Public Service Loan Forgiveness-Has it worked for anyone?

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Mispoken
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Public Service Loan Forgiveness-Has it worked for anyone?

Post by Mispoken » Sun Feb 18, 2018 2:22 pm

My wife is about 9 years into her PSLF payments and I believe the first loans were to be forgiven in October. I'm wondering if anyone here has successfully had their loans forgiven under the program yet?

Nate79
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by Nate79 » Sun Feb 18, 2018 2:29 pm

This is a great question. Considering all the articles about this last year I have yet to see a story written of someone actually getting the forgiveness.

fposte
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by fposte » Sun Feb 18, 2018 2:37 pm

Apparently the DOE isn't saying, for some reason. This report indicates that approximately 7500 people had applied for forgiveness and gives some detail about how the program went haywire.

Gray
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by Gray » Sun Feb 18, 2018 2:43 pm

Forecast is cloudy with a chance of rain

https://www.google.com/amp/s/www.forbes ... eness/amp/

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rcjchicity
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by rcjchicity » Sun Feb 18, 2018 3:28 pm

There are a few reddit threads on this topic with a couple of people reporting they know of someone who has had their loans forgiven via PSLF. Not an overwhelming number as people would have needed to be super on top of things and educated about the process when the program first started.

Mispoken
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by Mispoken » Sun Feb 18, 2018 4:51 pm

I also found a couple of "I know someone" type posts on WCI, but nothing from "the horses mouth" as it were. The articles and video posted seem to indicate the proposed budget changes would affect PSLF after July 2019, not people that have enrolled in the program prior to that. That's not to say the program can't be eliminated and leave us out to dry, but I think that's unlikely. Given this is a government program, I know the home stretch won't be easy but I'm hoping that by the time we apply in 2019 it will be mostly ironed out. Thanks for posting those articles!

Mispoken
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by Mispoken » Mon Feb 19, 2018 12:14 am

FYI; I learned the hard way if you’re going to do mfs on your taxes to keep the payment down, it behooves you to update your w-4 at your employer to withhold the single rate. I didn’t and found out today that I will have a large tax bill for 2017. We do mfs to keep SL payment down, if we filed jointly the payment would at least triple and possibly quadruple. Passing up some tax benefits you get filing jointly is worth it in our case. It seems as though our tax bill would decrease by about $3300 where as our student loan payment would increase $8000-$9000.

Just a word to the wise if you’re playing this game!

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teen persuasion
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by teen persuasion » Mon Feb 19, 2018 11:42 am

My BIL should have been eligible in October, but he's getting stonewalled.

My sister went thru every loan document, making absolutely sure he was eligible and followed rules to the letter. When they made to application for forgiveness, they were told, in essence, that they hadn't paid a high enough interest rate, so weren't eligible. My sister went back thru every promissory note for the rules, and no where does this interest rate "rule" appear. She's recently heard about class action lawsuits on the issue. They don't know of anyone who's actually gotten forgiveness, either.

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rcjchicity
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by rcjchicity » Mon Feb 19, 2018 2:11 pm

Here's an interview with someone whose loans were forgiven:

https://www.biglawinvestor.com/intervie ... rgiveness/

BrklynMike
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by BrklynMike » Mon Feb 19, 2018 3:13 pm

I've seen some posters on Reddit who have posted pics of their loans being forgiven. A school teacher with a balance of $185,000 comes to mind. Her original loans for undergrad and grad school we're something like $90,000.
"In a world of uncertainty, one should focus more on the consequences than the probabilities." - Benjamin Graham

NewPhoneWhoDis
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by NewPhoneWhoDis » Mon Feb 19, 2018 4:06 pm

Mispoken wrote:
Mon Feb 19, 2018 12:14 am
FYI; I learned the hard way if you’re going to do mfs on your taxes to keep the payment down, it behooves you to update your w-4 at your employer to withhold the single rate. I didn’t and found out today that I will have a large tax bill for 2017. We do mfs to keep SL payment down, if we filed jointly the payment would at least triple and possibly quadruple. Passing up some tax benefits you get filing jointly is worth it in our case. It seems as though our tax bill would decrease by about $3300 where as our student loan payment would increase $8000-$9000.

Just a word to the wise if you’re playing this game!
This is our scenario too. Definitely want to withhold at the single rate. We got hit hard with our 2015 tax bill and made the appropriate adjustments afterward.

