Ultimate Guide to Student Loan Forgiveness and Repayment for Accountants

 October 18, 2019
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Student loan forgiveness for accountants sounds like an appealing option for any finance professional with debt. After all, dealing with the ins and outs of money is your thing, and you want to keep as much of your hard-earned cash in your pocket as possible.

Accountants earn $78,820 per year on average, according to the Bureau of Labor Statistics. Yet even on that salary, repaying student loans can be overwhelming: The average graduate of the Class of 2018 left school with $29,800 in loans, according to a Student Loan Hero analysis. You may have more difficulty if your starting job pays less than average, or if you graduated with a higher amount of debt than the typical student.

Fortunately, there are several repayment strategies, and even specific student loan forgiveness programs accountants may qualify for, that can bring your debt balance down to zero. Here’s how to pay down your student loans quickly and drop that liability from the books.

Public Service Loan Forgiveness for accountants

After graduation, you may qualify for the Public Service Loan Forgiveness (PSLF) program if you have federal student loans and work for the government or an eligible nonprofit organization. To qualify:

  • Your loans must be under the William D. Ford Federal Direct Loan Program. This includes direct subsidized and unsubsidized loans, direct PLUS loans and direct consolidation loans.
  • You must make 120 qualifying monthly payments, or the equivalent of 10 years’ worth. The payments don’t have to be consecutive.
  • You must work for a local, state, federal or tribal government; a 501(c)(3) nonprofit; or other types of nonprofits if they provide qualifying public services.
  • You must work at least 30 hours a week — or your employer’s definition of full-time — whichever is greater. If you work more than one part-time job at multiple qualifying employers, you may combine your hours to meet the 30-hour minimum.
  • You must make your payments under an income-driven repayment plan.

PSLF may help ease the strain of a high student loan balance. However, the program may not be the best option for all accountants.

Since PSLF requires you to work for the government or a qualifying, nonprofit organization for 10 years, you could miss out on higher earning potential if your job doesn’t pay as much as a job in the private sector does. A better salary may ultimately offer more value than the debt relief you could receive from PSLF.

For example, say you have $30,000 in student loans and a starting salary with an accounting firm at $50,000. Alternatively, you could also choose a PSLF-qualifying public service job with a starting salary of $45,000. We’ll also assume that you’d get annual raises at a rate of 3% at either job.

Your annual salaries would be as follows:

We’ll also assume that, after 10 years, your student loan balance is $15,000. With PSLF, that amount would be forgiven tax-free, so your total benefit would be $15,000.

But the total amount earned over 10 years from a job at an accounting firm is $57,319 more than what the public service job paid. You’d have earned almost four times the value of forgiveness through PSLF.

For accountants, PSLF may not always provide the most long-term value. Compare your student loan balance with your projected salary to determine if it’s a smart move for your situation. PSLF has also been plagued with issues since borrowers started applying for forgiveness when they became eligible for the program in 2017. Only 1% of borrowers have had their application for forgiveness approved in 2018.

How to find a public service job

If you’re interested in taking a public service accounting job, be sure to check your local and state government websites. The following websites may also contain job listings for public service jobs, or information on working for the government and nonprofit organizations:

Once you land a qualifying job, submit an Employment Certification Form every year and every time you change employers. You can keep track of your qualifying payments through FedLoan Servicing, the loan servicer that manages PSLF. If you meet all the criteria, once you’ve made 120 qualifying payments, you may be eligible for student loan forgiveness. Use the government’s online PSLF Help Tool to get the process started.

Other student loan repayment options

Student loan forgiveness for accountants through PSLF is just one option. If it’s not your best choice, try an alternative way to eliminate your student loan debt.

Student loan refinancing

Depending on the terms of your current student loans, student loan refinancing may help you get a lower interest rate, a lower monthly payment or both. When you refinance your student loans, a lender issues you a new loan — often with a new interest rate, based on factors including your income and credit score — to pay off your old debt.

For example, you may want to pay off your student debt quicker than the 10-year standard repayment plan. Several student loan refinancing lenders offer repayment terms as short as five years. But know that if you refinance federal student loans, you’ll lose access to benefits including PSLF, reduced payments based on your income and generous payment postponement options.

If you’re interested in refinancing, compare lenders to find your best rates, terms and other features. When you find a lender, calculate your potential savings and read the fine print on any loan offer so you understand what you’re getting into.

Pay more than the minimum amount due

Even if student loan forgiveness for accountants isn’t available to you, you can still save money on interest by paying off debt ahead of schedule.

For example, say you have $25,000 in student loans with an average APR of 6% and a 10-year repayment period. Your monthly payment would be $278, and you’d pay $8,306 in interest over the life of the loan.

If you pay an extra $100 each month, though, you can shave more than three years off the life of your loan. Plus, you’ll save $2,855 in interest.

Curious to see how prepayment can help you? Use a prepayment calculator to see how much you can save (and how quickly you can pay off your debt) by putting extra money toward your student loans every month.

Make your student loans a priority

The sooner you pay off your student loans, the sooner you’ll have extra money each month to put toward other goals.

If student loan forgiveness for accountants isn’t an option for you, work to find other ways to wipe out your student debt as quickly as possible. Refinancing your student loans may help you get a lower interest rate, allowing you to apply money extra money toward repayment. And paying more than the minimum amount due every month can help you save money on interest and get rid of the debt sooner.

Once you’ve figured out the right repayment strategy, you’ll be even closer to freedom from student debt.

Joni Sweet contributed to this report.