Quarter Mil in Loans, But 10 Years to Forgiveness

by Theresa Y

The day I accepted my job as an entry-level government attorney making $43,350 a year was one of the happiest days of my life.

I had finally landed a job — a dream job. And maybe most importantly, I knew there would be a light at the end of the tunnel: an end date on my student loan repayment. Because with this job, I could ask for forgiveness.

I graduated from law school with excellent references, phenomenal internships and clinical experiences, fantastic grades, and a quarter million dollars in debt.

In a better economy, I would have had an offer before graduation day. Instead, I graduated and lived in a state of stress, fear, and anxiety for a year while I looked for work. I worked odd jobs on top of other odd jobs while applying for every legal position available within 200 miles.

On paper, my financial situation looks pretty ominous. I make $43,350 per year pre-tax. I owe in the neighborhood of $247,000 and I’m accruing student loan interest at 7.3%, which is nearly $1,000 per month (May’s interest was $979.66). I make student loan payments of $199 per month under the “pay as you earn” plan.

When my friends and family discover how low my loan payments are compared to my sky-high balance, they wonder how I am ever going to be able to pay this off. I used to wonder, too. Those statements killed me and filled me with worry. But then I got this job.

Forgiveness baby. It’s a beautiful thing. Forgiveness is my light at the end of the student loan tunnel, and what a glorious light it is.

In an attempt to encourage more workers to enter public service fields, Congress created the Public Service Loan Forgiveness (PSLF) program in 2007. It allows qualifying applicants to seek forgiveness for any remaining student loan balance after working for 10 years in a public service profession.

The first time I found out about loan forgiveness was in a letter accompanying my student loan billing statement. I was at the end of my first deferment period, about six months after graduating from college in 2007. The letter alerted me to the new legislation and gave some bullet points on how to qualify for forgiveness.

I didn’t pay much attention to the letter. I was planning to enter law school the following year and expected to go into private practice after that. I’d make my own money and pay off my own loans.

Then over the course of law school, I realized that the economy was bad for most people — and even worse for new lawyers. Graduating without a job and spending a year looking for one confirmed this.

I had a great mentor in law school who really helped me understand the importance of having good attorneys work in public service, whether government work or non-profit agencies that help the indigent. I did two semesters of litigation and appeals clinics my last year in school, and that experience drove me to pursue public sector employment. I really respect the attorneys who work for much less (literally, usually 30–50% less than our private sector counterparts) because they believe in the good that our profession does.

Loan forgiveness doesn’t hurt though, and if I’m completely honest, this was a huge driving factor in pursuing my job. The knowledge that my lower salary was tied to loan forgiveness made those smaller numbers much easier to accept. There were other benefits as well: I don’t have billable hour quotas, I get to work on interesting cases, I have a pension and retirement plan, and I have health insurance, to name a few of the big ones. These extra benefits are what really pushed me to fight for public service jobs, in the end. I already believed I would love the work and would thrive in this type of job, so these benefits just helped push me over the edge.

The $199/month that I currently pay towards my loans obviously doesn’t even make a dent in my interest. Without PSLF, I would be paying off this balance for at least 25 years. With this plan, I have the opportunity to serve the public, work for a small but manageable salary, and have confidence that my student loans will not ruin my life.

Surprisingly, many people who work in a public service profession, or those who want to, have no idea this program exists. My nurse roommate and social worker sister-in-law both plan to take advantage, but neither had any idea forgiveness was an option.

I think this is my dream job because it combines everything that is important to me. I knew I wanted a job where I could get into court early and often, and really hone my litigation skills. This is a huge opportunity for me to grow and learn, and I don’t think I would have the same opportunities in private practice. Work isn’t everything, though, and stability and “work life balance” are really important to me. Spending time with my friends and family outside of work is a real priority for me, and this job allows me to do that. I don’t live at the office, and I work late or on the weekends at my own discretion. I have insurance, I can pay my bills, I have free time, and I have a job that I enjoy. That’s the dream, at least for me.

I used to feel immense guilt and anxiety over my student loan balance. Now, I know that I have a plan that will get me debt-free in 10 years. I’ve come a long way from that year of darkness. Some people think the PSLF program allows people to take advantage of the system, but for the ones it helps, there truly is no greater relief. It’s a saving grace, and I’m working at a relative pittance to earn it. This safety net has given me back the confidence I lacked and has driven me to get the rest of my life in order. I’m so thankful every day that I no longer have to fear my loans. I have a plan, and I will be forgiven.

Qualifying for PSLF is pretty simple:

• First and foremost, the loans have to qualify for forgiveness. Generally, all loans under the Direct Loan program qualify. If you have non-Direct loans, you can usually still consolidate those loans under Direct Loan and qualify. Parent loans and private bank loans won’t qualify, but most other types of student aid will.

• Second, you have to be employed full-time in a public service profession (which includes non-profits of many types, as well as all government employees, public school teachers, etc.)

• Third, you have to make 120 on-time, full monthly payments under a qualifying repayment plan.

That’s it. Serve the public for a decade, and the Federal Government will release you from student loan debt.

Theresa Y is a lawyer.

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