Case Study - Amanda, a prosecutor pursues PSLF

Amanda just graduated from law school and is working as a prosecutor.  She expects to keep working as a prosecutor and she is single.

Student loans: $250,000 (Direct Unsubsidized Loans, Grad PLUS @ 6%)

Amanda's annual income: $60,000 

Amanda wants to save as much as possible using federal loan forgiveness

Amanda’s question:

“How do I qualify for Public Service Loan Forgiveness?”

Sample Strategy:

Enroll in an IDR such as PAYE and only pay the minimum amount for 120 required payments

The result:

Amanda can qualify for Public Service Loan Forgiveness (PSLF) by making 120 qualifying payments in an IDR plan.  Since she is pursuing loan forgiveness, she should only pay the minimum amount required.  If Amanda qualifies for and enrolls in PAYE, her monthly payments start at $340 a month.  if she stays on track for PSLF, she would pay a total of $46,828 over 10 years and would get the remaining balance forgiven tax-free. 

Compared to the 10-year standard payment plan, Amanda saves $286,233 by pursuing PSLF.