Public Service Loan Forgiveness: A Success Story/Cautionary Tale

When I was 16 I decided that I wanted to spend my life helping teens navigate this difficult world.

When I was 20 I decided that the way to help teens would be to become a psychologist or a therapist.

When I was 24 I decided to start graduate school in Clinical Psychology.

At age 24, I knew that graduate school would be expensive. I expected it would cost me over $100,000. I also knew that I’d likely make 6 figures after I became a psychologist. I was so clueless about money at the time that in my mind, making 6 figures was equivalent to making 1 bajillion dollars. It felt limitless to me. Between my strong sense of calling and my minimal understanding of personal finances, taking out mortgage-sized student loans made perfect sense to me.

At age 29, I completed graduate school with ~ $182,000 of student loan debt.

“Good debt.” Remember, geriatric millenniels, how we were told that student loans were “good debt”?

In December after graduation I attended a party hosted by a friend I had gone to graduate school with. My student loans were still in their 6 month grace period, so I wasn’t paying them yet. My friend had graduated several years before me, and I asked her, “How’s it going paying off the student loans?”

“I’m doing public service loan forgiveness,” she told me.

“Public service whaaa?” I asked.

She explained that if you meet criteria for a “partial financial hardship” you can lower your student loan payments, and then if you make those payments on time for 10 years while working for the government or a non-profit, your loans will be forgiven after 10 years.

At the time, I was working for the government. This seemed too good to be true. In fact, even while she was telling me, I thought it was too good to be true. BUT just in case the program she spoke of did exist, I remember what it was called, and Googled it when I got home. Annnnnnnd – It did exist! For real!

As I read up on the program, while it did, indeed, exist, it certainly felt risky. First of all, I didn’t want my career dictated by a loan forgiveness program. (At the time I was on a two-year contract with the government, and didn’t know where I’d be going after that). Second, the program began in 2007, which meant that at the time (it was 2011), no one had yet had their loans forgiven.

After some thinking and discussion with my husband, we agreed that I would pursue Public Service Loan Forgiveness (PSLF), but that we would save as much extra money as we could, and if I left public service when my two-year contract with the government ended, I’d throw that extra money at my student loans.

When my grace period was ending, I called my student loan company and informed the customer service agent that I needed Income Based Repayment so that I could pursue PSLF. THANKFULLY this customer service agent informed me that PSLF would only be available to me if I consolidated all of my student loans to Direct Loans prior to switching to an income based repayment plan.

I did what he told me to do.

Since I had been in school for most of 2011, my loan payments were calculated at $90 per month for the next year. However, it took two months to consolidate and during that time, I paid $2000 per month (which was about half of my take-home pay at the time) towards the student loans.

When my two-year government contract was ending, I decided to follow my heart and choose the job I wanted without considering if it would qualify me for PSLF. I ended up getting a job at non-profit hospital, which meant that it would qualify me for PSLF.

At first this hospital job was meaningful and wonderful. Over time things started to change. I slowly lost autonomy. I was pushed to focus more of my attention on specific rules and regulations related to documentation and assessments, which took brain power away from what I really cared about, which was helping kids. My hospital began hyperfocusing on things that didn’t really reflect good clinical work; I began being judged on patient satisfaction scores and productivity.

The job slowly became less enjoyable, but I continued to work hard and do my best. While the job wasn’t fantastic the way it had been, it was tolerable at worst and still meaningful at best.

At some point, around 2017 or 2018 I had a pretty important conversation with my boss about productivity. I experimented with seeing more patients in one day, and found that the quality of my work suffered when I saw too many patients. We agreed to scheduling a specific number of patients per day in order to balance productivity with quality work. She told me, “What you’re doing is perfect. We’ll never expect you to do more.”

And then the pandemic hit.

Oh, did it hit hard.

Suddenly my supervisors were incredibly worried that our clinic would close. In my opinion, they became so hyperfocused on that that they stopped worrying about the day-to-day needs we had in our clinic, and stopped focusing on us employees. We couldn’t get support for basic problems and issues that came along. Meanwhile, the hospital took a huge financial hit. Sooo…we were told we had to do more. I reminded my boss of what she had promised me years back, and reminded her that I could not do a good job if productivity expectations were increased. She told me that I was paid a lot and should expect to work more. I asked her for a pay cut in return for reasonable working conditions. She said that she couldn’t give me a paycut but that I could consider becoming a part-time employee.

