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I am a practicing attorney that also holds a leadership position with a nation-wide 501(c)(3) charity that works with youth. I have an idea for a PLSF program that I thought that I would throw out there and see if anyone is interested. If there is interest, then maybe we can get something set up. Please take a look below and comment if interested.

Right now, if you are in IBR/PAYE/REPAYE, then you will be paying for 20 years - and then any unpaid balance (plus interest) will be forgiven. However, the loan forgiveness is taxable to you - and if you start out with a $100,000 loan at 8% interest and don't make a payment for 20 years, your balance will be about $460,000 at the end. Assuming a 40% combined federal and state tax rate, you will have a tax bill of $184,000. Fortunately, unlike the student loan debt, the tax debt is likely dischargeable in bankruptcy, but it might take 7 years and you would end up with a net worth of approximately zero at about age 50. That is not good.

However, if you have a PLSF discharge, it is not taxable and it can be done in 10 years. So how about the proposal below as an alternative?

Here's the main points:
- PLSF loan forgiveness requires 120 payments (10 years) of repayment while one is employed "full-time" at a qualifying charity. However, the program does not require that you are employed "only" at the charity. Also, you can miss a payment and it does not reset the 120.
- Our charity often needs leaders/volunteers after 5pm and on weekends - so you can work a regular job during the week and use this repayment strategy by working on evenings and weekends.
- For PSLF purposes, that definition of "full-time" must be at least an annual average of 30 hours per week.
- But! "If you are a teacher, or other employee of a public service organization, under contract for at least eight out of 12 months, you meet the full-time standard if you work an average of at least 30 hours per week during the contractual period and receive credit by your employer for a full year’s worth of employment."
- Also! Any Vacation time counts towards the 30 hours per week.
- Additionally, as an employee, you would be paid. However, the pay would be minimal - the real benefit to you you is that you get a PSLF loan payoff in your "spare time."
- The benefit to our organization is that we get great people for very cheap - and people that are available to work nights and weekends.


So here's a plan - You are employed for an 8 month period to work 30 hours/week with two weeks (10 days) of floating vacation that can be taken in half-day increments. This should be enough to get you credit for the full year. In terms of hours, you would be looking at 35 weeks at 30 hours/week =1050 hours, minus 80 hours for vacation, so a total hour commitment of about 970 hours each year. You would be working primarily weekends and evenings during the 8 months. You would have to pass a background check and take a class in Youth Protection Training. The work may include on-site events that would take place in your area and also likely a lot of computer work that you can do from home (paperwork, approvals, copywriting, filing-type-stuff, editing program documents, etc.)

What do you think? Any interest? Comments? Improvements? Something that was missed?

You want a person with a full time job to "volunteer" for 10 years for no pay? Oh sorry, minimal pay. Is that like minimum wage?

Has the IRS given an opinion on this, when the PSLF job is done primarily for the tax benefit and is a secondary job?

It seems unlikely to me that anyone would make 0'payments on their loans for 20 years.

Edit to add: it seems unlikely that a person with a full time job could sustain this for 10 years. Maybe an unemployed lawyer (or anyone) looking for a PI job (or paying PSLF job) could do this while they job hunt and get a jump on the 10 year requirement.

The "Forginess Program" in the thread title seems oddly prescient.

Fed loans accrue simple interest, not compound interest.

ScottRiqui wrote:The "Forginess Program" in the thread title seems oddly prescient.

Whoops! Typo -thanks

ManagingPartner wrote:

ScottRiqui wrote:The "Forginess Program" in the thread title seems oddly prescient.

Whoops! Typo -thanks

Edited to add this quote from OP:

- Additionally, as an employee, you would be paid. However, the pay would be minimal - the real benefit to you you is that you get a PSLF loan payoff in your "spare time."

I don't see a benefit that can possibly be obtained in 10 years as that enticing. You failed to mention that if you do even a month less than 10 years of on time payments, you don't get any forgiveness.

I'm not sure what laws apply to wages of workers at not for profit, but I don't think loan forgiveness counts as a wage. It sounds like you will be underpaying people by promising a benefit they may never get. (Though I'm guessing you are paying minimum wage?)

It sounds sketchy as hell to me.

Tiago Splitter wrote:Fed loans accrue simple interest, not compound interest.

Thanks! That would reduce the $460K to about $216K - still pretty big. Also, I am no expert, but it looks like the interest may be capitalized in some situations - is that a concern?

Tls2016 wrote:You want a person with a full time job to "volunteer" for 10 years for no pay? Oh sorry, minimal pay. Is that like minimum wage?

Has the IRS given an opinion on this, when the PSLF job is done primarily for the tax benefit and is a secondary job?

It seems unlikely to me that anyone would make 0'payments on their loans for 20 years.

Edit to add: it seems unlikely that a person with a full time job could sustain this for 10 years. Maybe an unemployed lawyer (or anyone) looking for a PI job (or paying PSLF job) could do this while they job hunt and get a jump on the 10 year requirement.

