Best loan repayment strategy for postgrad govt work Forum

[Anonymous User]

Hoping to get insight or guidance to other resources on paying off loans when working in a public interest job.

Here's my situation:
I've accepted a 3-year position at a federal agency in DC, starting salary $62,400. I'll have around $55k in school debt at the time of graduation. I plan to stay in the public interest sector after this 3-yr commitment, either in the same spot or somewhere else, but I'm not 100% sure on that. My school does not have a school-specific LRAP for PI jobs.

So, my questions: How should I go about paying this off?

First, does this position qualify for the 10-yr forgiveness? Should I do the monthly minimum payments for 10 years and just plan to stay in a PI job? What if I am still in a PI job but make more beyond the limit (what is the limit?)? What if I start on that and then no longer qualify?

Or, should I just suck it up and pay it off as quickly as I can on my own (I'm happy to do this, I just don't want to be in the position later down the road and think "man, I could've just gotten most of this forgiven")? How does the proposed change to the forgiveness law play in? Are there any other factors that I should be considering or details that would be relevant?

Any advice from TLS would be much appreciated. I just don't know where to begin with this stuff, and my school isn't all that helpful.

[badaboom61]

Here's an oversimplified rundown:

A) figure out your monthly payment on a 10-year standard plan. Multiply * 120.

B) figure out your monthly payments each month over the next 10 years on the PAYE plan, accounting for future salary increases. Total these payments.

Is B less than A? If so, you stand to gain from loan forgiveness. If B is greater than A, then you won't gain from loan forgiveness, so you'd be better served by paying it down as quickly as possible, since the return on paying off your high-interest student loans is probably higher than most alternative investments.

[Anonymous User]

Here's an oversimplified rundown:

A) figure out your monthly payment on a 10-year standard plan. Multiply * 120.

B) figure out your monthly payments each month over the next 10 years on the PAYE plan, accounting for future salary increases. Total these payments.

Is B less than A? If so, you stand to gain from loan forgiveness. If B is greater than A, then you won't gain from loan forgiveness, so you'd be better served by paying it down as quickly as possible, since the return on paying off your high-interest student loans is probably higher than most alternative investments.

OP, let me know what you find is best after doing this. Hopefully I want to do the same thing as you and have similar debt (45k).

Also, off topic, but did you get your position from USAjobs? Did you have any luck with the jobs that requires you have a JD and pass the bar when you apply? I ask because I'm still a 3L and will have neither for a couple months. One job I applied to said I didn't meet the minimum requirements but another referred my resume to the hiring manager. So perhaps its just agency dependent or they made a mistake, lol.

[Anonymous User]

OP here. Thanks for the responses. My standard 120-month repayment would amount to $75,800. PAYE is coming out as $0 for initial and final payments? Total forgiven $128k? Why won't it give me a payment estimate?

I got my position (an Honors position) through previous experience with the agency during law school and keeping in contact; I'm not sure if it was posted on USAJobs. I had been using USAJobs for my general search too, and applied to anything that looked interesting that had a lower-end starting salary and didn't specify 2+ years experience. It's a bit of a black box how that works, I think.

[kay2016]

OP,

The above advice has been the standard advice due to PSLF and such…. But I would be very hesitant to count on PSLF right now.

There are few definitive facts about the proposed changes to PAYE and PSLF, but at the very least they foreshadow that changes are coming and those changes *could* include limiting the amount forgiven or worse. Ideally, you should be grandfathered in since you've started repayment, but I would just be cautious if you let your debt level rise (if minimum payments don't cover interest etc) and then get screwed over in 4-5 years.

Good luck though! I'll be battling the same choices in a few years (so long as I can actually get a job!)