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While student loan forgiveness programs can wipe away your debt, they might require years of service in a low-paying profession. If you’re sacrificing your earning potential to meet a program’s requirements, is student loan forgiveness worth it?
The answer all depends on your professional and financial goals. And to get that answer, let’s ask the following questions:
- Is student loan forgiveness worth it?
- Are there forgiveness programs with shorter time commitments?
- Which is more important, PSLF or passion?
Is student loan forgiveness worth it?
Student loan forgiveness program requirements often revolve around working in underserved communities. And although these jobs help those who need it most, they often offer a much lower salary than workers could find elsewhere.
For example, instead of earning $150,000 to $300,000 a year as a doctor or lawyer, you might only earn $50,000 to $60,000 in a job that qualifies for loan forgiveness. That’s a lot of salary to give up.
“In general, you’ll make more money if you take a higher-paying private sector job, even with loan forgiveness,” said Mark Kantrowitz, publisher and VP of research at SavingforCollege.com.
And when you consider the Public Service Loan Forgiveness (PSLF) program, the sacrifice becomes even greater.
“It’s a 10-year commitment, and it’s all or nothing,” Kantrowitz pointed out. “If you stop pursuing forgiveness at year nine, you’re not getting anything.”
It’s one thing to give up all those earnings for three or four years, but it’s another thing altogether to give up a much higher salary for a full decade. Whether or not this commitment is worth it, Kantrowitz noted, could depend on your field.
“It might not make sense for a lawyer, but some doctors can gain a benefit, depending on their situations,” Kantrowitz said.
One of the realities of medical school is that once you’ve graduated, you must still complete a residency.
“You’re earning a salary, but it’s $50,000 or $60,000 a year,” Kantrowitz said. “You might qualify for income-based repayment and work toward forgiveness. If you’ve been doing your residency and fellowship at a public hospital for several years, it can make sense to keep working at that public hospital for another four or five years to preserve the forgiveness you’ve earned so far.”
In the case of medical students, then, the PSLF program might be worth a few additional years of working at a lower-than-average salary.
Are there forgiveness programs with shorter time commitments?
While PSLF requires 10 years of service before it pays out, there are other student loan forgiveness programs with shorter service commitments. While they don’t necessarily offer full forgiveness, you can still get partial assistance paying down your student debt.
“Earn education awards through AmeriCorps, VISTA or PeaceCorps to pay down loans,” suggested Kantrowitz. “It’s money that goes toward your student loans … after a smaller time commitment.”
If you’re a medical professional, you can also consider these alternative programs to PSLF:
- National Service Health Corps (NHSC): If you’re willing to practice at an NHSC-approved site for two years, you can receive between $30,000 and $50,000 toward your student loans.
- National Institutes of Health (NIH): If you spend two years involved in certain health research funded by a domestic nonprofit or a government entity, you can get up to $50,000 of student loan forgiveness per year.
- Faculty Loan Repayment Program (FLRP): For teaching full- or part-time at an accredited health school for at least two years, you can get up to $40,000 toward your student loans.
Kantrowitz also suggested checking into state programs. Many states offer their own student loan forgiveness grants and programs, and these programs are more likely to have shorter service terms. Start your search with this full list of forgiveness and assistance programs.
Which is more important, PSLF or passion?
Trading a big salary for student loan forgiveness is a decision that should be made based on your long-term goals and lifestyle preferences, not just your desire to get rid of student debt.
“You don’t take a public service job because you want to get loans forgiven, especially if you choose a high-paying profession,” Kantrowitz said. “You take these jobs because you want to do good for society and you’re willing to sacrifice.”
But while PSLF can make a public service job more affordable, it might not be a good enough reason alone to pursue this career.
“Public Service Loan Forgiveness removes debt as a disincentive to stick with these jobs, but it doesn’t offer an incentive,” Kantrowitz said.
But if you’re already inclined to work in public service, the promise of loan forgiveness could be an enticing perk. If you’re not, you might be better off pursuing a career with higher earning potential.
Then with that higher salary, you could make extra payments on your loans and get out of debt ahead of schedule.
Rebecca Safier contributed to this report.
Interested in refinancing student loans?
Here are the top 6 lenders of 2021!Lender | Variable APR | Eligible Degrees | |
---|---|---|---|
1.89% – 5.99%1 | Undergrad & Graduate | ||
1.99% – 5.64%2 | Undergrad & Graduate | ||
1.91% – 5.25%3 | Undergrad & Graduate | ||
2.25% – 6.88%4 | Undergrad & Graduate | ||
1.89% – 5.90%5 | Undergrad & Graduate | ||
2.39% – 6.01% | Undergrad & Graduate | ||
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