Appreciate the comment! It lets me know how people might regard this. Let me give you more information for your questions:

1) The people would be hired at minimum wage-ish salaries (for example, it might be the same number nationwide, but minimum wages vary by state.) Not volunteers - low paid employees. The real benefit is the loan forgiveness. Here is a comparison - if you wanted to amortize a $100K loan over 10 years at an 8% interest rate, that's a monthly payment of $1,213/month ($14,556/year). Of course, the monthly payment would be paid with after-tax dollars (although you might be able to deduct the payment at certain incomes). If you can't deduct it and have a combined federal and state tax rate of 33%, then that $14,556/year is $21,834 in pre-tax terms. If you are working 1000 hours, then you would be making about $21/hour from the loan forgiveness and maybe $9-ish from the minimum wage for a total of about $30/hour. Of course, if you owed $200K in loans instead, you would be making about $50/hour including loan forgiveness and minimum wage.

2) The IRS has not given an opinion on this and we have not approached them at this time. Additionally, we would be vetting the program with the Department of Education who administrates the program. Additionally, the PLSF Employer Certification and Employee Certification only asks the employer to certify that the employee is a full-time employee - not to comment on any additional employment that may or may not exist.

3) I don't know how much people will or will not pay in 20 years - or what their initial loan amounts might be. Consider those numbers to be raw estimates.

4) I don't know if they can sustain it for 10 years either - but I note that they can start with us and get a few months under their belt and can take a break if they need to and start again - or they can pick up again with another qualifying employer. Also, considering the loans might last 20 years under IBR, and you only need 120 payments for this program, maybe you can think of it as whether the person can make half of their payments under this program during those 20 years? If so, they wipe out their loan balance instead of being stuck with a tax whammy.

Tls2016 wrote:

ManagingPartner wrote:

ScottRiqui wrote:The "Forginess Program" in the thread title seems oddly prescient.

Whoops! Typo -thanks

Edited to add this quote from OP:

- Additionally, as an employee, you would be paid. However, the pay would be minimal - the real benefit to you you is that you get a PSLF loan payoff in your "spare time."

I don't see a benefit that can possibly be obtained in 10 years as that enticing. You failed to mention that if you do even a month less than 10 years of on time payments, you don't get any forgiveness.

I'm not sure what laws apply to wages of workers at not for profit, but I don't think loan forgiveness counts as a wage. It sounds like you will be underpaying people by promising a benefit they may never get. (Though I'm guessing you are paying minimum wage?)

It sounds sketchy as hell to me.

Hi Again!
It's true that you have to have 120 payments or you don't get the benefit and I thought that was clear - and yes we would be paying minimum wage. Of course, you can take a break and start again later or your can start with us and then complete the 120 payments with another qualifying entity. The 120 payments need not be in a row and need not be all to us.

ManagingPartner wrote:

Tls2016 wrote:

ManagingPartner wrote:

ScottRiqui wrote:The "Forginess Program" in the thread title seems oddly prescient.

Whoops! Typo -thanks

Edited to add this quote from OP:

- Additionally, as an employee, you would be paid. However, the pay would be minimal - the real benefit to you you is that you get a PSLF loan payoff in your "spare time."

I don't see a benefit that can possibly be obtained in 10 years as that enticing. You failed to mention that if you do even a month less than 10 years of on time payments, you don't get any forgiveness.

I'm not sure what laws apply to wages of workers at not for profit, but I don't think loan forgiveness counts as a wage. It sounds like you will be underpaying people by promising a benefit they may never get. (Though I'm guessing you are paying minimum wage?)

It sounds sketchy as hell to me.

Hi Again!
It's true that you have to have 120 payments or you don't get the benefit and I thought that was clear - and yes we would be paying minimum wage. Of course, you can take a break and start again later or your can start with us and then complete the 120 payments with another qualifying entity. The 120 payments need not be in a row and need not be all to us.

Maybe I'm dense but I'm not seeing this as a huge selling point for a second, full time, minimum wage job.

You should look for unemployed people looking for PSLF jobs. But this is an academic exercise for me personally, maybe there would be people interested.

So far the comments seem generally negative. If anyone is actually interested in something like this, please comment. If the program would not be well-received, we will probably not develop it.

For myself personally, I know people who are 20 years out and still have significant loan balances - they seemed to indicate that they wish they could have participated in a program like this. Personally, it took me the better part of a decade to pay off my loans - and they were big. If I could have kept that money in exchange for volunteering 1000 hours/year for 10 years, I probably would have. I would be significantly better off now, especially because that money would have been compounding in my favor.

I have also mentioned this potential program to several recent law grads and they have all reacted positively - of course, as the previous commenter brought to my attention, law grad interest likely varies with employment status. As I reflect now, I think that the majority that I have discussed it with was underemployed and would thus have more time - except for two attorneys who were in firms and were not interested for themselves, but thought it might be of interest to other people. Of course, I am always concerned that people are just telling me what they think I want to hear, so I very much appreciate the frankness of the anonymous/unbiased feedback I can get through your comments.

Please comment pro/con or give me any other feedback. Thanks!

Yeah I don't know a lot of attorneys who have 30 hours per week free for a second job. Especially one that pays minimum wage and the hope that you will last ten years.