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How to Pay Down Student Loans
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Should I consider working in the public sector to have my loans forgiven?


Forty thousand dollars can get you a lot of things: A down payment on a starter home, or a payment toward an undergraduate college education. Average student loan debt, according to Student Loan Hero, is a staggering $39,400. What many graduates don’t know, though, is that there is potential to have those loans forgiven.



What exactly is the Public Service Forgiveness Program?

The Public Service Loan Forgiveness Program (“PSLF”) offers complete federal forgiveness benefits in return for qualifying public service work.  In other words, it allows you to wipe out your outstanding Federal loans in exchange for working in a public service field.  (source:

This program, signed into law by George Bush back in 2007, allows borrowers that work for the government or a 501(c) (3) organization to have the balance of their loans forgiven after making 120 payments (10 years of payments). Importantly, as of right now, there is no cap for this program in terms of how much outstanding debt can be forgiven.


For some people this program is a huge deal if they can qualify. As an example, it’s possible to have six figures worth of student loan debt forgiven if you’ve borrowed substantial sums. If you successfully pay on your loan for a total of 120 payments, anything you have not paid beyond the 120 payments would be forgiven. Even for smaller loan balances, this could be several thousands of dollars that you would not be obligated to pay if you meet all the requirements.


What jobs potentially qualify for student loans to be forgiven? A few include: government employees (state, federal, local, etc.); non-profit organizations, including all 501(c)(3) organizations; public school teachers; and public safety and law enforcement personnel (police, firefighters, park rangers, etc.). This is not a full list of all fields that qualify as public service.


Keep in mind that you must be committed to working in one of these public sector jobs for a total of ten years. Ten years is a long time. Even if you are just starting out, this could be between 1/4 - 1/3 of your total career. Let that sink in, because the last thing you want to do is get stuck in a position that you hate because of your student loans. On the other hand, if you walk the stage with six figures worth of student loan debt this program should at least be considered. Why? Show me another program or some person that would be willing to pay this type of loan off for you.



Should I consider working in the public sector to have my student loans forgiven? It depends…


My questions for you would be: How much do you have in student loans? Do your student loans qualify?  


If your student loans are relatively low, between $20,000 - $30,000, perhaps you have more flexibility to decide where you want to work. Though this amount of debt isn’t insignificant, it does give you more options than if it were higher. When your student loan balance is $30,000 - $40,000, you may want to start considering the difference between going into the public sector vs. private sector. As your balance gets larger than $40,000 then I think it makes more sense to consider going into a program like Public Service Loan Forgiveness Program.


You also want to make sure that your loans actually qualify for this program. As an example, if you had majority of your loans financed through a private institution like a bank then you would not qualify for this program. The loans must be a direct loan from the Federal Government. Another thing to keep in mind is making sure you fill out the correct paperwork for the program. If you end up working for a 501(c) (3) and faithfully pay on your loans for several years, but don’t get around to filling out the paperwork, those payments are not credited towards the 120 payments total that you need. The clock for the 120 payments starts the day you fill out the paperwork correctly, not the day you start making payments.


For those reading this that have student loans, don’t get discouraged – you have options! When looking at your situation it makes sense to really crunch the numbers before you commit to relying on this program for your student loan repayment.



Chris Vasquez, is a Financial Advisor with Lucien, Stirling & Gray Advisory Group, Inc. in Austin, Texas and is passionate about helping people achieve the life they want. Chris emphasizes that daily behavior with your finances is more important than knowing every detail about financial planning.  



All content provided in this blog is supplied by Chris Vasquez and is for informational purposes only. Barclays makes no representations as to the accuracy or completeness of any information contained in the blog or found by following any link within this blog.

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