Working In The Public Sector Can Give You Debt-Forgiveness Handcuffs

Do you feel trapped in your public service field? You can change your job and still be eligible for PSLF.

I am sure that many readers of this column have heard the term “golden handcuffs” used at one point of another.  However, for those of you who do not know, golden handcuffs describes a situation in which people need to continue working high-paying jobs because they have grown accustomed to an expensive lifestyle.  Even though these individuals might hate their jobs, and want to make a career change, their expensive lifestyle has given them golden handcuffs, and they are unable to leave their job.

To some extent, the entire Biglaw system runs on shackling young attorneys with golden handcuffs.  Indeed, attorneys who work in Biglaw are given exorbitant salaries and other benefits starting when they are summer associates and continuing throughout their rise in the ranks of Biglaw.  Since Biglaw firms invest a considerable amount of time and money in their associates, they have a vested interest in keeping them from leaving by shackling them with golden handcuffs.  Indeed, the term golden handcuffs is almost synonymous with the Biglaw lifestyle.

However, individuals who work in the public sector can also experience a type of vocational handcuffs themselves.  The handcuffs some public sector workers experience is not as widely discussed as golden handcuffs, but the effect is virtually the same.  Over the past several months, I have corresponded with a number of lawyers in the public sector who are relying on income-driven repayment plans and Public Service Loan Forgiveness to manage their student loans.  These individuals are paying a set percentage of their income to student loans each month, and after 10 years, all of their student debt should be forgiven.

However, some people have told me that after working in public interest fields for several years, they wish to make a career change.  Nevertheless, these individuals have already made progress toward loan forgiveness, and if they leave the public sector, they will not be able to obtain loan forgiveness as quickly as they would in the public sector.  In addition, some individuals have told me that while they were making modest student loan payments as public sector workers, the interest on their student debt accumulated at an astonishing rate.  Some of these individuals feel forced to stay in the public sector for the full 10 years required for Public Service Loan Forgiveness even though they no longer enjoy their work.

In many ways the situation of these individuals with debt-forgiveness handcuffs is worse than people in Biglaw with golden handcuffs.  Indeed, individuals in public interest fields have hundreds of thousands of dollars of loan forgiveness that would be forfeited if they leave their jobs, which could be more compelling than the trappings of Biglaw.

I have much sympathy for individuals who have debt-forgiveness handcuffs, and there are a few pieces of advice individuals in this situation should consider.  In Silicon Valley (the place, not the show!), I am told that there is a belief that individuals and companies should “fail fast” so that they can learn from their mistakes and move onto something else.  For individuals who may be dissatisfied with the public sector, this idea is equally applicable.

If you are working in the public sector in order to obtain Public Service Loan Forgiveness, and find you no longer want to work in your field, make a move as soon as you can.  The longer you stay on an income-driven repayment plan while working toward Public Service Loan Forgiveness, the longer interest is going to accrue on your student loans.  In addition, the longer you stay in your field, it becomes more likely that you will want to simply ride out the 10-year period needed to obtain Public Service Loan Forgiveness, and be unhappy with your career.

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As I have blogged about on this column and my own website, there are many ways to pay off your student loans.  Indeed, it is possible to pay off your student debt in less than the 10 years required for Public Service Loan Forgiveness by refinancing your student debt and making additional money through side-hustles.  If your public interest job is not right for you, leave as soon as you can so that you can employ other strategies to pay off your student loans.

Another piece of advice to keep in mind if you no longer enjoy working in a public service field is that there are a number of different jobs that qualify someone for Public Service Loan Forgiveness.  Indeed, working for non-profits, governmental entities, and some other employers all make you eligible for Public Service Loan Forgiveness.  If you have already been making progress toward Public Service Loan Forgiveness, but want to make a change in your career, you should definitely consider other options that still qualify you for this program.  In this way, you can still be eligible for debt forgiveness through PLSF and will still be able to make a change in your career.

In the end, Public Service Loan Forgiveness is an amazing program, which ensures that more people are working in vital public service jobs that benefit us all.  However, some people might feel trapped in public service fields, since they are relying on the debt forgiveness afforded to individuals in such roles.  Nevertheless, if you keep a few things in mind, you can ensure that you do not shackle yourself with debt-forgiveness handcuffs while working in the public sector.


Jordan RothmanJordan Rothman is the founder of Student Debt Diaries, a personal finance website discussing how he paid off all $197,890.20 of his college and law school student loans over 46 months of his late 20s. You can reach him at Jordan@studentdebtdiaries.com.

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