PSLF qualifying employers

[MAPLE90]

Given the uncertainty surrounding Public Service Loan Forgiveness (PSLF), I would consider banking on loan forgiveness while deciding on a graduate program, to be not the wisest of decisions.  Especially because many jobs that you would traditionally associate with the federal government, are now being outsourced to contractors.  

 

However, out of curiosity, do the following organizations qualify one under PSLF, given the current guidelines?

 

NATO?

The U.N.?

World Bank?

[wheretonext]

(Full disclosure: I currently work for a non-profit that receives USG contracts)

While I think it's valid to be concerned about if PSLF will be around for the next 10 years, I think the idea that there aren't a lot of qualifying jobs doesn't hold much water. Many of the "contractors" doing government work are in fact 501c3 non-profits that do qualify for PSLF. Even the for-profit "contractors" generally will have an associated non-profit foundation which allows them to bid on grants that are only available to non-profits.

[chocolatecheesecake]

I will be graduating next month, and we had a loan counseling workshop recently where we heard an earful about what happens when you actually try to go in for loan forgiveness. It's actually a pretty unattractive option, because you may actually not have a lot of loans left after your ten years of work and repayments, and you're paying more interest than you already would. In some cases, the forgiven loans actually count as taxable income, so it means a huge chunk out of your pocket anyway. I highly suggest that you should do more research on exactly how that works before counting on it. Even if it exists for the next ten years, it's no cakewalk. 

[ErmahgerdAdulting]

Created an account just so I can chime in here because this is something I've heavily researched. Firstly, I highly advise you to read the PSLF FAQs from the actual federal government student aid website (link here). I'm starting grad school in the fall, but I'm hoping to work in the non-profit sector or the federal government after graduation, so naturally PSLF is something I hope to benefit from. I too am concerned that it might eventually get cut from the federal budget, but until that actually occurs, I'm planning on participating in this program. That doesn't mean I won't be applying for external scholarships or other forms of funding, but it's still in the back of my mind. 

@MAPLE90, those international organizations you mentioned DO NOT qualify under PSLF (see question 40 in the PSLF FAQs). I was heartbroken myself when I read that, but bear in mind that you qualify for PSLF after 120 payments made while working for a qualifying entity and those 120 payments don't need to be consecutive. In other words, you can work for a qualifying company for a few years and make progress towards loan forgiveness, then work for the UN for a bit, then go back to a qualifying company and your initial progress doesn't get lost--you just won't be progressing during your time at the UN or whatever int'l org you're hypothetically at. 

In regards to tax exemption, if you do manage to have your loans forgiven under PSLF, the forgiven amount IS NOT taxable income! See question 3 in the PSLF FAQs. Under your normal loan repayment programs (PAYE, REPAYE, ICR, etc), if you reach 20 or 25 years and your remaining debt is forgiven, that does get taxed. Check out this page for more details on that. 

[MAPLE90]

Thank you for the replies.  My understanding was also that your remaining balance on 10 year PSLF is not taxable as income, but it is on PAYE for 20 year forgiveness (lets hope most people borrow wise enough not to need the second of these two options).

 

It is good to know ahead of time that the mentioned organizations do not qualify for PSLF.  I am a prospective Georgetown student, and because only about 20% of students receive school funding, Georgetown flouts PSLF as a possible solution to the debt burden their program requires.  

 

The issue is that PSLF is not properly integrated into the language of loan promissory notes.  So while it is more than likely that current graduates with be grandfathered in, should any changes to the program be made.  There is just too much ambiguity surrounding the question of what will happen if the program is altered before one graduates, and begins to make qualifying payments.

Edited April 23, 2016 by MAPLE90