How a 40-year-old student was forgiven of $222,000 in student loans through the PSLF

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• Robert Metzger, Jr. was forgiven of $222,000 worth of student loans through the PSLF.
• He worked out an income repayment plan as soon as possible, initially paying $0 a month.
• He kept his payments low by maximizing retirement and FSA contributions to lower his AGI.

Robert Metzger, Jr., a physiotherapist and host of the faith-based financial literacy podcast “Family Abide,” hit six-figure student loan debt after completing graduate studies at Emory University in 2010. I noticed that I was holding a

About 10 years later, his loan was forgiven thanks to the Civil Service Loan Forgiveness Program, and he held back payments along the way.

Metzger told Insider, “Emory was the first place I actually learned about the Public Service Loan Forgiveness Program, a student loan forgiveness program for civil servants who work for nonprofits, governments, or tribal organizations.” PSLF forgives civil servant student loans after her 120 eligible payments (approximately 10 years).

Armed with that knowledge, Metzger, now 40, deliberately sought work in the nonprofit sector. In 2012, he got a job at a non-profit hospital. In the meantime, he was determined to get his debts as low as possible. He enrolled in an Income-Dependent Repayment (IDR) plan, but he earned very little in his first year and his student loan payments were initially $0 a month.

As he earns more money, his payments rose to $413 a month in 2015 and $956 a month in 2020 before pandemic payments were paused, but he’s paid off his student loans. “Over the last 10 years, I have paid $55,000 to $60,000 and it has not affected my principal balance at all,” he said. says.

His bet paid off. According to records reviewed by Insider, Metzger said he received a $221,804 student loan forgiveness through the PSLF. (Currently, a limited-time waiver is in effect to help more civil servants reach his PSLF. This waiver expires on October 31st. See this link can apply.)

This is a tax strategy he used to pay as little as possible for his student loans.

He used FSA and severance pay to lower his AGI

The IDR plan is calculated using the Annual Gross Income (AGI) shown on your tax return. Metzger realized that getting the AGI as low as possible would also reduce his monthly student loan payments.

To lower the AGI, Metzger contributed as much as possible to the Flexible Spending Account (FSA). Similar to a Health Savings Account (HSA), an FSA is an account that allows you to keep pre-tax money from your paycheck, especially for medical or childcare expenses.

These pre-tax contributions lower the AGI. Accountant girlfriend Akeiva Ellis said: W-2.” Metzger and his wife, Charity Metzger, donated a total of $7,800 to her FSA of normal and dependents to lower AGI.

Retirement benefits work similarly to lower AGI. The Metzgers also donate a total of $14,000 annually to retirement accounts to lower their AGI, resulting in fewer monthly student loan payments.

Note that lowering AGI this way is not always beneficial. Jay Zigmont, founder of Childfree Wealth and his planner, said that if he’s applying for a mortgage or other loan, the lower his AGI on the tax return, the lower the loan amount could be. said.

“Another drawback is that you may not have enough money to pay the bills and have to pay taxes at a later date on everything you put in before taxes,” he says.

Correction: October 27, 2022 — A previous version of this article contained several errors regarding the year Metzger graduated, started working for the nonprofit, and enrolled in the PSLF. These dates have been corrected. Additionally, the article previously contained inaccurate information about Metzger’s charitable contributions and the impact it had on his student loan payments. His charitable donations didn’t lower his AGI, so they didn’t affect his monthly repayments. The story has been updated accordingly.