We're scheduled to be forgiven around Oct 2020. Fingers crossed until then.

Mispoken
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by Mispoken » Tue Feb 20, 2018 5:36 pm

Here is an interesting question. We currently file taxes as MFS. Her student loans should be forgiven at the end of 2019, meaning her last payment will be December of 2019.

I wonder if we file for forgiveness January 1 but file jointly after the loan has been forgiven for 2019, if they could retroactively make us pay the joint filing student loan amount. HMMMMMM

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neurosphere
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by neurosphere » Tue Feb 20, 2018 11:02 pm

teen persuasion wrote:
Mon Feb 19, 2018 11:42 am
My BIL should have been eligible in October, but he's getting stonewalled.

My sister went thru every loan document, making absolutely sure he was eligible and followed rules to the letter. When they made to application for forgiveness, they were told, in essence, that they hadn't paid a high enough interest rate, so weren't eligible. My sister went back thru every promissory note for the rules, and no where does this interest rate "rule" appear. She's recently heard about class action lawsuits on the issue. They don't know of anyone who's actually gotten forgiveness, either.
I'm very interested in this. There is no rule about interest rates. The rates on federal student loans are set the same for everyone. If your BIL didn't qualify, then NO ONE qualifies for any of the loans he took out, because the rates on loans taken out at the same time are identical to all.

I strongly suspect there is a miscommunication somewhere. Eligibility is very clearly defined as 120 payments made with a qualifying loan, a qualifying employer, and a qualifying payment plan. Which of these elements did your BIL not meet, and does he have any documentation from the lender/services specifying the reason he was not eligible? I have not heard of any lawsuit regarding this either. Any info you can provide would be much appreciated!

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neurosphere
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by neurosphere » Tue Feb 20, 2018 11:07 pm

Mispoken wrote:
Tue Feb 20, 2018 5:36 pm
Here is an interesting question. We currently file taxes as MFS. Her student loans should be forgiven at the end of 2019, meaning her last payment will be December of 2019.

I wonder if we file for forgiveness January 1 but file jointly after the loan has been forgiven for 2019, if they could retroactively make us pay the joint filing student loan amount. HMMMMMM
Your payments do not adjust until you loan anniversary date. Do you know when that is? On that date, they look back to your most recently available filed taxes. Whether you files separately or jointly might affect the payment amount but NOT your eligibility for PSLF. If you have already made 120 eligible payments before your anniversary date, your filing status is irrelevant.

If your 120th payment is Dec 2019, then your filing status FOR 2019 (e.g. in Spring 2020) should not matter.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".

mariezzz
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by mariezzz » Wed Feb 21, 2018 12:05 am

Mispoken wrote:
Sun Feb 18, 2018 4:51 pm
I also found a couple of "I know someone" type posts on WCI, but nothing from "the horses mouth" as it were. The articles and video posted seem to indicate the proposed budget changes would affect PSLF after July 2019, not people that have enrolled in the program prior to that. That's not to say the program can't be eliminated and leave us out to dry, but I think that's unlikely. Given this is a government program, I know the home stretch won't be easy but I'm hoping that by the time we apply in 2019 it will be mostly ironed out. Thanks for posting those articles!
Wanted to clarify what was stated above - from what I understand, you don't have to have "enrolled in the program" before July 2019. I.e., you don't have to have told the gov't you are working for an employer who will qualify you for PSLF - or even be working for an employer who qualifies at that point. As long as you've taken out a qualifying loan before July 1 2019, make 10 years of qualifying payments while working for an employer who qualifies you for PSLF, and follow all the rules about making payments on time, etc., you should be eligible for PSLF. (Unless they change the rules.)

From the source below, the change that is being considered is that new loans taken out after July 1, 2019 would not qualify for PSLF.

https://www.forbes.com/sites/zackfriedm ... 877984768d
Under Trump's proposed budget, the Public Service Loan Forgiveness program would be eliminated.
The proposal would impact borrowers who borrow a new student loan starting July 1, 2019.

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teen persuasion
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by teen persuasion » Wed Feb 21, 2018 8:03 am

neurosphere wrote:
Tue Feb 20, 2018 11:02 pm
teen persuasion wrote:
Mon Feb 19, 2018 11:42 am
My BIL should have been eligible in October, but he's getting stonewalled.

