PSLF & Rising Income

Did you know that if your income increases while you’re on IDR and PSLF, your monthly payment amount will also increases? Let’s take a look at an estimate of forgiveness based on adjusted gross income and overall federal student loan balance:

Source: Official Blog of ED; These numbers are just estimates and not based off your loan interest rate. To ensure the program is the right fit for you, the ED highly recommends you click or tap here for loan simulation.

If you wanted to lower your PSLF payments and save for things like a mortgage, retirement, kids, you know…life, then the key is REDUCING YOUR AGI (Adjusted Gross Income). Since your AGI is tied to your monthly repayment amount (as reported on your Annual Income Re-certification), you can find creative, legal ways of reducing your AGI.

What can you do to try to lower your AGI? Here are a few:

  1. Max out your employer-provided 401k/403b to reduce your AGI. See
  2. Max out your HSA. See chart below and
  3. You may be able to deduct part of your contributions to a traditional IRA. See
  4. Take advantage of the COVID-19 suspension of payments and interest! Don’t pay your loans while the COVID-19 suspension is active. Save those dollars for rainy days.
  5. If you ever have a dip in income, report it on your Income Re-certification form immediately! Your monthly repayment amount will drop afterwards. You don’t have to wait until your annual Re-certification date. Click on “I am submitting documentation early to have my income-driven payment recalculated immediately.”

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