Oh. Did I mention that to qualify for PSLF, you must be a full-time worker? Reducing my work hours was not an option for me. I felt trapped.

At this point, I had 2.5 years left until my loans would qualify for forgiveness, by my loan company’s count (which wasn’t actually incorrect, I had 3 payments that the loan company was not counting for unknown reasons, and 3 additional payments I made that wouldn’t count either because my loans had been put on administrative forbearance or because I made them prior to being put on the lower payment plan).

I felt trapped.

At this point, because I had been paying so little on my student loans, they had grown to $230,000.

So now, if I stayed at the hospital I had been at for 6 years I’d be forced to work in a way that didn’t feel good or right to me, and which would push me into burnout and resentment. I knew that.

I felt trapped.

Now, for PSLF, I could work for any non-profit or government job. The only problem? I’m a crazy good child psychologist, and I couldn’t figure out anything else that I’d be good at in the public sector. Buuut, I realized that I could look for another Child Psychologist job. And so I did. About a year into the pandemic, I had a job offer for a job that I thought *might* make me happier than the job I was in. The only problem? I wasn’t sure I’d be happier. The new job was not offering compensation that matched my old job. I was so burnt out and miserable at the old job, and I was scared that I’d move my family across the country to the new job and be just as miserable + have caused a major disruption to my family.

I ended up not taking that job.

But again, I was miserable at my job and felt trapped.

Meanwhile, things were changing in relation to PSLF. There had been too many problems with loan companies miscounting payments (as I mentioned happened to me). There had been too many problems with people being in the wrong loan type (as mentioned above, I happened to be in the correct loan type thanks to the customer service guy who helped me when I called the loan company back in 2012, though I had made a few payments prior to consolidation). Finally, there was a huge problem with people being forced to stay in their non-profit jobs well after the 10 years of service needed to qualify for PSLF because the rules as they were written stated that in order to receive loan forgiveness, you had to still be working with a non-profit when the loans were forgiven (so people would stay in jobs for months to years waiting waiting waiting, it was terrible). Around October 2021, a ruling came out to remedy all of this. Loans were to be forgiven after 10 years of payments while working for a non-profit, even if an individual no longer worked for that non-profit at the time of forgiveness. Any payments made to government loans while working for a non-profit would qualify as a payment, even if not a Direct Loan.

Freedom was getting closer!

By my count, I had 6 extra payments that should qualify with the new rules (3 that were made on the wrong loan type + 3 because my loan company was simply bad at counting). MOST IMPORTANTLY, I didn’t have to stay at this job that made me miserable waiting for my loans to be forgiven; As soon as my 10 years were completed, I could quit! I would qualify for PSLF in February 2021!

In December 2021, my family took a trip to Greece. While on the airplane, I looked at the flight attendants, and I told my husband, “I think I’m going to do it. I’m going to become a flight attendant.” Before my job got really bad during the pandemic, I had planned to retire from psychology at age 50, and had always told my husband that my “fun job” after we reached financial independence would be to be a flight attendant.

In January 2022, I began applying to airlines.

In February 2022, I got a job offer at an airline and put in my notice at the hospital. A day later I realized that my loans had been forgiven. This didn’t make sense, because I hadn’t even put in the paperwork proving that I had made my 10 years of payments. I then remembered the new rule about all payments on government loans counting towards PSLF: In 2011 and 2012, I made payments on some undergraduate loans right after I completed graduate school, which then got consolidated in with my graduate school loans. Now and those payments counted!

Jubilee! I was freeeeeee!

From a purely numbers perspective, I am absolutely a PSLF success story. Because I was making minimum payments on my student loans, I was able to buy a home and save a lot for retirement. PSLF was a MASSIVE leg-up for me!

From an emotional perspective, this is a failure story. I stayed at a job that was clearly not right for me because I had student loans that I was waiting to have forgiven. If I hadn’t been pursuing PSLF, I would have left my job as soon as there was a problem and would most likely still be working in private practice as a psychologist today. As it is, the world lost a crazy good child psychologist because I’m too dang burnt out to consider returning to psychology any time soon.

I think anyone who has student loans and is pursuing financial independence should CONSIDER how PSLF might benefit them. But they also should consider how it might hurt them. Also, I want anyone reading this to know: The special rules that went into place in October 2021 to make Public Service Loan Forgiveness easier only lasts until October 2022. You MUST consolidate your student loans into Direct Loans by October 2022 if you want to qualify! Go do it today!