My sister went thru every loan document, making absolutely sure he was eligible and followed rules to the letter. When they made to application for forgiveness, they were told, in essence, that they hadn't paid a high enough interest rate, so weren't eligible. My sister went back thru every promissory note for the rules, and no where does this interest rate "rule" appear. She's recently heard about class action lawsuits on the issue. They don't know of anyone who's actually gotten forgiveness, either.
I'm very interested in this. There is no rule about interest rates. The rates on federal student loans are set the same for everyone. If your BIL didn't qualify, then NO ONE qualifies for any of the loans he took out, because the rates on loans taken out at the same time are identical to all.

I strongly suspect there is a miscommunication somewhere. Eligibility is very clearly defined as 120 payments made with a qualifying loan, a qualifying employer, and a qualifying payment plan. Which of these elements did your BIL not meet, and does he have any documentation from the lender/services specifying the reason he was not eligible? I have not heard of any lawsuit regarding this either. Any info you can provide would be much appreciated!
Unfortunately, I don't have any hard details. I believe he consolidated loans, which lowered the rate, and I suspect this is the root of the issue. I know some consolidation is allowed, or even necessary to get into certain repayment programs, but I believe other alterations to loans make you ineligible. Without more details, it's only conjecture on my part. My sister strongly agrees with you that there is no rule about rates, and yet that is the item the rejection letter took issue with, so??

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neurosphere
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by neurosphere » Wed Feb 21, 2018 8:57 am

teen persuasion wrote:
Wed Feb 21, 2018 8:03 am
neurosphere wrote:
Tue Feb 20, 2018 11:02 pm
teen persuasion wrote:
Mon Feb 19, 2018 11:42 am
My BIL should have been eligible in October, but he's getting stonewalled.

My sister went thru every loan document, making absolutely sure he was eligible and followed rules to the letter. When they made to application for forgiveness, they were told, in essence, that they hadn't paid a high enough interest rate, so weren't eligible. My sister went back thru every promissory note for the rules, and no where does this interest rate "rule" appear. She's recently heard about class action lawsuits on the issue. They don't know of anyone who's actually gotten forgiveness, either.
I'm very interested in this. There is no rule about interest rates. The rates on federal student loans are set the same for everyone. If your BIL didn't qualify, then NO ONE qualifies for any of the loans he took out, because the rates on loans taken out at the same time are identical to all.

I strongly suspect there is a miscommunication somewhere. Eligibility is very clearly defined as 120 payments made with a qualifying loan, a qualifying employer, and a qualifying payment plan. Which of these elements did your BIL not meet, and does he have any documentation from the lender/services specifying the reason he was not eligible? I have not heard of any lawsuit regarding this either. Any info you can provide would be much appreciated!
Unfortunately, I don't have any hard details. I believe he consolidated loans, which lowered the rate, and I suspect this is the root of the issue. I know some consolidation is allowed, or even necessary to get into certain repayment programs, but I believe other alterations to loans make you ineligible. Without more details, it's only conjecture on my part. My sister strongly agrees with you that there is no rule about rates, and yet that is the item the rejection letter took issue with, so??
I think the answer is probably lying in plain sight. I suspect one of two things happened.

1) He consolidated the loans into a PSLF eligible loan, but didn't realize that consolidation re-sets the 10 year payments to zero.
2) He consolidated outside of the federal loan system, likely to lower his rates, (and thus the loan isn't eligible).

There is only one consolidation loan which is eligible for PSLF, called a Federal Direct Consolidation loan. The interest rate on this is set for everyone as the weighted average of the loans which are consolidated. All federal consolidation loans are PSLF eligible. Period. Any other consolidation loan (e.g. with a bank or other non-federal student lender) is NOT eligible.

You mentioned "he consolidated, which lowered the rate". Since federal consolidations loans do not lower the rate, this was probably not a federal loan, and thus is not eligible for PSLF.

NS
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Big Dutch
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by Big Dutch » Wed Feb 21, 2018 8:59 am

My SIL received public student loan forgiveness 2-3 years ago. No issues there. BIL and a friend are in process and haven't reported any issues yet.

~Big Dutch

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neurosphere
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by neurosphere » Wed Feb 21, 2018 9:02 am

Big Dutch wrote:
Wed Feb 21, 2018 8:59 am
My SIL received public student loan forgiveness 2-3 years ago. No issues there.
The earliest one could have received any forgiveness through the public service forgiveness program was roughly fall of 2017. 10 years of eligible payments are needed, and the program began fall of 2007.

