Student debt is something nearly every veterinarian faces, no matter what your line of work or area of focus. For veterinarians in the public and nonprofit sectors, there is a federal program you should know about, that can help you pay off debt: The Public Service Loan Forgiveness program (PSLF).
PSLF is a program administered by the U.S. government, that forgives the remaining debt on eligible loans for borrowers who have worked at least 10 years in public service or the nonprofit sector.
It's a critical resource for professionals who otherwise would be financially unable to pursue—or continue working in—a career in public health or public service. PSLF is a viable option for many veterinary professionals, but there are strict rules about who qualifies. If you're wondering whether the program can work for you, here's what you need to know.
Help preserve PSLF
PSLF eligibility is based on three criteria:
Qualifying for PSLF isn't about the specific job you do, but rather who you do it for. Essentially, it's intended for government employees and people who work for a 501c3 non-profit organization. There also are non-profits that aren't 501c3 that can qualify for PSLF—if their "primary purpose is to provide certain types of qualifying public services."
Aside from your employer, other employment-related details also may affect your eligibility—for example, whether you are working full or part time, and if you are employed as a contractor. This is especially important for veterinarians working in academia or other sectors where their position may be funded in such a way that they are not technically classified as full-time employees.
Check that you meet PSLF employment criteria by filling out an Employment Certification Form. It's available here or in the Public Service Loan Forgiveness section on studentaid.ed.gov. We urge anyone interested in PSLF to file this form annually, because it's the only paper trail you'll have on file with the government during the 10-year timeframe you're working toward forgiveness.
Only direct loans from the government qualify for PSLF. Private loans do not qualify. This means that decisions around consolidation and refinancing should be made carefully. For example, direct loans that have been consolidated into private loans no longer count toward PSLF. On the other hand, consolidating a non-qualifying loan, such as a Perkins loan, into a direct government loan, will allow you to start counting payments toward PSLF from the time of consolidation.
To access a list of your current federal student loans, visit the National Student Loan Data System at nslds.ed.gov.
The final requirement for PSLF eligibility is that you have made 120 on-time payments in a qualifying repayment plan. In general, this means an income-driven repayment plan (IDR). IDRs are repayment plans based on your income and family size, not loan balance. They're especially useful for high-debt, low-income borrowers who are looking to make lower monthly payments than they would with a standard 10-year plan. If your debt isn't repaid at the end of the plan term – either 20 or 25 years – the IDR will forgive the remaining balance, which will be taxed as income in the year it is forgiven.
An important note is that the required 120 payments don't need to be made consecutively. They do, however need to be scheduled. That means you can't accelerate payments, and overpaying won't help you reach forgiveness faster. In fact, extra payments will only decrease the future amount to be forgiven.
You can only apply for PSLF after you've made 120 qualifying payments. But if you're considering the program, these are the things you should be doing now:
- File an Employment Certification Form annually. This form will help you (and the federal government) confirm that you meet PSLF employment criteria and track your payments. We strongly urge anyone interested in PSLF to file this form every year, because it's the only paper trail you'll have on file with the government during the time you're working toward forgiveness. Download the form here.
- Recertify your IDR annually. Document every conversation you have with your loan servicer, including reference numbers or employee IDs for each call. Also, double-check any information or recommendations provided to you, and we recommend keeping a spreadsheet of all your payments with dates and confirmation numbers.
- Be informed and be prepared. It's wise to have a back-up plan in case PSLF doesn't work for you. An income-driven repayment plan—which you may already be enrolled in if you're working toward PSLF—can be a good option. You can learn about various loan repayment strategies by watching our video series on MyVeterinaryLife.com. These brief videos offer more insight into PSLF, and will help you make informed decisions about managing your student loans and choosing the right repayment strategy. Be sure to understand what a back-up plan may look like if you need to use it. For example, an IDR will affect your finances for a longer period and will require saving for the added taxes that come with debt forgiveness.
Help preserve PSLF
Recently, PSLF has come under scrutiny, and concerns about its potential cost continue to be discussed by Congress. Adding to the uncertainty is the low approval rate—just over 1 percent—on the applications processed from 2017 to now. According to the U.S. Department of Education’s March 2019 report 53% of denials were due to applicants not having made enough qualifying payments, 25% were because of missing information on the application, and 16% were because the loans weren’t eligible for the program in the first place, i.e. they weren’t direct loans.
If you were denied from PSLF because you weren’t in the correct repayment plan, you may be eligible to receive funds under a Temporary Expanded Public Service Loan Forgiveness program.
For people who are counting on PSLF, we know that questions about its status and approval rating can be especially stressful. Among the questions we hear are whether PSLF will be “guaranteed” for existing borrowers and whether forgiveness amounts will be capped. We don’t yet have these answers, but we are in close contact with lawmakers and will notify the profession if there is any change to the status of PSLF—both on this page and our AVMA@Work blog.
Meanwhile, we are working with lawmakers and federal officials to better understand the issues and improve the program for our members who rely on it. We oppose any proposal to cap forgiveness amounts, and we continue to advocate for the preservation and funding of PSLF. In March 2019, we provided a letter to Congress voicing our support of PSLF, on behalf of over 120 animal health organizations.
You can join our efforts to preserve PSLF by sharing your own story. Whether you’re a veterinarian currently working in the nonprofit sector, or you’re a student relying on PSLF to follow your dreams, we want to know how PSLF—and any potential cuts to it—would impact you. Your stories can help us make a real difference in educating Congress and the public about how important this program is. Share your story with us by submitting this form on the AVMA Congressional Advocacy Network website. We also encourage you to fill out this simple form telling Congress to protect this vital program.