UPDATE: Current Borrowers to Remain Eligible for Public Service Loan Forgiveness Under Trump’s Budget Proposal

defund public service loan forgiveness pslf

Last week, the Washington Post reported that the Trump administration plans to include a potentially big blow to student loan borrowers in its education budget proposal: an end to the Public Service Loan Forgiveness (PSLF) program.

Unveiled in 2007, PSLF is currently slated to begin awarding federal student loan forgiveness to eligible public sector and nonprofit workers later this year. At first, the report suggested those plans may be in jeopardy. However, more details have emerged that indicate current federal student loan borrowers will still be able to receive forgiveness through PSLF. The proposal would only impact new borrowers on or after July 1, 2018.

According to the the latest Public Service Loan Forgiveness statistics, 552,931 borrowers have been approved and are potentially slated to receive forgiveness through PSLF.

Here’s what we know now (and check back as we’ll be updating this as we learn more):

Get the FULL list of forgiveness programs (before it’s too late)

Is this the end for PSLF?

Not yet, at least. Currently, this is merely a proposal put forth by the Trump administration. While this certainly isn’t encouraging for the PSLF program, the president does not make the budget. That’s up to Congress.

In other words, before there are any changes to PSLF, Congress must take action.

Does this proposal impact current borrowers who are currently on track to get PSLF?

Based on a May 23 conference call with reporters, this proposal would not impact current borrowers who are looking to receive forgiveness through PSLF. Borrowers currently on track to receive forgiveness through the program should be able to do so as originally outlined. The proposal would only impact borrowers who take out their first federal student loans on or after July 1, 2018, according to the Washington Post.

This means that anyone who’s already borrowed federal loans should remain eligible for PSLF as well as anyone who begins borrowing prior to July 1, 2018. It appears that whether or not borrowers begin making PSLF-eligible payments or submitting Employment Certification Forms by this deadline would not impact eligibility. Only the borrowing date would matter.

Are there other major changes for student loan borrowers in this proposal?

The report from the Post also indicates that the Trump administration plans to eliminate the current income-driven repayment options including Income-Based Repayment, Pay As You Earn, Revised Pay As You Earn, Income-Contingent Repayment, and others.

For undergraduate degree holders, the proposal would reportedly replace these programs with a single income-driven option that would cap payments at 12.5 percent of discretionary income while offering forgiveness after just 15 years. If this plan is offered, this could be good news for student loan borrowers as it may result in greater amounts of forgiveness over a shorter repayment term.

The news isn’t so great for graduate degree holders, who would enjoy the same 12.5 percent payment cap, but would need to do so for 30 years before receiving forgiveness.

What should you do if you’re potentially affected?

No matter which side of the political aisle you stand on, eliminating PSLF would be bad news for borrowers. With mounting student loan debt that’s been compared to the recent housing bubble, borrowers need better — not fewer — options for relief.

While any potential changes to the program are likely far off, make your voice heard by contacting your Congresspeople and letting them know that you want to keep PSLF intact.

Before it’s too late: Get the list of forgiveness programs

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Published in Federal Student Loan Repayment, News, Public Service Loan Forgiveness, Student Loan Forgiveness

  • Dedangelo

    He’s real man of the people, that Trump guy….

  • Johnny Dale Rodriguez

    Hey wikileaks…..or the other guys. Need help! Can you please clear the student loan list
    Yes I’m in default. I got no money. Just like the housing bailouts and automotive bailouts….a student loan bailout would be good. But not by tbe govnt. They wont do it. So its up to you to wipe it out , fresh start, reboot, “in the beginning!” Pour water on the shit. Washit. Do your thing.

  • Vanessa Hublard

    want to see facts

  • Emily Martinez

    that is insane, I hope that these changes he wants to make do not go into effect.

  • Sarah

    The program was pretty useless anyways. They pay off your loans after 10 years, but the only loans which qualify are on the ten year plans. So you already paid off your loan all by yourself anyways. What a useless program.

  • matt

    Will private student loans be eligible to be bundled into the 12.5% payment? I haven’t seen info one way or another.

  • d peters

    Everyone in my family (5 siblings, 2 children, my spouse and I) all paid off our student loans. When you get that loan in good faith, you agree to pay it back in good faith. One sibling took 25 years to pay off his large student loan, but he did pay it off. Be responsible, people, don’t be a leech!

  • Frances Harrison

    What about student loan borrowers who have already been taking out loans for years, but are not yet signed up for PSLF? Do you need to register for PSLF before July 2018 then (which implies having to start repayment prior to graduating)?? Thank you

  • gFlint

    One point four billion in outstanding student loans of which 25% are in default. Bankers used and abused students loans shackling students and their parents to never ending debt. until death do you part. So tell me again you value a highly educated populace….

  • Andrew Lassiter

    Thank you for the post Jeffrey. Relieving news for PSLF-bound borrowers.