Big Dutch
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by Big Dutch » Wed Feb 21, 2018 9:08 am

neurosphere wrote:
Wed Feb 21, 2018 9:02 am
Big Dutch wrote:
Wed Feb 21, 2018 8:59 am
My SIL received public student loan forgiveness 2-3 years ago. No issues there.
The earliest one could have received any forgiveness through the public service forgiveness program was roughly fall of 2017. 10 years of eligible payments are needed, and the program began fall of 2007.
Ah, sorry, I should have checked my facts before replying. I had assumed SIL's student loans were forgiven by the federal government but it could have been something separate through her non-profit employer (social work). I'll get more info and update my post.

Thx,
Big Dutch

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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by itsgot8 » Wed Feb 21, 2018 10:05 am

I'll be following this thread. The Wifester just recently enrolled in PSLF.

I hadn't considered the MFS aspect, to keep loan payments down. Rather than changing the W4 from "married" to "single", could I just increase my 401k contribution amount to equal the amount my federal taxes would increase (assuming there's that much room for growth when comparing my current annual contribution relative to the $18,5k limit)?

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neurosphere
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by neurosphere » Wed Feb 21, 2018 10:14 am

itsgot8 wrote:
Wed Feb 21, 2018 10:05 am
I'll be following this thread. The Wifester just recently enrolled in PSLF.

I hadn't considered the MFS aspect, to keep loan payments down. Rather than changing the W4 from "married" to "single", could I just increase my 401k contribution amount to equal the amount my federal taxes would increase (assuming there's that much room for growth when comparing my current annual contribution relative to the $18,5k limit)?
Filing MFS does not necessarily mean that you should select "single" on the W4. Yes, this will increase the tax withheld, and make up for the extra taxes due (if any) by MFS rather than MFJ. But MFS eliminates certain deductions, credits, and changes other issues which can make estimating the cost (or benefit) of MFS tricky. The best thing to do is estimate your taxes due upon MFS and then increasing withholding by whatever method you prefer, such as adding an extra mount to the W4, changing exemptions, changing married to single, or perhaps simply make estimated tax payments. But yes, increasing 401k contributions will lower your taxable income, and might offset any extra tax due by MFS. But you just can't just increase 401k contributions by the amount "my federal taxes would increase". You'd have to increase your 401k contributions by the extra tax divided my your marginal tax rate.

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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by smitcat » Wed Feb 21, 2018 10:16 am

If the loan or parts thereof are forgiven does that then add to your taxable income?

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neurosphere
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by neurosphere » Wed Feb 21, 2018 10:20 am

smitcat wrote:
Wed Feb 21, 2018 10:16 am
If the loan or parts thereof are forgiven does that then add to your taxable income?
Under the public service loan forgiveness program, no, the forgiven amount is not taxable. Under the regular forgiveness program which is time based and does not require public service, yes, the amounts forgiven are taxable.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".

itsgot8
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by itsgot8 » Wed Feb 21, 2018 11:04 am

neurosphere wrote:
Wed Feb 21, 2018 10:14 am

Filing MFS does not necessarily mean that you should select "single" on the W4. Yes, this will increase the tax withheld, and make up for the extra taxes due (if any) by MFS rather than MFJ. But MFS eliminates certain deductions, credits, and changes other issues which can make estimating the cost (or benefit) of MFS tricky. The best thing to do is estimate your taxes due upon MFS and then increasing withholding by whatever method you prefer, such as adding an extra mount to the W4, changing exemptions, changing married to single, or perhaps simply make estimated tax payments. But yes, increasing 401k contributions will lower your taxable income, and might offset any extra tax due by MFS. But you just can't just increase 401k contributions by the amount "my federal taxes would increase". You'd have to increase your 401k contributions by the extra tax divided my your marginal tax rate.
Great, thank you for the suggestion!

Mispoken
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by Mispoken » Wed Feb 21, 2018 5:13 pm

itsgot8 wrote:
Wed Feb 21, 2018 10:05 am
I'll be following this thread. The Wifester just recently enrolled in PSLF.

