Over the past few months, politicians and pundits have debated the merits of massive student debt cancellation. Jeffrey Morgan is one of the few who knows firsthand what it is about the government to write off your student debt.
Earlier this year, the 39-year-old lawyer from the Massachusetts Department of Mental Health had $ 38,381.32 in federal student loans discharged through the Civil Service Loan Forgiveness Program, an initiative that allows borrowers who work for the government and some nonprofit organizations to have their student loans wiped out after 10 years of payments.
Settling your debt through the program required a combination of vigilance, attention to detail, and patience – whether you were watching the traditional PSLF program or a temporary extension of it that Morgan used, initial rejection rates are over 95%.
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But even though Morgan made it through the process, his money problems didn’t go away. “It allows me to pay rent and keep paying my private loans, so that I don’t run out of money or default on anything,” Morgan said of the forgiveness. “It is important.”
Here’s how Morgan acquired the debt, paid it off, qualified for forgiveness, and how the experience affected her life.
Most of the debt came from law school
Although Morgan incurred debt to attend college, the bulk of his student loans came from law school. For his undergraduate career, he received a generous scholarship from Harvard University, where he attended school, work-study, and help from his parents in the form of getting into debt themselves.
By the time Morgan began his law studies in 2004, he had paid off some of the debt he incurred during his undergraduate studies. But “I was obviously an adult and my parents weren’t going to ask for more loans for me because they have four other kids that they were also sending to college.”
Morgan knew he was going to have to go into debt to pay for his law school. All of the schools he was considering offered similar financial aids that were not enough to cover tuition, books, rent, and the tools he needed for school like a laptop.
““I don’t know if I really could have afforded less loans. ““
Morgan’s time in law school, between 2004 and 2007, spanned the height of the private sector student loan. Much of the debt he took on came from private lenders, meaning he was not eligible for the PSLF. Even after the pardon, Morgan said he still owed $ 67,987.09 in private student loans.
“Like a lot of people you just go out and hope for the best and say ‘this is something that I have to do and I hope everything will be fine in the end,’” Morgan said. “I don’t know if I could have really afforded myself to try and take out fewer loans. “
Morgan took action early on to try and qualify for the PSLF
When Morgan assumed the debt, he had no plans to have it canceled – the PSLF was not established until 2007. But once he started his career in the Berkshire District Attorney’s Office in Massachusetts about a year after graduating with his law degree, Morgan realized he planned to stay in the public service for the long term, so it made sense for him to do whatever it takes to qualify for the program.
“He called his loan officer and was told that in fact none of the 22 payments he thought he made for the rebate counted. “
At this point, in 2008, Morgan consolidated its federal loans from Federal Family Education Loans, which do not qualify for the program, to Direct Loans, which do. After taking this step, Morgan believed he was on track to get his loans canceled after making 120 payments.
But a few years later, Morgan found himself on his agent’s website searching for the answer to an unrelated question and only discovered about half of the payments he had made since consolidating his loans eligible for remission. He called his server to find out why and was told that in fact none of the 22 payments he thought he made for forgiveness counted.
This is because he was getting them into the wrong type of repayment plan. In order for a payment to qualify for the 120 required for exemption under the PSLF, a borrower must either be in a standard 10-year repayment plan (in which case they would have already repaid their 10-year loans) or a reimbursement based on income.
A common mistake
Morgan’s mistake is relatively common. So common in fact that in 2018 Congress authorized a $ 700 million fund, known as the Temporary Extended Public Service Loan Forgiveness, for borrowers who used an incorrect repayment schedule.
Once Morgan realized his mistake, he moved on to a repayment plan that qualified. At that point, “it was only a matter of time”, until forgiveness. Because it still took several years before Congress would allow TEPSLF, Morgan assumed he would have to wait two more years for pardon due to the 22 lost payments.
““I can’t even begin to think about having kids because I have no idea how I would pay for even the ordinary things – diapers, food, – let alone school, college, superior health insurance. ““
But in 2018, when Congress cleared TEPSLF, Morgan realized he could qualify. He read “a ton” as he put it, made phone calls to his service agent, and followed the conversation surrounding the extension on Reddit to determine if he would qualify and how many of his lost payments would qualify. .
Congress allocated a limited amount of money to TEPSLF, so Morgan said he was eager to apply for the program as soon as he was eligible – that is, after making at least 120 payments on his loan. – including the 22 he thought he had lost.
To access TEPSLF, borrowers must first enroll in the regular civil service loan forgiveness program and be rejected. Morgan did this in March 2019 as soon as he thought he had made the 120 payments. It was rejected and then quickly requested the TEPSLF, which essentially involves sending an email to the server that oversees the PSLF. In May 2019, his debt had been canceled.
Debt forgiveness coincides with increased spending
Knowing that everything worked was a relief for Morgan, who for years used a spreadsheet to track expenses and factored forgiveness into his financial planning strategy.
“It was exciting, I printed the letter from my email – I always hung it on the wall,” he said.
““It was exciting, I printed the letter from my email – I always hung it on the wall.”“
Yet the experience did not change his life as he had hoped. The forgiveness coincided with Morgan’s owner’s decision to renovate the apartment he shared with two roommates, so they had to move out. Morgan and one of those roommates found a different third roommate to share a new apartment, costing her an additional $ 265 per month in rent (or $ 625 in total, for all three together). In addition, he and his roommates had to share a real estate agent fee of $ 2,500.
“If it didn’t coincide with this increase in my spending, it would have been even better,” Morgan said of the forgiveness. Yet debt relief has been helpful. “I probably should have done some sort of forbearance on my private loans right now if I was still paying my federal loans.”
A spreadsheet, a side-hustle and little room for luxury
Throughout his career in the public service, Morgan has lived near financial advantage with little extra money to save other than his expenses. In addition to his day job, he worked for several years as a contract proofreader.
Even with the debt cancellation, Morgan still can’t afford many luxuries, like taking vacations or planning long-term in part because of his private student loans.
“I can’t even begin to think about having kids because I have no idea how I would pay for even the ordinary things – diapers, food, – let alone school, college, superior health insurance, ”he said. “If I didn’t have all these loans to pay off, maybe I could. “
Morgan said his experience with student debt changed the way he talks to prospective lawyers. He advises them to think critically about the decision to go to law school and whether it is worth acquiring the required debt.
Yet he does not regret his decision to work as a public interest lawyer. Today, it helps adults with intellectual disabilities have access to medical and psychiatric care and guardians who help improve their lives.
“The work I have done has been useful and rewarding,” he said.