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  • I've been covering finance for nearly a decade, and I've written about some wild stuff, but

  • there's no issue I've covered that causes more stress in people's lives than student loans.

  • Some one in six American adults has a student loan.

  • A quarter of them are having trouble paying it back, and it's no wonder.

  • It's a horribly and needlessly complicated system.

  • It's not easy to make sense of your finances.

  • I'm Shahien Nasiripour, and I want to meet people with an obsession to beat the system

  • and never leave money on the table.

  • Consider this.

  • The Feds offer borrowers about six weeks to get their loans forgiven.

  • One of the most prominent ways, taking a public service job after college has a 99% rejection

  • rate.

  • Licensed clinical social worker, Michael Mitchell, is part of the one percent.

  • He's one of the first to make it through the Federal Public Service Loan Forgiveness program,

  • which started in 2007.

  • I visited his office in Manhattan to find out how.

  • By the time I got through this whole process and got the forgiveness, it was actually $170,000

  • at that point.

  • Wow.

  • I just remember seeing my net worth one day going from here to here.

  • Did you call anyone?

  • Did you tell anyone?

  • I spoke with my best friend.

  • We popped a bottle of champagne.

  • Did you really?

  • Yeah.

  • In 2007, Congress created Public Service Loan Forgiveness.

  • The pitch for borrowers was you spend 10 years as a nurse, police officer ... Basically,

  • work for a government agency or a non-profit, and after 12 on time payments a year for a

  • decade, whatever's left of your debt is wiped away.

  • It's a huge benefit available to about a quarter of all Americans with a job.

  • I downloaded the law and I read it.

  • I had been a proofreader before, so I'm just somebody who's very detailed oriented.

  • At this point, it was probably $130,000, $140,000 that I owed because it just kept growing,

  • even though I was already paying loan payments at that point.

  • Your balance was shooting up?

  • My balance was continuing to creep up.

  • Right.

  • when filing these forms that they did work in eligible employment, and then maybe four

  • years through the process- It didn't count.

  • Yeah.

  • It didn't count.

  • They backtracked on that.

  • It sounds simple when you just toss it off of like, “Oh yeah, you work 10 years in

  • not for profit, and your loans are forgiven.”

  • But, there's a lot of nuance to it.

  • How often did you call your loan servicer to talk about this?

  • By the end, I was calling them probably every other day.

  • Wow.

  • But, public service isn't the only way to get your student debt forgiven.

  • You can die, for example.

  • Sorry.

  • It's a bit grim, but it is true.

  • Or, if you're totally disabled or so destitute that you'll never be able to afford your payments,

  • the Feds will forgive your loans then, too.

  • The other big way is to enroll in plans that tie your monthly payments to your income,

  • like Michael did while he was in the public service plan.

  • Here's Bloomberg reporter, Janet Lorin, on how borrowers can pay less on their loans.

  • Caution, there's a warning coming.

  • There are programs called Income-Based Repayment, and students could qualify based on what they're

  • making.

  • You also have to be mindful that the interest is going to be accruing.

  • There's this scary term called negative amortization, and

  • that means even though you may not be making a payment, or you're making a small payment,

  • the total balance of your loan is continuing to grow.

  • Thanks, Janet.

  • Let's look at the scary math Janet just laid out.

  • Imagine you make 45 grand a year, and you owe 50 grand at six percent interest.

  • Now, you could try to pay it off over 10 years by making monthly payments of about $550.00,

  • or you could opt into the income based plan, and pay as little as $220.00 a month, but

  • consider this.

  • Under the first option, your total payments, including interest, would come out to about

  • 66 grand.

  • Under the second, because of all that interest and because you'd be paying over about twice

  • the amount of time, you pay more than 92 grand.

  • Student loans can have really steep interest rates, and if you can afford it, you'd be

  • better off paying a bit more than required because it'd be a smart way to avoid paying

  • unnecessary interest.

  • Remember, generally whatever interest you don't pay just gets added to your total balance.

  • A lot of people are paying interest on interest.

  • It's stressful, but meeting stress head on can feel good.

  • Give it the old college try.

I've been covering finance for nearly a decade, and I've written about some wild stuff, but

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