Public Service Loan Forgiveness - Success!

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JimmyD
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Public Service Loan Forgiveness - Success!

Post by JimmyD »

Bogleheads, I know there are a number of you who are in the Public Service Loan Program and perhaps, like us, have been dealing with it and all its entanglements for the better part of a decade or more.

I wanted to post a quick message letting you know that my wife's $235,000 (yes, really) balance was forgiven last night, presumably due to the temporary waiver that apparently, is beginning to be implemented.

In all my dealings with this program and numerous social media groups dedicated to it over the years, it is my experience that there are countless people dealing with the same mess that we have for so long. That said, I wanted to start a thread and let you all know that I am more than happy to answer any questions any of you might have related to your own, personal situation as it relates to PSLF, the waiver, and your looming forgiveness, based on my own experience with managing to successfully navigate this program. While I'm not proclaiming to have all the answers, I'm hopeful that I can share tips and steps that worked for us and maybe help point you in the right direction.

Best wishes to all who may have recently been granted forgiveness or who will be very soon!
zagguru
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Re: Public Service Loan Forgiveness - Success!

Post by zagguru »

Thats great to hear! I am going for the standard 20 year PAYE forgiveness and I am hoping it works as well!
jackiechiles
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Re: Public Service Loan Forgiveness - Success!

Post by jackiechiles »

zagguru wrote: Tue Nov 09, 2021 7:14 am Thats great to hear! I am going for the standard 20 year PAYE forgiveness and I am hoping it works as well!
be sure you save up for the tax bomb
Nysinvestor
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Re: Public Service Loan Forgiveness - Success!

Post by Nysinvestor »

Jackiechiles, If forgiven by public loan forgiveness, this is tax free!!

How long did processing take, from the submission of last employer cert form until forgiveness?
Topic Author
JimmyD
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Re: Public Service Loan Forgiveness - Success!

Post by JimmyD »

Nysinvestor wrote: Tue Nov 09, 2021 9:10 am

How long did processing take, from the submission of last employer cert form until forgiveness?
This is where it gets REALLY odd.

I submitted the last ECF on November 5th (4 days ago) and it was just this morning, that I logged in to read the confirmation letter from Fed Loan that it has been received and was now being processed. After reading the letter, I happened to see the zero balance and upon further investigation, also saw that the two loans had been marked paid in full.

My best guess is that this was just coincidental and that the PSLF temporary waiver is beginning to be implemented...and we were lucky enough to be included in the first batch...and...best of all, once the waiver payments are applied, they are simply wiping out loan balances instead of forcing you to apply and wait.
nungjames
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Re: Public Service Loan Forgiveness - Success!

Post by nungjames »

Congratulations!

Can you tell us more?

EG same employer for 10 years?

Same loan servicer?

How did you keep track (and more imporantly how did you help loan servicers keep track) of payments etc? (we are having real trouble with this one, we have bills and documented payments we have sent in and the loan servicer is saying we never got a bill.....

Any insight would be very interesting.......
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JimmyD
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Re: Public Service Loan Forgiveness - Success!

Post by JimmyD »

nungjames wrote: Tue Nov 09, 2021 7:48 pm Congratulations!

Can you tell us more?

EG same employer for 10 years?

Same loan servicer?

How did you keep track (and more imporantly how did you help loan servicers keep track) of payments etc? (we are having real trouble with this one, we have bills and documented payments we have sent in and the loan servicer is saying we never got a bill.....

Any insight would be very interesting.......
Yes, same employer for 10 years.

Same loan servicer for the last 10 years - Fed Loan.

I saved every single piece of correspondence to and from Fed Loan from day 1. I also kept a spreadsheet of all payments amounts, dates, and confirmation numbers. Lastly, we submitted an employment certification form every year.
Lynx310650
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Re: Public Service Loan Forgiveness - Success!

Post by Lynx310650 »

Congrats! I totally screwed up my repayment strategy. I paid off a good chunk of my loans right before I started at my employer that would qualify for PSLF, and I am approaching 10 years. But I made very few payments during that time because of that initial big chunk and smaller chunks I would pay at once.

Sucks, but it is what it is.
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neurosphere
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Re: Public Service Loan Forgiveness - Success!

