF.

3

Clancy said:
I think you can decline IDR forgiveness if you want to keep working toward PSLF.

If you decline the forgiveness, what happens? Do you just keep paying until it’s all gone or something else?

4

@oliviamartin
If you’re still on an IDR plan, you keep paying until the loan is either paid off or you pass away. Whichever comes first.

5

You could look into claiming insolvency for the tax burden.

Check out this IRS link: https://www.irs.gov/forms-pubs/about-form-982.

6

Hollis said:
You could look into claiming insolvency for the tax burden.

Check out this IRS link: https://www.irs.gov/forms-pubs/about-form-982.

I don’t think I’ll qualify for insolvency.

My loans are about 300k now. After another 7 years of zero-dollar payments and interest, they might grow to 500-600k by the time they’re forgiven. If I’m in a 40% tax bracket, that’s a $240k tax bill, maybe more with my income. But my house is worth 320k (paid off), I’ve got 100k+ in retirement, 80k liquid, and some cars and other assets.

7

@Sky
Don’t forget the forgiven debt counts toward your assets.

8

Hollis said:
@Sky
Don’t forget the forgiven debt counts toward your assets.

I know. If the debt hits 600k, and I’ve got about half a million in assets now, I’ll probably be over the insolvency limit by then. Unless I buy an expensive house right before forgiveness or something.

9

@Sky
Got it, just wanted to make sure you knew. Insolvency isn’t widely known, and the tax bill scares a lot of people. But it sounds like PSLF might be a good backup for you.

10

@Sky
With this much money involved, it might be worth getting professional advice. Look into Stanley Tate’s studentloansherpa.com, or start with free advice at freestudentloanadvice.org.

11

If your question is about Public Service Loan Forgiveness (PSLF), you might want to check out forums specifically focused on PSLF. They could provide better responses and keep the discussion organized.

If your post isn’t mainly about PSLF, feel free to ignore this suggestion.

12

Where can you see your payment count? Can you share a link?

13

Emerson said:
Where can you see your payment count? Can you share a link?

Go to this link on a desktop: https://studentaid.gov/app/api/nslds/payment-counter/summary. Log in and paste it into your browser’s address bar.

14

@Sky
Thanks! Mine’s still processing. Anyone know how to read the HTML code they show? I think I removed all my personal info. DM me if you can help. Here’s what it says:

“type”: “ICR”,
“borrowerEligibleIndicator”: “N”,
“loanEligibleIndicator”: “Y”,
“qualifyingPaymentCount”: 252,
“eligiblePaymentCount”: null,
“forgivenessRequiredPayments”: 300,
“forgivenessRemainingPayments”: 48

“type”: “IBR”,
“borrowerEligibleIndicator”: “N”,
“loanEligibleIndicator”: “N”,
“qualifyingPaymentCount”: 252,
“eligiblePaymentCount”: null,
“forgivenessRequiredPayments”: 300,
“forgivenessRemainingPayments”: 48

“type”: “IBR_2014”,
“borrowerEligibleIndicator”: “Y”,
“loanEligibleIndicator”: “Y”,
“qualifyingPaymentCount”: 250,
“eligiblePaymentCount”: null,
“forgivenessRequiredPayments”: 240,
“forgivenessRemainingPayments”: 0

“type”: “PAYE”,
“borrowerEligibleIndicator”: “N”,
“loanEligibleIndicator”: “N”,
“qualifyingPaymentCount”: 251,
“eligiblePaymentCount”: null,
“forgivenessRequiredPayments”: 240,
“forgivenessRemainingPayments”: 0

15

@Emerson
That looks a lot like mine. I’m not sure if those are my counts after the adjustment or before. I don’t even know if the adjustment has been applied yet.

16

Sky said:
@Emerson
That looks a lot like mine. I’m not sure if those are my counts after the adjustment or before. I don’t even know if the adjustment has been applied yet.

Looks like the “IBR_2014” type is eligible. Did you consolidate grad loans? What’s “IBR_2014” supposed to be?

“type”: “IBR_2014”,
“borrowerEligibleIndicator”: “Y”,
“loanEligibleIndicator”: “Y”,
“qualifyingPaymentCount”: 250,
“eligiblePaymentCount”: null,
“forgivenessRequiredPayments”: 240,
“forgivenessRemainingPayments”: 0

17

I imagine they’ll have a process to either opt in or opt out of forgiveness. It’s like with automatic disability discharges—some people have reasons, like state taxes, for not wanting forgiveness at a particular time. All this assumes it’s not tax-free across the board by the time you qualify for IDR forgiveness.