It's become common for music teachers to have tens or hundreds of thousands of dollars in student loan debt. And so, the Public Service Loan Forgiveness program has become a popular approach to breaking free.
It works like this.
Work full-time for a government or non-profit organization, make regular payments for 10 years, and the remainder of the loan is forgiven.
Sounds like a sweet deal, right?
Not so much.
In this post, we'll take a critical look at the 10-year student loan forgiveness program, it's larger implications, and the risks to music teachers' financial future.
It's yet another program that relies on our inability to think critically and do math, thus keeping us in financial peril.
And if you want to take a step further, check out our free financial wellness course for music teachers.
No hacks. No tricks. No weird investment advice.
Just the common sense tactics and routines we should have been taught before graduating high school.
What It Means to Sign Up for Loan Forgiveness
The biggest issue with student loan forgiveness programs is that you're locked into a low income.
Don't get me wrong.
There's nothing wrong with working for the government, or for non-profit organizations. But, to qualify for these programs, you have to work for them full time for 10 years.
And the pay is low!
Not to mention, if your work environment is toxic, you can't leave without risking losing your eligibility.
So while it seems like you're getting a great deal on your loans, you're actually losing money (and possibly mental health) over the long term.
Here's an example to show you how.
Music Teacher A on Loan Forgiveness
Music teacher A has $150,000 in student loans. Not uncommon for someone with multiple graduate degrees.
He decides to sign up for the student loan forgiveness program, working at a non-profit community music school.
His salary is $30,000 a year.
So over the course of 10 years, music teacher A makes $300,000. The remainder of the loan is wiped clean. For simplicity, let's say music teacher A saved $150,000 (although monthly payments were made over this time, so he didn't really save this much...).
Music Teacher B Tackling Debt Head On
Music teacher B also has $150,000 in student loan debt, but decides to prioritize career development and income level. Between private teaching, and being selective about employment opportunities, music teacher B makes $60,000 a year.
He keeps an organized budget, and makes it his mission to destroy his student loan debt within 10 years.
Over 10 years, music teacher B makes $600,000. Even having paid the $150,000 debt off himself, music teacher B still comes out $150,000 ahead compared to music teacher A.
That's not a small amount of money.
Plus, as music teacher B prioritized career development, his income likely went up during that time.
That Other Thing...The Government is All-Powerful
Another aspect of this discussion to remember is that the government is all-powerful. If the government decides not to honor your 10-year agreement, you literally have no recourse.
So, not only will you have limited your income (and possibly your sanity) during this time, but you will have so for nothing if you were staying in it just for this program.
In fact, I'll go on a limb and say that it's quite likely the government will not be forgiving most student loans in the near future.
It's a nice thought. And something that would bring relief to millions of college graduates.
But let's think critically here for a moment.
The interest on student loans brings in a ridiculous amount of income. Do we really think the government is going to give that up easily?
Also, think about it from the politician's point of view.
About 60% of Americans do not have a college degree. But they are indeed taxpayers.
Would it be a smart political move to announce that the non-degreed people's tax dollars will be going to wipe away the debt of college graduates? Saving people who signed up for their own debt?
Doubtful.
While you may have signed a dotted line for a loan forgiveness program, there's still a huge risk it won't work out.
The Takeaways
There are some wonderful nonprofit organizations out there. But to keep a full-time job at one only to wipe out your student loans is a mistake.
Or, if you love that sort of work and want it full-time, taking a backseat on getting rid of your debt is also a mistake.
When music teachers rely on the government to ride in on a horse and save their financial future, it never turns out well.
But it doesn't have to be that way.
With the right tools and mindset, music teachers can take control of their financial future, clean up the debt mess themselves, and create a career that can make the impact they've always wanted.
It's powerful stuff. But stuff that most people never pursue.
If you want to learn more, check out our free financial wellness course, or join the Musiciative mailing list.
Peace, freedom, and impact await.