Post by neurosphere »

Nysinvestor wrote: Tue Nov 09, 2021 9:10 am Jackiechiles, If forgiven by public loan forgiveness, this is tax free!!
PSLF is indeed tax free. But keep in mind there are a few states (such as PA) that will indeed tax PSLF.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".
thawing
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Re: Public Service Loan Forgiveness - Success!

Post by thawing »

20 year PAYE forgiveness is different than PSLF forgiveness though, and I believe not tax free

... actually just read that may have changed with stimulus bill until 2026
Last edited by thawing on Tue Nov 09, 2021 8:58 pm, edited 1 time in total.
StoopieHippo
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Re: Public Service Loan Forgiveness - Success!

Post by StoopieHippo »

thawing wrote: Tue Nov 09, 2021 8:52 pm 20 year PAYE forgiveness is different than PSLF forgiveness though, and I believe not tax free
Isn't PAYE a type of IBR? At the end of the timeframe, whatever is forgiven gets added to income and taxed, correct?

(This is just educational for me -- I finally paid my $180k in student loans off 2 years ago.)
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Godot
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Re: Public Service Loan Forgiveness - Success!

Post by Godot »

neurosphere wrote: Tue Nov 09, 2021 8:48 pm
Nysinvestor wrote: Tue Nov 09, 2021 9:10 am Jackiechiles, If forgiven by public loan forgiveness, this is tax free!!
PSLF is indeed tax free. But keep in mind there are a few states (such as PA) that will indeed tax PSLF.
Neurosphere: In 2017 after being erroneously turned down for PSLF forgiveness I paid off my loan rather than deal with the joke the program was back then. Any idea if there any provision in the revamped program to get a refund on that payment? TIA!
"You're on earth. There's no cure for that." | ― Samuel Beckett
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neurosphere
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Re: Public Service Loan Forgiveness - Success!

Post by neurosphere »

Godot wrote: Tue Nov 09, 2021 9:03 pm
neurosphere wrote: Tue Nov 09, 2021 8:48 pm
Nysinvestor wrote: Tue Nov 09, 2021 9:10 am Jackiechiles, If forgiven by public loan forgiveness, this is tax free!!
PSLF is indeed tax free. But keep in mind there are a few states (such as PA) that will indeed tax PSLF.
Neurosphere: In 2017 after being erroneously turned down for PSLF forgiveness I paid off my loan rather than deal with the joke the program was back then. Any idea if there any provision in the revamped program to get a refund on that payment? TIA!
Nope, sorry. Only those with existing balances on loans which are still held with the federal government are eligible for PSLF. :(
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".
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arcticpineapplecorp.
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Re: Public Service Loan Forgiveness - Success!

Post by arcticpineapplecorp. »

StoopieHippo wrote: Tue Nov 09, 2021 8:57 pm
thawing wrote: Tue Nov 09, 2021 8:52 pm 20 year PAYE forgiveness is different than PSLF forgiveness though, and I believe not tax free
Isn't PAYE a type of IBR? At the end of the timeframe, whatever is forgiven gets added to income and taxed, correct?
correct.
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targetconfusion
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Re: Public Service Loan Forgiveness - Success!

Post by targetconfusion »

arcticpineapplecorp. wrote: Tue Nov 09, 2021 10:16 pm
StoopieHippo wrote: Tue Nov 09, 2021 8:57 pm
thawing wrote: Tue Nov 09, 2021 8:52 pm 20 year PAYE forgiveness is different than PSLF forgiveness though, and I believe not tax free
Isn't PAYE a type of IBR? At the end of the timeframe, whatever is forgiven gets added to income and taxed, correct?
correct.
PAYE and IBR are distinct, but both varieties of “income-driven repayment.”

https://studentaid.gov/manage-loans/re ... ome-driven
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Godot
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Re: Public Service Loan Forgiveness - Success!

