Why PSLF Will WorkYou wanted to become a physician to serve your higher purpose and help others. Being a physician can be a rewarding but also trying career. There’s the burnout. The stress. The PTSD. Higher suicide rates. Oh, and let’s not forget about student loan debt which can easily go into the multiple six figures. One saving grace that can help you financially at least is the Public Service Loan Forgiveness (PSLF) program. Under this program, physicians who work at a nonprofit hospital or in the public sector can get their loans forgiven after 10 years of service and 120 payments. Tax free, too. In fact, according to the Association of Medical Colleges Medical School Graduation Questionnaire, 45 percent of respondent said they’re going to pursue loan forgiveness. Among that group, more than 75 percent stated they’ll pursue PSLF. This option can clearly be a godsend for physicians with high balances and is a big part of graduates’ plans. But there’s been some worry as of late given the headlines that only one percent of PSLF borrowers were approved for loan forgiveness. Here’s why we’re not too worried and why PSLF will work out for current borrowers.
The program is working out the kinksIn 2007, Congress passed the College Cost Reduction and Access Act of 2007, which unveiled the Public Service Loan Forgiveness program in part to attract borrowers to work in the public sector. Under the program, qualified candidates work full-time at an eligible organization for 10 years and make 120 payments. After that, boom, your loans are forgiven. But, it’s not been that easy. Given that the program started in 2007, the first group of borrowers only recently became eligible for this program. It was reported last year that only one percent of borrowers applying for PSLF actually got loan forgiveness. Not exactly encouraging right? But also, everyone from the borrowers to FedLoan Servicing who processes the paperwork are dealing with this for the first time and working out the kinks.
The Truth is in the NumbersThe two reasons cited for not being approved for PSLF were:
- Not meeting program requirements
- Missing information