Student loan forgiveness sounds like a great idea. Help your community, earn some repayment assistance, and put the money toward your debt.
But even though it sounds like a good plan, it’s hard to get excited about it. For those with potentially high-paying professions, the idea of giving up years of higher income for a chance at student loan forgiveness isn’t always appealing.
Would you give up a high salary for student loan forgiveness?
Student loan forgiveness program requirements often revolve around working in an underserved community. Though 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 net if you take a higher-paying private sector job, even with loan forgiveness,” said Mark Kantrowitz, publisher of Cappex, a free website about college admissions and financial aid.
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, he added. It’s another thing altogether to give up a much higher salary for a full decade. “It might not make sense for a lawyer,” he continued, “but some doctors can gain a benefit, depending on their situations.”
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. You might qualify for income-based repayment and work toward forgiveness,” Kantrowitz said. “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.”
Other student loan forgiveness programs
Kantrowitz pointed to the current legal case put forth by the American Bar Association. He said the main problem with long-term programs like PSLF is that you can wait a decade for forgiveness just for the government to tell you they’ve changed the game.
“You have to trust it won’t change in 10 years after you’ve already given up all that money in potential salary,” he said.
Instead, Kantrowitz suggested looking into programs with shorter service commitments. You might not get as much loan forgiveness this way. But you can still get money to pay down student loan debts, feel good about your work, and move on to a higher salary.
“Earn education awards through AmeriCorps, VISTA, or PeaceCorps to pay down loans,” Kantrowitz said. “It’s money that goes toward your student loans … after a smaller time commitment.”
PSLF alternatives
Kantrowitz pointed out that programs like PSLF make it affordable to make that choice. “Public Service Loan Forgiveness removes debt as a disincentive to stick with these jobs, but it doesn’t offer an incentive,” he said.
But those who seek forgiveness might not be willing to stay in that field for 10 years. “If you can get something that will knock tens of thousands of dollars off your loans without waiting 10 years before you start making much more, that can be a better choice,” Kantrowitz said.
For medical professionals especially, there are many more options for student loan forgiveness. If you’re not interested in qualifying for PSLF, check out the following:
- 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 $35,000 of student loan forgiveness per year.
- Faculty Loan Repayment Program (FLRP): For teaching full- or part-time at an accredited health school, you can get up to $40,000 toward your student loans.
Kantrowitz also suggested checking into state programs. Many states offer their own medical and legal student loan forgiveness grants and programs. These programs are more likely to have shorter service terms. Start your search with this full list of forgiveness and assistance programs.
Student loan forgiveness is more about passion
Trading a big salary for student loan forgiveness is a decision that’s made based on your long-term goals and lifestyle preferences.
“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.”
Interested in refinancing student loans?
Here are the top 6 lenders of 2020!| Lender | Variable APR | Eligible Degrees | |
|---|---|---|---|
 | 1.99% – 6.65%1 | Undergrad & Graduate | |
 | 1.99% – 7.10%2 | Undergrad & Graduate | |
 | 2.99% – 6.44%3 | Undergrad & Graduate | |
 | 2.39% – 6.01% | Undergrad & Graduate | |
 | 1.99% – 6.43%4 | Undergrad & Graduate | |
 | 3.18% – 6.07%5 | Undergrad & Graduate | |
| Check out the testimonials and our in-depth reviews! 1 Important Disclosures for Laurel Road. Laurel Road DisclosuresAll credit products are subject to credit approval. Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com. As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount. Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate. Interest Rate: A simple annual rate that is applied to an unpaid balance. Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%. KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. This information is current as of June 23, 2020. Information and rates are subject to change without notice. 2 Important Disclosures for Splash Financial. Splash Financial DisclosuresSplash Financial loans are available through arrangements with lending partners. Your loan application will be submitted to the lending partner and be evaluated at their sole discretion. For loans where a credit union is the lender, or a purchaser of the loan, in order to refinance your loans, you will need to become a credit union member. The Splash Student Loan Refinance Program is not offered or endorsed by any college or university. Neither Splash Financial nor the lending partner are affiliated with or endorse any college or university listed on this website. You should review the benefits of your federal student loan; it may offer specific benefits that a private refinance/consolidation loan may not offer. If you work in the public sector, are in the military or taking advantage of a federal department of relief program, such as income based repayment or public service forgiveness, you may not want to refinance, as these benefits do not transfer to private refinance/consolidation loans. Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of May 1, 2020. Fixed APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rate options range from 2.88% (without autopay) to 7.27% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Rates are subject to change without notice. Fixed rate options without an autopay discount consist of a range from 2.88% per year to 6.21% per year for a 5-year term, 3.40% per year to 6.25% per year for a 7-year term, 3.45% to 5.08% for a 8-year term, 3.89% per year to 6.65% per year for a 10-year term, 4.18% per year to 5.11% per year for a 12-year term, 4.20% per year to 7.05% per year for a 15-year term, or 4.51% per year to 7.27% per year for a 20-year term, with no origination fees. The fixed interest rate will apply until the loan is paid in full (whether before or after default, and whether before or after the scheduled maturity date of the loan). Variable APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Variable rate options range from 1.99% (with autopay) to 7.10% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Our lowest rate option is shown with a 0.25% autopay discount. Our highest rate option does not include an autopay discount. The variable rates are based on the Variable rate index, is based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of April 27, 2020, the one-month LIBOR rate is 0.43763%. The interest rate on a variable rate loan is comprised of an index and margin added together. The margin is a fixed amount (disclosed at the time of your loan application) added each month to the index to determine the next month’s variable rate. Variable rate options without an autopay discount consist of a range from 2.01% per year to 6.30% per year for a 5-year term, 4.00% per year to 6.35% per year for a 7-year term, 2.09% per year to 3.92% per year for a 8-year term, 4.25% per year to 6.40% per year for a 10-year term, 2.67% per year to 4.56% per year for a 12-year term, 3.44% per year to 6.65% per year for a 15-year term, 4.75% per year to 6.93% per year for a 20-year term, or 5.14% per year to 7.10% for a 25-year term, with no origination fees. APR is subject to increase after consummation. Variable interest rates will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. The maximum variable rate may be between 9.00% and 16.00%, depending on loan term. The floor rate may be between 0.54% and 4.21%, depending on loan term. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
3 Important Disclosures for SoFi. SoFi Disclosures
4 Important Disclosures for Earnest. Earnest DisclosuresTo qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application. Earnest fixed rate loan rates range from 3.19% APR (with Auto Pay) to 6.43% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.43% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of June 15, 2020, and are subject to change based on market conditions and borrower eligibility. Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance. The information provided on this page is updated as of 6/15/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product. © 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America. 5 Important Disclosures for CommonBond. CommonBond DisclosuresOffered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.19% effective June 10, 2020. |
|||