Post by Godot »

neurosphere wrote: Tue Nov 09, 2021 9:11 pm
Godot wrote: Tue Nov 09, 2021 9:03 pm
neurosphere wrote: Tue Nov 09, 2021 8:48 pm
Nysinvestor wrote: Tue Nov 09, 2021 9:10 am Jackiechiles, If forgiven by public loan forgiveness, this is tax free!!
PSLF is indeed tax free. But keep in mind there are a few states (such as PA) that will indeed tax PSLF.
Neurosphere: In 2017 after being erroneously turned down for PSLF forgiveness I paid off my loan rather than deal with the joke the program was back then. Any idea if there any provision in the revamped program to get a refund on that payment? TIA!
Nope, sorry. Only those with existing balances on loans which are still held with the federal government are eligible for PSLF. :(
After a bit of digging I found a Forbes article, which stated, "Borrowers who have made more than 120 qualifying payments towards PSLF may be able to get their overpayments refunded. According to the Department of Education, “If you made more than 120 payments on an existing Direct Loan, you will automatically receive a refund for the qualifying payments you made in excess of 120.”

If this is true I'm due a 20k refund, though I have not been automatically refunded anything yet. Will put a call in tomorrow.
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soap_dodger
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Re: Public Service Loan Forgiveness - Success!

Post by soap_dodger »

Refunds are only available for borrowers who receive forgiveness under PSLF. So if someone already paid off their loans, even if they paid more than 120 qualifying payments, there is nothing to forgive and no refund. FYI there is a very active subreddit on PSLF run by the The Institute of Student Loan Advisors (TISLA) that is incredibly helpful for providing accurate and specific information.
junior
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Re: Public Service Loan Forgiveness - Success!

Post by junior »

I received loan forgiveness as well and also recommend the PSLF subreddit.

On the topic of refunds I was refunded two months overpayment due to an incorrect rejection of the Public Service Loan Forgiveness. I had continued to make regular payments for two extra months and was reimbursed once it was acknowledged that the government had miscounted. It wasn't hard to work with the employees once I had been officially denied- before that time they were not doing recounts of the annual estimate and blew off my recount requests but after the rejection was official they were willing to initiate a recount.
mariezzz
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Re: Public Service Loan Forgiveness - Success!

Post by mariezzz »

jackiechiles wrote: Tue Nov 09, 2021 8:55 am
zagguru wrote: Tue Nov 09, 2021 7:14 am Thats great to hear! I am going for the standard 20 year PAYE forgiveness and I am hoping it works as well!
be sure you save up for the tax bomb
Forgiveness under PSLF incurs no federal taxes. That's written into the law.
RXfiles
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Re: Public Service Loan Forgiveness - Success!

Post by RXfiles »

mariezzz wrote: Wed Nov 10, 2021 11:36 am
jackiechiles wrote: Tue Nov 09, 2021 8:55 am
zagguru wrote: Tue Nov 09, 2021 7:14 am Thats great to hear! I am going for the standard 20 year PAYE forgiveness and I am hoping it works as well!
be sure you save up for the tax bomb
Forgiveness under PSLF incurs no federal taxes. That's written into the law.
20 year PAYE isn't pslf
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Godot
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Re: Public Service Loan Forgiveness - Success!

Post by Godot »

soap_dodger wrote: Wed Nov 10, 2021 8:37 am Refunds are only available for borrowers who receive forgiveness under PSLF. So if someone already paid off their loans, even if they paid more than 120 qualifying payments, there is nothing to forgive and no refund. FYI there is a very active subreddit on PSLF run by the The Institute of Student Loan Advisors (TISLA) that is incredibly helpful for providing accurate and specific information.
Thank you. Putting a call in nonetheless.
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nungjames
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Re: Public Service Loan Forgiveness - Success!

Post by nungjames »

Congrats!


FWIW we got forgiven just before christmas - great christmas present. We were in PSLF for 12 years. Things really started moving when the PSLF waiver was implemented in October.

Looks like some more (bulk) forgiveness happening in the new year also. One student loan planning email we subscribe to said they've seen more posts from borrowers getting PSLF this week than any other week in the past 5 years.

The waiver does seem to have helped unclog this backed up program (at least partially), for now, but it only lasts til October this year.

So please do what you can to get eligible. Good Luck!
BogleCPA
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Re: Public Service Loan Forgiveness - Success!

Post by BogleCPA »

nungjames wrote: Thu Jan 13, 2022 1:01 pm Congrats!


FWIW we got forgiven just before christmas - great christmas present. We were in PSLF for 12 years. Things really started moving when the PSLF waiver was implemented in October.

