Beware Public Service Loan Forgiveness Program

The following is adapted from a newsletter feature I do at my office, and I decided to share on my blog.

Last month, I shared some information about the Federal Student Aid’s Public Service Loan Forgiveness Program, which might be a great tool to consider if you’re planning on returning to school. After learning additional facts and details, I wanted to suggest that readers proceed with a healthy dose of caution when exploring this option to finance their continuing education. For example, if you have Parent Plus Loans—federal loans for your adult children--the program is likely not going to be particularly helpful. The degree of assistance it might provide may also be largely contingent upon your family’s current financial situation. Before planning on using this benefit, crunch the numbers yourself to make sure that the program is worth your time and effort. You might also seek out a certified financial planner. 

If you’re not careful, the high interest rates of the Federal Student Loan servicer—e.g. Nelnet--can quickly offset any potential savings benefit. You may even be surprised to find much better options at your own bank or local credit union.  For instance, we successfully leveraged our home equity to refinance our mortgage and entirely payoff those annoying federal student loans.

UPDATE: CBS NEWS STORY

In case it's of any help, I am also offering you the e-mail address to a Jeffrey Noordhoek, one of Nelnet's Board of Directors. You can find his profile information here.