Public Service Loan Forgiveness: Will You Be Part Of The 0.3%?

By Joseph Reinke, CFA, CEO of FitBUX

One of the biggest fears of FitBUX Members pursuing Public Service Loan Forgiveness (PSLF) is the chance that they may not qualify, thus costing themselves a lot of money in the long run.

Since the PSLF program was launched in the fall of 2007, the first eligible individuals to qualify for PSLF were able to apply for forgiveness last October. The government released a report last week with the most up-to-date figures and the deeper you dig into the numbers, the more you realize why you have to have a solid backup plan in case you don’t qualify. (Click here for the full report)

This article discusses the new data that was just released as well as how to protect yourself today just in case you don't qualify for PSLF in the future.

Public Service Loan Forgiveness Data

  • Overall, 28,000 borrowers submitted applications for forgiveness
  • 70% (approximately 19,600 people) of applicants were denied for not having eligible loans and not having qualifying employment! This is something we stress time and time again when creating repayment strategies with FitBUX members considering going onto PSLF.
  • Another 28% were denied for missing or incomplete data on the application.
  • Overall, only 96 unique borrowers qualified to have their loans discharged.
  • That is 0.3% of applicants.

What you can do in case you don’t qualify for PSLF

This report highlights the reason why all should take the advice we give to FitBUX Members who are pursuing/considering pursuing PSLF: Pretend it doesn’t exist.

If it didn’t exist, you would be on an income-driven loan forgiveness plan (IDR). While IDR monthly payments are lower, the amount forgiven at the end of the IDR plan, unlike PSLF, is taxed at the same rate as your regular income, however.

This means that you will most likely have a significant tax bill at the end of 20 or 25 years when your loans are forgiven. At a minimum, you need to start saving for the tax as soon as possible.

If you end up qualifying for PSLF, then great, you will have a lump sum of money available for other purposes.

If you don’t qualify for whatever reason, at least you are on pace to be able to cover your tax liability.

If you need expert help figuring out how much to save for the tax and to track this amount over time, I highly recommend our one-of-a-kind FitBUX IDR Tracking Solution.

We calculate exactly how much you should be saving to cover your estimated tax liability as well as automatically track whether you’re on pace to pay the tax liability or need to save more. In addition, we also update your forecasted numbers every time your income changes or tax laws change.

Learn more here: FitBUX Student Loan Tracking Solution.

About FitBUX, Inc.

If you are interested in developing a student loan repayment plan that is customized to you, you can visit and become a member today for free.

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2 Comments on “Public Service Loan Forgiveness: Will You Be Part Of The 0.3%?

  1. Do you think that part of the issue is that at first there were no defined or standard documents til 2012 or so? Or that the program has been more defined in the last few years?

    1. I do think that has a huge part to do with it. There was mass confusion when they implemented. In fact, a lot of people are still confused and Fed Loans is not easy to deal with.

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