Looks like some more (bulk) forgiveness happening in the new year also. One student loan planning email we subscribe to said they've seen more posts from borrowers getting PSLF this week than any other week in the past 5 years.

The waiver does seem to have helped unclog this backed up program (at least partially), for now, but it only lasts til October this year.

So please do what you can to get eligible. Good Luck!
Can you expand on what you mean when you say the waiver only lasts until October of this year?
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neurosphere
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Re: Public Service Loan Forgiveness - Success!

Post by neurosphere »

BogleCPA wrote: Thu Jan 13, 2022 6:05 pm
nungjames wrote: Thu Jan 13, 2022 1:01 pm Congrats!


FWIW we got forgiven just before christmas - great christmas present. We were in PSLF for 12 years. Things really started moving when the PSLF waiver was implemented in October.

Looks like some more (bulk) forgiveness happening in the new year also. One student loan planning email we subscribe to said they've seen more posts from borrowers getting PSLF this week than any other week in the past 5 years.

The waiver does seem to have helped unclog this backed up program (at least partially), for now, but it only lasts til October this year.

So please do what you can to get eligible. Good Luck!
Can you expand on what you mean when you say the waiver only lasts until October of this year?
They have expanded the rules such that borrowers who previously did not qualify for PSLF due to ineligible loans and ineligible payments plans can newly make themselves eligible (or received additional credit for months that did not previously qualify). But there is a window to do this. Basically one has to take certain action before Oct in order to get this "extra" credit. One need not actually acheive PSLF during this window, but people have limited time to inform the governement they are eligible and take some necessary steps (such as consolidating or reconsolidating) to qualify.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".
nungjames
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Re: Public Service Loan Forgiveness - Success!

Post by nungjames »

This link from Fed student aid website (which is a part of the Dept of Education), explains it better than I can:



https://studentaid.gov/announcements-ev ... ted-waiver
Carl53
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Re: Public Service Loan Forgiveness - Success!

Post by Carl53 »

Several posts mention that no taxes are owed when the loan is forgiven. Has this not been the case for anyone such that they got a 1099?

This government website, https://studentaid.gov/sites/default/fi ... -loans.pdf, says the following for IBR loans and similar for others.
• Any outstanding balance on your loan will be forgiven if you haven’t repaid your loan in full after 20 or 25 years.
You may have to pay income tax on any amount that is forgiven.
• Your monthly payments will be 10 or 15 percent of your discretionary income** and your monthly payment will
never be more than the 10-year Standard Repayment Plan amount. Payments are recalculated each year and are
based on your updated income and family size.
• If you’re married, your spouse’s income or loan debt will be considered only if you file a joint tax return.
• You must have a high debt relative to your income.
• You’ll pay more for your loan over time than you would under the 10-year Standard Repayment Plan.
• This is a good option if you are seeking Public Service Loan Forgiveness (PSLF).
I see others mention PSLF specifically and 10 year forgiveness. That differs from the quoted site noting 20 or 25 year forgiveness.
RXfiles
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Re: Public Service Loan Forgiveness - Success!

Post by RXfiles »

Carl53 wrote: Sat Jan 15, 2022 6:31 am Several posts mention that no taxes are owed when the loan is forgiven. Has this not been the case for anyone such that they got a 1099?

This government website, https://studentaid.gov/sites/default/fi ... -loans.pdf, says the following for IBR loans and similar for others.
• Any outstanding balance on your loan will be forgiven if you haven’t repaid your loan in full after 20 or 25 years.
You may have to pay income tax on any amount that is forgiven.
• Your monthly payments will be 10 or 15 percent of your discretionary income** and your monthly payment will
never be more than the 10-year Standard Repayment Plan amount. Payments are recalculated each year and are
based on your updated income and family size.
• If you’re married, your spouse’s income or loan debt will be considered only if you file a joint tax return.
• You must have a high debt relative to your income.
• You’ll pay more for your loan over time than you would under the 10-year Standard Repayment Plan.
• This is a good option if you are seeking Public Service Loan Forgiveness (PSLF).
I see others mention PSLF specifically and 10 year forgiveness. That differs from the quoted site noting 20 or 25 year forgiveness.
PSLF is 120 qualifying payments which is 10 years and there's no tax bomb. All the information is in this link.

https://studentaid.gov/manage-loans/for ... orgiveness
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