IBR/PSLF and Federal Agency contribution.

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IBR/PSLF and Federal Agency contribution.

Postby TooManyLoans » Thu Apr 30, 2015 11:10 am

I'm enrolled in IBR and plan on using PSLF in 10 years to discharge my debt. I've recently learned my agency participates in the Federal Loan Repayment Program and will pay up to 10k a year.

If I enroll in this can I use it with IBR/PSLF? Essentially it would be the government paying everything since I pay less than 10k a year in IBR payments.

I tried searching but couldn't find anything related.

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A. Nony Mouse
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Re: IBR/PSLF and Federal Agency contribution.

Postby A. Nony Mouse » Thu Apr 30, 2015 11:25 am

My understanding is that you can use it with IBR, but the program is a supplement to your payment, not a substitute for it. That is, the federal agency matches your payment, so it doesn't get you out of paying. What I'm not positive about is if it reduces your payments at all (e.g. your required payment is $500, you pay $250 and the agency pays $250), or if you still have to cover your payments, it just then matches them (e.g. you pay $500 and they match $500). However, my impression is that it's the latter, because the emphasis is that the agency payment doesn't substitute for your payment and you still have to pay. So if you're planning to use PSLF, I'm not sure it makes sense to do this, because it doesn't reduce your payment, just the total amount you'd get forgiven in 10 years.

However, this is my understanding/experience - I don't know if it varies by agency.

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Re: IBR/PSLF and Federal Agency contribution.

Postby lapolicia » Thu Apr 30, 2015 11:39 am

It definitely varies by agency. Most haven't changed their programs to take advantage of iBR/PSLFP so they give you a lump sum of 10.000 at the beginning of the year which only counts as one month's payment. Others have now changed their programs to give you a payment every month, which may fulfill most of your IBR payment or even all of it depending on the size of your payment. And still others require you to contribute around half of your yearly IBR payment, notably the DOJ once your salary exceeds a certain limit. So there isn't one answer--completely depends on your agency.

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