Talk about a hot topic. Ever since my story of paying off my $40,000 of student loans on a teacher's salary blew up, I've been getting an email or two a week asking about and my decision to pay my loans off early instead of trying to seek loan forgiveness.
Generally, they look something like this:
“Obviously you didn't know about the PSLF program. I'm going to have my student loans forgiven, which is much smarter than what you did. Why would you spend that much money just to be able to say you were debt free?”
The PSLF program (or Public Service Loan Forgiveness Program) allows the remainder of your student loan debt to be forgiven if you serve in a public service career for 10 years. Because I was a teacher, I would have been able to participate in this program.
It was created back in October of 2007, and the first forgiveness of loan balances will be granted in October of 2017.
Why I chose to pay off my loans instead of seek forgiveness:
I'm going to use the word “chose” very purposely, because deciding to pay off debt faster than the loan term is a choice (a super difficult one BTW).
I was like a lot of people out there that knew about some of the various loan forgiveness programs, and wanted absolutely nothing to do with them. Instead of giving some blanket statement of wanting to be self-sufficient or whatever, I'll list the reasons:
1) The PSLF program takes 10 years (aka 120 payments) to complete
Make no mistake about it – many student loan forgiveness programs are designed to encourage people to stay in government jobs for a significant period of time. And before you think I am making that up, please read this statement made directly by the Department of Education:
“The PSLF Program is intended to encourage individuals to enter and continue to work full-time in public service jobs.” – StudentAid.gov
I knew within about a year of being a teacher that I needed to have the ability to change my career. Because of the obvious financial burden, student loans can keep you locked into a career that you may not want to keep.
The reality is that you might not like your first job or career path.
2) 10 years is VERY long time
People tend to discredit how long a year actually is, much less a decade. What would happen if I decided on year four of the program that I was miserable being a teacher? Six more years of being unhappy to make some numbers balance out to zero?
Nope. Not for me. I have too much confidence in my abilities and intelligence to box myself into a situation like that. I want as much life liquidity as humanly freaking possible.
3) I don't want to rely on the government
This is not a politically charged site in any way, and I'm definitely not making some kind of jab at anyone's political views. I just know that change in the government is predicated on making voter bases happy, which means there are no guarantees that anything will stick around long term.
What if I had completed nine years of the PSLF program, and funding was slashed or cancelled altogether? That sounds like a nightmare to me. Paying off debt early gives you more freedom to create your own destiny.
Did I make the right choice?
I'm happier than I've ever been before, make twice as much money as I did teaching, and have a better quality of life and work-life balance than I could have ever imagined. I also found my passion in life for helping people with debt.
For me – it was very obviously the right choice, but it may not be for you.
There is no one-size-fits-all solution for debt. Stop looking for one.
For a lot of people, loan forgiveness is a great option that fits their life goals and plans really well. I stopped judging people for how they choose to attack their debt a long time ago. It only takes a few gut-wrenching emails from desperate readers about their debt to put you in your place.
If you want to go after one of the various loan forgiveness programs like PSLF, do it and don't give a crap what I or anyone else thinks about it. If you have a plan for becoming debt free, you're already winning more than anyone else you know.
Just remember – there are always a lot of exclusions in these programs and they don't work for everyone. There is also a TON of red tape/fine print to wade through. If forgiveness is part of your strategy, be a student of the game and research like crazy before you commit (please).
Question for you:
Are you going for early payoff or loan forgiveness?