How Do the PSLF Changes Affect Me?

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Part 3 of a 4 Part Series

PSLF Part 3: How do the PSLF Changes Affect Me? Audio Version

How will these new PSLF changes benefit me?

After learning what the new changes to the PSLF are, I’m sure you’re seeing the opportunities. And they are major! A great way to really bring this point home is to show you some examples. We’ll talk about how the changes affect a person 15 years out from repayment, 10 years out from repayment, and 5 years out.

10 Years Out

Let’s say you graduated 10 years ago, you’ve been working at a qualified employer (QE) ever since, and making monthly student loan payments, but you never enrolled in the PSLF.

If you’ve been paying off your loans every month for 10 years, you’ve made 120 payments. And now that those payments are eligible for PSLF, that means…

BAM! You’re done!  

5 Years Out

Or, say you’ve been out 5 years, making payments while at a QE, surprise!  Only 5 more years to pay off and you’re done! You’re halfway through loan re-payment.


15 Years Out

Now let me hit you with an even crazier scenario— let’s say you’ve been out 15 years, and you’ve made more than 120 payments…not only will you get your loans forgiven, you will get a REFUND for those extra payments above 120!!!


And the best part of all?  The amount of your loans that is forgiven is TAX FREE!!!  What does that mean? 

Let’s take a moment to appreciate how awesome this is. One big difference between the PSLF and other federal student loan forgiveness programs is that with those other programs, the amount of debt that was forgiven would be taxed like it was income.*

So for example, if $20,000 of loans was forgiven, that means that year you’d owe income tax on the $20,000.  That’s about a $5000 tax bill. YIKES!

But with PSLF, the amount of loans forgiven is not taxed.  It’s simply…forgiven.  (Like it should be.)

*The rules were recently changed so that loan forgiveness amounts are no longer taxed, regardless of which forgiveness program you’re in. This was part of the federal coronavirus stimulus package that Biden signed into law on March 11, 2021. This change will last until 2025, and hopefully it will be extended. We shall see.

So, to recap what you’ve learned so far: In Part 1 of the PSLF Changes Explained, you learned what the PSLF is, in Part 2, you learned what the new changes are, today in Part 3 you learned how these changes could massively benefit you, and so you’re probably thinking, “Hell yeah! Sign me up!” Coming up in Part 4, you’ll learn how to take action and sign up for this thing so that you can start wiping out your federal student loan debt in 3 easy steps. I’ve got a video that walks you through it.

Read/listen Part 1: What is the PSLF?

Read/listen Part 2: What are the new changes to the PSLF?

Read/listen Part 4: The Easiest Way to Sign Up for the PSLF Waiver

Stop feeling overwhelmed and start taking action with the Money Med School FREE Guide to Getting Started with Your Finances. Take control of your money without dying of boredom!

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