A 40-year-old physical therapist got $222,000 in student loans forgiven through PSLF and used a tax strategy to pay as little as possible along the way (2024)

About a decade later, his loans have been forgiven thanks to the Public Service Loan Forgiveness Program, and he kept his payments down along the way.

Metzger tells Insider, "Emory is actually the first place I learned about the Public Service Loan Forgiveness Program," a student-loan forgiveness program specifically for public servants who work for nonprofit, government, or tribal organizations. PSLF forgives the student loans of public servants after 120 eligible payments, roughly 10 years.

With that knowledge, Metzger, now 40, intentionally sought out work in the nonprofit sector; in 2012, he landed a job at a nonprofit hospital. In the meantime, he was determined to pay as little as possible on his loans. He enrolled in an income-driven repayment (IDR) plan and was making so little in his first year his student loan payments were initially $0 a month.

As he made more money, his payments increased to $413 per month in 2015, and $956 per month in 2020 before the pandemic payment pause, but he continued optimizing his taxes to keep his student loan payments to a minimum. "During those 10 years, I paid $55,000 to $60,000 and none of that touched the principal balance," he says.

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

Here's the tax strategy he used to pay as little as possible toward his student loans.

He used his FSA and retirement contributions to lower his AGI

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

To lower his AGI, Metzger contributed as much as possible to his flexible spending accounts (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 or childcare expenses.

Those pre-tax contributions lower your AGI. Accountant Akeiva Ellis says, "FSA contributions are not included in your W-2 income, which flows through your AGI. For example, if your gross salary is $50,000 and you contribute $1,000 to FSA, only $49,000 of your income will come through on your W-2." Metzger and his wife, Charity Metzger, contributed a total of $7,800 to regular and dependent care FSAs to lower their AGI.

Retirement contributions work to lower AGI in a similar way. The Metzgers also contribute a total of $14,000 a year to their retirement accounts to lower their AGI, and, in turn, get lower monthly student loan payments.

It's worth noting that lowering your AGI in this way is not always beneficial. Financial planner Jay Zigmont, founder of Childfree Wealth, says that if you're applying for a mortgage or other loan, a lower AGI on your tax return might qualify you for a lower loan amount.

"Another downside is that you may not have enough money to pay your bills, and you will have to pay taxes at a later date on everything that you put away pre-tax," he says.

Correction: October 27, 2022 —A previous version of this article contained several inaccuracies regarding the years Metzger graduated, began working for a nonprofit, and enrolled in PSLF. Those dates have been corrected. Further, this article previously contained inaccurate information about Metzger's charitable donations and their impact on his student loan payments. His charitable donations did not lower his AGI and thus did not impact the amount he owed each month. The story has been updated accordingly.