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  • June 21, 2022

    On Public Service Loan Forgiveness: Success Stories and Financial Considerations

    With the Public Service Loan Forgiveness program, public interest work can be a viable career option for many Wisconsin attorneys. Susan Lund discusses the program and the real-life experiences of Wisconsin public interest lawyers.

    Susan C. Lund

    breaking chain between debt and graduation

    Setting aside the other benefits of a public interest legal career, if you have moderate or high qualifying student loan debt, working for a public interest employer may be your smartest financial move – even if the salary is low.

    Public Service Loan Forgiveness (PSLF) allows those with qualifying student loans to discharge the balance of their student loans tax free after working at a qualifying employer for 10 years while making 120 qualifying monthly payments.

    Public Service Loan Forgiveness began in 2007, meaning that the earliest an individual could have achieved debt forgiveness was 2017. Each Master Promissory Note for loans disbursed after 2007 includes a guarantee of Public Service Loan Forgiveness for individuals who meet PSLF criteria.1

    As of April 19, 2022, the U.S. Department of Education reported that more than 113,000 people had received Public Service Loan Forgiveness, totaling over $6.8 billion in forgiven student debt.

    Public Service Loan Forgiveness and Wisconsin Lawyers

    Public interest work is important and fulfilling, and often provides a work/life balance not available elsewhere.

    Susan Lund Susan Lund, U.W. 2011, is a supervising attorney in the Milwaukee offices of Legal Action of Wisconsin, where her practice includes removing legal barriers to family-sustaining employment for people experiencing poverty.

    Many Wisconsin lawyers have already benefited from Public Service Loan Forgiveness. However, many new graduates and job seekers have yet to hear directly from an attorney who has received Public Service Loan Forgiveness.

    To reassure new graduates and job seekers that the promise of Public Service Loan Forgiveness is real, seven Wisconsin lawyers who have received Public Service Loan Forgiveness shared their stories:

    • A civil legal aid attorney in Milwaukee County had over $160,000 in loans forgiven in 2020 through Public Service Loan Forgiveness. They had income-driven payments ranging from $190-$300 each month over the course of repayment.

    • A civil legal aid attorney in Marathon County had $93,000 worth of loans forgiven through Public Service Loan Forgiveness in 2022 (with help from the Temporary Waiver program). Their income-driven payments ranged from about $200-$400 per month.

    • A civil legal aid attorney in Milwaukee County had nearly $14,000 worth of student debt forgiven through the Temporary Expanded Public Service Loan Forgiveness program in 2019. Their most recent income-driven payment amount was about $160 per month.

    • A government attorney in Milwaukee County had over $100,000 in loans forgiven in 2019 through Public Service Loan Forgiveness. Their average income-driven payment was about $530, whereas their standard 10-year payment would have been nearly $1,200 per month.

    • A civil legal aid attorney in Dane County had nearly $60,000 in loans forgiven through Public Service Loan Forgiveness, with income-driven payments ranging from about $70-$550 each month.

    • A public defender in Milwaukee County had over $185,000 forgiven through Public Service Loan Forgiveness in 2022 (with help from the Temporary Waiver). Their income-driven payments ranged from $0-$800 monthly, whereas their standard 10-year payment would have been $1,700 per month.

    • A government attorney in Manitowoc County had over $32,000 in loans forgiven through Public Service Loan Forgiveness in 2019-20. Their most recent income-driven payments were less than $750 per month despite having a six-figure income and a working spouse.

    As these stories suggest, Public Service Loan Forgiveness can be a very substantial financial benefit – if you meet the criteria. Setting aside the other benefits of a public interest legal career, if you have moderate or high qualifying student loan debt, working for a public interest employer may be your smartest financial move – even if the salary is low.

    My Situation

    Transparently sharing information about programs that alleviate the burdens of student loan debt can help others see public interest law as a viable career path.

    To illustrate, I’ll share some aspects of my own situation:

    I currently have approximately $160,000 in student loan debt (including principal balance and accrued interest). I have slightly over a year left before my loans are forgiven. Because I minimize my Adjusted Gross Income through a variety of strategies, my current income-driven payment amount is less than $200 per month (though I am currently taking advantage of the COVID-19 related Student Loan Pause and therefore haven’t paid anything since March 2020, despite getting PSLF credit for these months).

