Hi Heather (or whoever else may be able to help)!

I had a question about payments during my PSLF period. I just graduated with about 60,000 in loans and I will begin a teaching position in an eligible PSLF school next month.  While doing this, I will be participating in a two year Masters program in Education.

Because I will be a full time teacher, I qualify for PSLF immediately and I was thinking about not going into deferment on my loans and paying the monthly PAYE amount to start working towards my 120 months.  However, because my Masters program is 2 years, I will be continuously receiving loans for each semester. 

Although I have Perkins loans, my thought was to not consolidate my loans and start paying off through PAYE to work towards my 120 necessary months.  How will this work when loans are added on? For each loan, it does not restart my 120 months, correct? WIll this just mean after 10 years my initial loans will be forgiven and after 12 all of them will be? The Perkins loans are minimal and if this is possible I was planning on paying those off separately so I don’t have to consolidate and lose the option to be forgiven of the new loans, but if I do consolidate my loans does that mean that once I get the new loans over the next two years they will not be counted in my monthly payments or I will have to start again?

Any advice is appreciated! Thanks!

Congrats on the teaching position and thank you for your service!  Once your grace period (6 months on most federal loans) expires, you could choose PAYE and start making payments towards PSLF and yes, it could save a lot of money over time to have two years of payments under your belt.  Here’s a VERY important detail: DO NOT CONSOLIDATE NEW LOANS WITH OLDER LOANS ON WHICH YOU HAVE MADE PAYMENTS THAT COUNT TOWARDS FORGIVENESS.  That would serve to repay the underlying loans and the new consolidation loan would have no payments towards forgiveness.  What would be better is to have your undergrad loans on a different forgiveness track than your masters loans.  Keep them separate.

As for the Perkins loans, you can’t choose PAYE for Perkins loans unless you consolidate into a Direct Consolidation Loan (but they do have their own cancellation provisions so analyze that carefully).  Look for a blog post on this site about Teacher Loan Forgiveness.

Thank you very much for your answer!! So if I have both loans on two different forgiveness tracks, does that mean I need to make two payments monthly or will they be included in the same payment but just have different periods where they reach their 120th payment? Because it is a two year program, if this is the case would it then be possible to have three different tracks all with one payment (undergrad, masters year one, masters year 2)? I would then have the majority of my loans forgiven after year 10, then half masters forgiven after year 11 and the other half after year 12.
Thanks again!

You can only start making payments that count towards forgiveness on loans that have exhausted their grace period.  As long as you prevent your undergrad loans from being placed into an “in-school deferment” status, their grace periods will end 6-months after you left school (Perkins are 9-months but again, you’d have to consolidate to make those eligible for PSLF, and consolidation ends the grace period), and you can “enter repayment”.  On your master’s loans, you won’t be able to start making qualifying payments until after you leave school because you cannot waive the grace period and “enter repayment”.  You’ll have to wait until the grace period tolls after you leave school.  The only other way to end grace is to consolidate, which you aren’t permitted to do while you are in school (and even after you complete your masters you need to be careful about for the reasons we discussed above).

I’m not sure what you mean by “both loans” in this question, but if you mean your undergrad and master’s loans, the answer is that while you are in the master’s program, they will calculate one monthly payment amount that will be divided among your undergrad loans (based on what percentage of your total debt each loan represents).  After your master’s program, you’ll continue to have one calculate monthly payment amount that covers all your loans and will be distributed to each loan.  But you’ll have two different tallies of the number of qualifying payments you’ve made towards PSLF.  The undergrad loans would be eligible for forgiveness two years earlier.  Make sense?

What kinda teacher are you?