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Paola "Lola" Esmieu
Getting a masters degree at the Graduate School of Education was a monumental decision for me. I am a first generation, low-income student of color who comes from a small and humble Guatemalan family. I saw Penn GSE as the best environment for my academic growth and personal development, but after I was accepted, I had to answer big questions. How was I going to afford the tuition and related fees, moving from Los Angeles to Philadelphia, and an apartment? After receiving my aid package, I realized that the only way I could attend Penn GSE would be to incur substantial student loan debt. It was daunting and stressful. I almost decided not to go to graduate school at all.
Thankfully, I researched how I could manage my student loan debt after graduation, and discovered programs that gave me payment flexibility and will even forgive a significant portion of my debt. If you are serious about pursuing a career in education or an education-related area, then you should know that you have options much like I did. Hopefully my story can kick-start your research.
Understanding these programs is important because it will inform your decision to accept the student loans being offered to you, your graduate student experience, and even whether you choose to pursue certain employment opportunities.
Direct Loan Program repayment plans and the Public Service Loan Forgiveness program are available for all federal loans that fall under these categories:
After graduation you will receive documentation from Direct Loans that discusses your total amount of loan debt and what your estimated monthly payment. If you are like me, then this initial number will probably give you serious heart palpitations. When you receive this, take a step away and realize that this is the monthly payment under the 10-year Standard Repayment Plan. Initially, all loans are automatically placed on the 10-year Standard Repayment Plan. Under this plan, you have 10 years of continuous payments at a fixed amount that will allow you to pay off your principal and interest within that time. For many of us going into education, this is not a realistic payment. For this reason, the federal government has created other income-driven repayment plans.
The REPAYE, PAYE, IBR, and ICR plans are all income-driven and will provide you with a much more affordable monthly payment that takes your actual income into consideration. Placement in these repayment plans is not automatic and they each require a separate application. Depending on which plan you choose, it is likely, your monthly payment will be either about or no more than 10% of your discretionary income.
When reading the website to review your repayment options, deciding to go on a repayment plan can be scary because the website says that under these repayment plan options “you’ll pay more over time than under the 10-year Standard Repayment Plan amount”. The reason for this is because your loan repayment gets stretched from 10 years to 20/25 years. Thus, the interest builds up for a much longer time creating more debt. But for many people working in education, changing your repayment plan is a first step until they become eligible for loan forgiveness.
If you pursue a post-graduate career that is in education or is education related, you will likely qualify for Public Service Loan Forgiveness (PSLF). When I was applying for PSFL, I worried that I would not qualify since I was working for a private institution. However, because my employer was a tax-exempt organization under section 501(c)(3) of the Internal Revenue Code, I qualified.
To give you my personal example I have combined the Income Based Repayment (IBR) program with the PSLF program. I am three years into the program and so far it has worked in my favor. My monthly payments are affordable and have not caused me any undue hardships. Through the IBR, I am on a 25-year repayment plan. At the end of 10 years I would have met my Public Service Loan Forgiveness requirement, which means that I will have 15 years worth of payments forgiven by the federal government! Without combining the income-driven repayment plan and the PSLF program, then I definitely would end up paying a lot more in the long run since I would be paying 25 years worth of interest on my loans versus the standard 10 years. But since I am on PSLF, I am actually going to pay back only an affordable portion of my total debt.
After graduation, you should automatically receive a 6-month forbearance period. This is designed to let you find a job before having to make loan repayments. Use these 6 months to set your new budget and to figure out which income-driven repayment plan you prefer and whether your employment will allow you to qualify for PSLF.
During this time you will also want to fill out the applications (or at the very least familiarize yourself with the applications) for both the repayment plan and the PSLF. Each requires its own application and process, which can easily be found online. The applications are not contingent on each other and you might qualify for one but not the other.
When applying, you will want to call Direct Loans and ask them all of your questions. I called several times and eventually received the information I needed. That’s how I learned, for example, that the earliest I could apply for the repayment plan was one month before my 6-month forbearance period ended, though you should check because the rules could change. Once I had this information, I set a reminder in my calendar and the first day I was able to apply, I sent my applications. Since then, I have been on these programs and have not encountered any serious issues. Every year I receive a friendly reminder from my loan provider and all I have to do is send them my newest federal tax return.
Like I said, my decision to make the financial commitment to attend Penn GSE was not an easy one. As a low-income student, debt presented a serious obstacle. But, having earned my masters, gone into the working world, and since returned to Penn, I can say I made the right decision for me.
Paola “Lola” Esmieu is the Associate Director for Programs at the Penn Center for Minority Serving Institutions. She is an M.S.Ed. graduate of the Penn GSE Higher Education Division (’13), currently earning her Ed.D. at Penn GSE. Lola's story relates her own experience and we hope her story shows a possible path to a master’s level education. You should borrow only what you really need, and never borrow in anticipation of forgiveness because every student has unique personal circumstances and governmental policies can change. If you would like to chat with a financial aid professional about your path, contact us at firstname.lastname@example.org.