What in the world is PSLF? Not to worry!
By the time you are done reading this post, you will not only know what the PSLF is, you will also learn how to stay motivated with your money if you decide to participate in it.
For those "not in the know", PSLF stands for Public Service Loan Forgiveness - a 10 year program that will forgive your student loan debt if you meet certain criteria.
The problem is, 10 years is a long time. And even with the promise of student loan forgiveness, it can be challenging to stay motivated the whole time. Here's how you can stay with it to get the loan forgiveness you deserve.
What Is PSLF?
The Public Service Loan Forgiveness (PSLF for short) program is a loan forgiveness program that was set up by the United States Department of Education to help people who are either employed by the government or a not-for-profit organization.
The PSLF will forgive the remaining balance on your Direct student loans after you have made 120 qualifying monthly payments while working for a qualifying employer. Being in a “qualifying job” is less about the specific job you do and more about who your employer is.
A qualifying employer for the PSLF program includes:
- Any government organization whether it is federal, state, local, or tribal.
- Not-for-profit organizations that are tax-exempt under the IRS code Section 501(c)(3).
- Not-for-profit organizations that are not tax-exempt but whose primary purpose is to provide a public service. This would include organizations that are involved in providing:
- Emergency management
- Law enforcement
- Early childhood education
- Public education
- Public safety
- Military service
- Public library services
- Public services for people with disabilities
- If you are a full-time volunteer for AmeriCorps or the Peace Corps, you can qualify for the PSLF program as well.
If you want to be considered for the PSLF, you can check out the application here.
The other condition you must meet in order for the rest of your loans to be forgiven under this program is for you to make 120 monthly payments. Yes, that is at least 10 years worth of payments in order to have your loans forgiven.
How do you stay motivated with money during that 10-year period so you can reap the benefit of having your loans fully forgiven?
Think of the Long-Term Reward
In the short-term, 10 years or 120 qualifying monthly payments sounds like a long time!
However, this is where you will have to employ the part of your brain that thinks about the long-term benefit of having your loans forgiven and never having to make a student loan payment ever again in your life. You will be done with pesky loan servicers calling at 6 a.m. to harass you.
And to be honest, 10 years will come sooner than you think.
Stay Inspired with Stories from Other People
Headlines like, How This Mom Paid Off $100,000 in Five Years, get us all clicking and you will find many of such stories with a simple Google search. So make it a daily routine to find such stories to read.
Listen to podcasts and watch YouTube videos that share the stories of other people who have smashed debt to stay inspired.
Need a place to get started? Watch videos on YouTube by yours truly.
Reward Yourself Along the Way
Have you made 12 monthly payments without missing a beat? Reward yourself!
Giving yourself little rewards along the way validates your hard work and will push you to do even more.
Remind Yourself of Why You Are Doing This
Why do you want to pay off your student loans? What will loan forgiveness do for you, your family, and your mental health?
Perhaps paying off your student loans means you can finally move out of the city and go live in the woods like you always wanted.
Or perhaps it means your student loans, which have felt like chains for the longest time, will no longer prevent you from taking a month off to visit Europe.
Whatever your reason is, it is important for you to write it down and remind yourself of it regularly.
Your reason does not have to be an emotional one. However, if it is, the likelihood that you will push towards your end goal is high.
Find Support Groups
Find other people who have goals similar to yours.
Jim Rohn once said, “You are the average of the five people you spend the most time with.” This idea applies to everything in life. If you hang out with people who make foolish decisions with their money, it won’t be long before you find yourself doing similar things.
So while I’m not saying to break off all your friendships with your friends who are not money-savvy, it may be time for you to seek out communities — online and offline — who will support you on your journey to debt freedom.
Looking for a group you can join on Facebook? Join the Investing and Personal Finance Club run by the team here at The College Investor.
Tips to Get You on the Road to PSLF
As Much as Possible Make Sure Your Employment Is Qualifying
The Public Service Loan Forgiveness program applies as long as you make your payments while working for a qualifying employer. This does not mean that if you have a period of time where you are working for a non-qualifying employer, your previous payments are nullified. The 120 qualifying payments don’t have to be consecutive.
However, while working for a non-qualifying employer, those payments will not count towards your 120 total. So what’s a person to do?
If you want to take advantage of the program in 10 years, you will have to stay working with a qualifying employer as much as you can so you can get those payments out of the way.
Don’t like your current public service employment? You can serve the public in multiple ways. So, don’t be afraid to switch to a different job.
You Can Use Income-Driven Repayment Plans to Make Qualifying Payments
The good news is that using an income-driven repayment plan will not disqualify you from benefiting from PSLF. Check out more about your options for income-driven repayment plans for your federal student loans here.
If Need Be, Pick Up a Side Hustle So You Can Make On-Time Payments
We’ve all been there: those times when your paycheck was simply not enough to cover the month’s expenses, let alone make a student loan payment.
Financial emergencies are real and they happen. One of my favorite ways to ensure that a financial emergency does not turn your whole life into mush is to start a side hustle. And in recent times, starting a side hustle is much easier than you think.
Have a car? Drive for Lyft or Uber.
Do you have a spare bedroom? How about Airbnb?
Do you love to clean? Start a weekend cleaning business.
All those small amounts add up to money that can make a substantial impact to your financial situation.
Again, thinking of the long-term reward will keep you motivated and moving ahead to get those loans forgiven under the PSLF program.
You Can Do This!
Paying off your debt will not always feel great when you see how much money is leaving your account. But the feeling of being debt-free makes it worth it!
You can do this.
Have you applied for the PSLF program or have benefited from it? Let us know in the comments below. It will serve as encouragement for others.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.