    Because I received approximately $17,000 from a loan repayment assistance program for nonprofit lawyers, I will have personally spent less than $10,000 on my student loans by the time they are forgiven. Assuming I receive forgiveness of approximately $160,000 as planned, my financial benefit from PSLF will be more than $15,000 per year for 10 years. I always consider this amount to be a part of my compensation package at my job.

    In sum, as a public interest lawyer, I have financially benefited from income-driven repayment plans, a loan repayment assistance program, the COVID-19 student loan pause, and I am ultimately banking on receiving Public Service Loan Forgiveness of a substantial amount, tax free.

    Advice on PSLF from Wisconsin Lawyers

    The Wisconsin lawyers who benefited from PSLF had some advice for those pursuing forgiveness:

    • Make sure you have the correct loan, correct payment program, correct payment amount, and have correctly consolidated your loans (if it is beneficial for you to consolidate your loans). Certifying your payments when you start a new employer, when you leave a qualifying employer, and annually is a great way to ensure you are on track.

    • Never take the information your loan servicer gives you at face value – do your own research. Assume your loan servicer will change at least once during your term of repayment. Because you cannot always trust the information your loan servicer gives you, keep meticulous records of your own (remember, bank records usually only go back seven years).

    • Look for ways to reduce your Adjusted Gross Income (which will reduce your income-driven payments), such as contributing to 401(k), 457, and/or Health Spending Account. Consider which tax-filing option will be most beneficial for you overall – many pursuing PSLF benefit from the “Married Filing Separately” tax status. If you are on an income-driven repayment plan and become pregnant, don’t forget that you can immediately recalculate payments based on family size, resulting in a reduced payment.

    • Use online resources – even those you wouldn’t normally consider. Folks reported finding helpful, practical, and encouraging information on reddit and Facebook. These forums are also full of thousands of additional PLSF success stories.

    A Potential Financial Lifeline

    Although the PSLF program is not perfect, it has been a financial lifeline for many lawyers practicing public interest law.

    One lawyer shared that: “loan forgiveness was truly life-changing for me. I was one of the first thousand people in the country to have my loans forgiven, and it was at a time where the approval rate was 1-2%, so it was especially emotionally overwhelming for me. The approval rates have gotten better, so as long as we stay on this track, it will continue to be a better and better option for any lawyers out there.”

    Another lawyer described the impact of loan forgiveness: “I cried the day I got my final forgiveness statement. I do not come from money and even though my debt load was much lower than most attorneys, it felt so good to have that burden lifted.”

    I hope this information helps build confidence in Public Service Loan Forgiveness. With the help of Public Service Loan Forgiveness, public interest work may be the best career option for many Wisconsin attorneys.

    This article was originally published on the State Bar of Wisconsin’s Public Interest Law Section Blog. Visit the State Bar sections or the Public Interest Law Section webpages to learn more about the benefits of section membership.

    Endnote

    1 For example, the current Master Promissory Note states, “A Public Service Loan Forgiveness (PSLF) program is also available. Under this program, we will forgive the remaining balance due on your Direct Loans after you have made 120 payments (after October 1, 2007) on those loans under certain repayment plans while you are employed full-time by a qualifying employer. The required 120 payments do not have to be consecutive. Qualifying repayment plans include the REPAYE Plan, the PAYE Plan, the IBR Plan, the ICR Plan, and the Standard Repayment Plan with a 10-year repayment period.”




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    Public Interest Law Section Blog is published by the State Bar of Wisconsin; blog posts are written by section members. To contribute to this blog, contact Richard Lavigne and review Author Submission Guidelines. Learn more about the Public Interest Law Section or become a member.

    Disclaimer: Views presented in blog posts are those of the blog post authors, not necessarily those of the Section or the State Bar of Wisconsin. Due to the rapidly changing nature of law and our reliance on information provided by outside sources, the State Bar of Wisconsin makes no warranty or guarantee concerning the accuracy or completeness of this content.

    © 2022 State Bar of Wisconsin, P.O. Box 7158, Madison, WI 53707-7158.

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