I hadn't considered the MFS aspect, to keep loan payments down. Rather than changing the W4 from "married" to "single", could I just increase my 401k contribution amount to equal the amount my federal taxes would increase (assuming there's that much room for growth when comparing my current annual contribution relative to the $18,5k limit)?
What is said above is correct; there are two parts to what I'm getting at;

1- We would save $3300 in taxes by filing jointly but the loan payment would go from $290/mo to $1000-$1200/mo. So, best case lets say it goes to the lower, $1000, that would be an increase of just over $8700/yr. Filing separately nets us $5500 in savings annually by filing separately. Your point about maxing out your 401k contributions is an interesting one, you'd have to do the math. If you both have the option, contributing $37,000 in pre tax dollars could provide the savings youre looking for to take advantage of the joint filing status. In our case, only I can contribute pre-tax dollars to a 401k, spouse contributes to a pension fund at a predefined amount and the 403b options through her employer are horrible.

2- The W-4 portion of it is in addition to the MFS situation. In my case we filed as MFS, however, I did not adjust W-4 to withhold at the single rate which resulted in an underpayment of taxes and a heft tax bill. Had I changed that, I still probably would have owed, but not nearly as much. Hopefully if you're doing this, you've caught it early enough in 2018 to prevent you from having a big tax bill for the year.

Mispoken
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by Mispoken » Wed Feb 21, 2018 5:27 pm

neurosphere wrote:
Tue Feb 20, 2018 11:07 pm
Your payments do not adjust until you loan anniversary date. Do you know when that is? On that date, they look back to your most recently available filed taxes. Whether you files separately or jointly might affect the payment amount but NOT your eligibility for PSLF. If you have already made 120 eligible payments before your anniversary date, your filing status is irrelevant.

If your 120th payment is Dec 2019, then your filing status FOR 2019 (e.g. in Spring 2020) should not matter.
Good to know! December is my anniversary month and when we recertify. What you say makes sense. Our 2017 taxes filed this year will dictate her new payment when we recertify December of 2018, which will carry forward to 2019 and then forgiven December of 2019. Is that correct?

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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by TropikThunder » Sat Mar 24, 2018 10:32 pm

Mispoken wrote:
Wed Feb 21, 2018 5:27 pm
neurosphere wrote:
Tue Feb 20, 2018 11:07 pm
Your payments do not adjust until you loan anniversary date. Do you know when that is? On that date, they look back to your most recently available filed taxes. Whether you files separately or jointly might affect the payment amount but NOT your eligibility for PSLF. If you have already made 120 eligible payments before your anniversary date, your filing status is irrelevant.

If your 120th payment is Dec 2019, then your filing status FOR 2019 (e.g. in Spring 2020) should not matter.
Good to know! December is my anniversary month and when we recertify. What you say makes sense. Our 2017 taxes filed this year will dictate her new payment when we recertify December of 2018, which will carry forward to 2019 and then forgiven December of 2019. Is that correct?
The month you become eligible for forgiveness will not be the month you receive forgiveness since the process will take some time. You will likely need to recertify at that time (Dec 2019) for new payments starting in Jan 2018 but I can't find an explicit statement re: whether you need to keep making payments while forgiveness is being processed or if they give you a forbearance.

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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by siwelvlBogleHead » Mon Jul 09, 2018 1:28 pm

I've noticed several people mention married but filing single while making payments pursuant to PSLF. Does MFS have any impact on the ultimate decision to accept or deny the applicant's request for loan forgiveness?

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neurosphere
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Re: Public Service Loan Forgiveness-Has it worked for anyone?

Post by neurosphere » Mon Jul 09, 2018 3:17 pm

siwelvlBogleHead wrote:
Mon Jul 09, 2018 1:28 pm
I've noticed several people mention married but filing single while making payments pursuant to PSLF. Does MFS have any impact on the ultimate decision to accept or deny the applicant's request for loan forgiveness?
Hi SiwelvlBogleHead (that's a mouthful)! Welcome to Bogleheads!

The short answer is no. Qualification depends on making 120 payments while 1) working for an eligible employer 2) making payments on eligible loans and 3) paying under an eligible payment plan (where payments are based on income).

Depending on the payment plan chosen, there are different rules for how/whether they count spousal income. For two of the payment plans (PAYE and IBR) they only count the borrower's income when calculating the payments if the couple has filed taxes separately. So there is no reason for any denial of any future PSLF based on filing status. But one's filing status may impact the payment amount along the way. In certain cases, payments may be so high (if income is high enough) that there is nothing left to forgive because the loan gets paid off prior to 120 payments.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".

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