Since beginning my graduate program at Norwich University, my wife and I have been forced to shoulder some new college loans. We were both fortunate enough to make it through our undergraduate degrees with only a minimal amount of debt, but the enormous cost of my graduate program exceeds the current limitations of our combined income. Recently, while submitting an updated FAFSA, I stumbled across some information on the Public Service Loan Forgiveness (PSLF) program. Military service members qualify for this program, as do individuals who work in the government, for non-profits, or in other qualifying public service professions. The way it works is simple – During your active military service, if you make 120 qualifying payments, the remainder of your student debt is forgiven, no strings attached. The qualifying payments must be full, timely monthly payments and paid during your service. The good news is that this number is cumulative with any other payments made while in public service. For example it is possible to work for the government before serving on active duty and finish your remaining 120 payments afterwards employed by a qualifying non-profit.
It sounds like a great deal, and it is. However, the tough part is making 120 payments (10 years) and still having student debt! By the time I graduate from my graduate program, I will have accumulated around $27,000 in Stafford loans. Using calculators available on studentaid.ed.gov, it is quite clear that I will have repaid most, if not all, of my loan by that time. This repayment includes a significant amount of interest, making a $27,000 degree cost closer to $35,000 (or more) in the long run. Like any loan, there is a set monthly payment based on the amount of owed – However, there are a number of programs which lower monthly payments.
Even with my current limited income, between what I make and what my wife makes, I am ineligible for most of the programs which would lower monthly payments. However, an independent junior enlisted service member may be able to make good use of programs such as the Income-Contingent Repayment Plan (ICR) or the Income-Based Repayment Plan (IBR). These programs require differing degrees of “financial hardship” to qualify, and can significantly reduce monthly payments. In most cases, these plans are a short term fix, as the long term amount repaid is usually higher, but for an individual who qualifies for PSLF, paying less each time MAY mean paying less in the long run.
Keep in mind I am not endorsing trying to take on significant debt and allowing interest to freely build up. Although some may actually require PSLF due to extremely high levels of student debt, others looking to take advantage of this program may not do the research required to ensure that you pay less in the long run. If you think this program may be to your advantage, I urge you to go to studentaid.ed.gov and do research. All available repayment plans are listed, along with payment calculators which show you monthly payments and the total amount repaid over the life of the loan.
Using these calculators, I have been able to determine that it is possible in my case to take advantage of PSLF utilizing the non-hardship based Extended graduated (or fixed) repayment plan. This program extends the term of the loan and lowers the payments, leading to a much higher amount paid over time. However, these programs require a minimum debt of $30,001, so I would need to take out approximately $3,000 more in loans, which I can do through a DirectPLUS loan. I am eligible for up to $8,000 via a DirectPLUS for living expenses, and honestly it would be a welcome boon. It does appear that I will pay slightly less or about the same amount as my graduate degree costs utilizing PSLF, whereas if I repaid under a standard program I would be debt free sooner, but at a significantly higher price in interest. Whether I pursue this route is still a matter of careful discussion with my wife, but I hope that my exploration of this topic may help other service members become aware of another excellent financial resource available for military students.
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