PSLF: Rethinking Your Student Loan Strategy
Carter Michaelson, CFP?, CSLP?, BFA?
Wealth Advisor | Financial Planner | Student Loan Expert | Christ Follower | Washed-up Athlete
To those pursuing Public Service Loan Forgiveness (PSLF): It's time to rethink how you view your student loan strategy. 4 Key Tips:
1. 120 Qualifying Payments, Not Just 10 Years:
PSLF requires 120 qualifying payments, and these don't have to be consecutive. Breaks in employment? No problem, your journey doesn't reset.
Whatever your balance is at the end of your 120th qualifying payment is now eligible for tax-free forgiveness.
2. Treat It Like a 'Tax':
With Income-Driven Repayment plans, your payments are a percentage of your income.
Consider it more like a tax than a traditional loan repayment. Whether you have $50,000 or $500,000 in federal student loans, your payment won’t change based on the size of your debt. It will be based on your income.
3. Lower Payments with Pre-Tax Contributions:
Contributing to pre-tax retirement accounts, HSAs, or FSAs can effectively lower your taxable income, thus reducing your student loan payment under these income-driven plans.
This is a great way to save for the future, while also benefiting in the short-term.
4. Focus on Payments, Not Balance:
Your loan balance can be misleading in the PSLF program. It's the number of qualifying payments that count, not the amount you owe.
Navigating PSLF can be complex, but understanding these nuances can make a big difference in your journey towards loan forgiveness.
Schedule a Free Consultation if you want to learn more about strategies and opportunities in your situation.