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  • Robert Metzger, Jr. got $222,000 in PSLF forgiven student loans.
  • He got an income-driven repayment plan as soon as possible, even when he was still in graduate school.
  • He paid as little as possible using charitable donation tax breaks and pre-tax payroll deductions.

Robert Metzger, Jr., a physical therapist and host of the faith-based financial literacy podcast “Family Abide,” found himself in six-figure student loan debt after graduating from Emory University in 2013.

Nearly a decade later, his loans have been forgiven through the Civil Service Loan Forgiveness Program, and he has maintained his payments along the way.

Metzger told Insider, “Emory is actually the first place I heard about the Public Service Loan Forgiveness Program,” a student loan forgiveness program specifically for public servants who work for nonprofit organizations. non-profit, governmental or tribal. The PSLF cancels government student loans after 120 qualifying payments, or about 10 years.

With that knowledge, Metzger, now 40, intentionally sought work in the nonprofit sector. In the meantime, he was determined to repay his loans as little as possible throughout these 10 years. He immediately signed up for an Income Contingent Repayment (IDR) plan while we were still in college, which made his first year of qualifying payments $0 per month.

As he was making more money working for a nonprofit hospital, his payments increased to $413 per month in 2015 and $956 per month in 2020 before the pandemic payment pause. “During those 10 years, I paid $55,000 to $60,000 and none of it hit the principal balance,” he says.

His bet paid off. According to records reviewed by Insider, Metzger received $221,804 in student loan forgiveness through PSLF. (There is currently a time-limited waiver in effect to help more public servants achieve the PSLF. The waiver expires October 31. You can apply at this link.)

Here are the two tax strategies he used to pay his student loans as little as possible.

1. He donated $22,000 to charity in 2021

IDR plans are calculated using the annual gross income (AGI) shown on your tax return. Metzger realized that reducing his AGI as much as possible would also lead to lower monthly student loan repayments.

By itemizing his deductions, instead of taking the standard deduction, he was able to reduce his AGI by $22,015 by donating to charity.

He adds, “We pay our tithes,” 10 percent of gross annual income paid directly to his church, “on credit cards so we can earn reward points. We do not go into debt for our tithes, but they are paid with every paycheck. on automatic payment; 1%-2% cash back on $30,000 adds up.”

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0.25%; 0.06 – 0.13% for low cost investment funds

Account Types

Traditional IRAs, Roth IRAs, and SEP IRAs

Types of investment

ETFs, Index Funds, and Crypto Trusts

Wealthfront Wealthfront IRA

Costs

0.25%; 0.06 – 0.13% for low cost investment funds

Account Types

Traditional IRAs, Roth IRAs, and SEP IRAs

Types of investment

ETFs, Index Funds, and Crypto Trusts

Costs

0.25%; 0.06 – 0.13% for low cost investment funds

Account Types

Traditional IRAs, Roth IRAs, and SEP IRAs

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2. Metzger used his FSA and pension contributions to further reduce his AGI

To lower his AGI even further, Metzger contributed as much as possible to his Flexible Spending Account (FSA). Similar to a Health Savings Account (HSA), an FSA is an account where you can keep pre-tax money from your paycheck specifically for medical expenses.

These pre-tax contributions reduce your AGI. Accountant Akeiva Ellis says, “FSA contributions are not included in your W-2 income, which passes through your AGI. For example, if your gross salary is $50,000 and you pay $1,000 to the FSA, only $49,000 of your income will come on your W-2.” Metzger and his wife, Charity Metzger, paid regular and dependent care ASFs a total of $7,800 to reduce their AGI.

Pension contributions contribute to reducing the AGI in the same way. The Metzgers also contribute a total of $14,000 a year to their retirement accounts to reduce their AGI and, in turn, get lower monthly student loan repayments.

It should be noted that lowering your AGI in this way is not always beneficial. Financial planner Jay Zigmont, founder of Childfree Wealth, says that if you apply for a mortgage or other loan, a lower AGI on your tax return could qualify you for a lower loan amount.

“Another downside is that you might not have enough money to pay your bills, and you’ll have to pay taxes at a later date on anything you put aside before tax,” he says.