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Monday, March 5, 2018
The End of Student Loan Forgiveness
The Public Service Loan Forgiveness program (PSLF), is a federal plan created in 2007 by the Bush administration, designed to encourage graduates to pursue work as teachers, social workers, public defenders and other public service positions. Students who work for ten years in the non-profit or public sector, and who make at least 120 payments towards their loan debt, can qualify to have their remaining balances forgiven. Under the Trump administration, this program is now on the chopping block.
At the graduate and professional school level, PSLF is critical for allowing and encouraging students to work in lower income professions. For example, many law students graduate with six-figure student loan debt, but jobs as public defenders and legal aid practitioners often pay between $40,000 and $60,000 a year. The same hurdles are true for medical school graduates who pursue work at low-income clinics and community medical centers. PSLF was designed to coax quality professionals into service-based careers.
According to US News & World Report, more than half a million borrowers have utilized PSLF in the past ten years. Critics of the program argue that PSLF's solvency hasn't yet been tested, because 2017 was the first year in which the earliest recipients could have their loans forgiven.
In December 2017, the House GOP introduced a bill called the PROSPER Act, designed to reform federal student aid legislation that has been in place since 1965. The bill would eliminate PSLF entirely, as well as placing a cap on federal graduate student loan borrowing. Such an action would likely have two primary effects: 1) forcing students to take on more private loans and 2) discouraging students from pursuing graduate education in the first place.
The Trump Administration's proposed 2019 Budget calls for the termination of the program. It is believed that the elimination would not apply retroactively.
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