This fall, the first of approximately 552,931 people in public service jobs hope to receive Public Service Loan Forgiveness (PSLF), according to a report from The Washington Post.
The program, which provides student loan forgiveness for public servants who make at least 10 years of federal student loan payments, was instituted during the administration of President George W. Bush. Now, it’s under threat from the administration of President Donald Trump.
The latest attack on PSLF came earlier this week in the form of a brief filed by the Department of Education.
Department of Education states Public Service Loan Forgiveness still isn’t guaranteed
Last year, the Department of Education disqualified some lawyers working for the American Bar Association (ABA) from receiving PSLF. However, those lawyers had already received information from FedLoan Servicing indicating they worked for an employer eligible for PSLF.
The ABA, along with four plaintiffs, filed suit in December 2016, and the Department of Education has been embroiled in a legal battle since.
The Department of Education reiterated in the brief it filed yesterday that previous letters from FedLoan Servicing determining whether an employer met PSLF requirements were “interim, non-binding, individualized determinations.”
It also said there had been no final decision about who would receive federal student loan forgiveness under PSLF, only that “once a borrower has made 120 qualifying payments, she may submit an application for PSLF.”
Are your chances for PSLF on the chopping block?
Although the language the Department of Education used might seem to indicate it doesn’t have to honor Public Service Loan Forgiveness, student loan lawyer Jay Fleischman warned against abandoning a current course of action based on this lawsuit.
“The fact of the matter is that the ABA is a professional organization,” Fleischman said. “It might be [a] nonprofit, but it’s not a 501(c)(3).”
“While there’s a chance that teachers, police, and other public service jobs might be impacted, their eligibility is pretty clear-cut in those cases,” Fleischman explained. “Their Public Service Loan Forgiveness probably won’t be affected by the outcome of this lawsuit.”
Others might not be so lucky, though, according Fleischman. He referred to some workers as being in a gray area. Private security guards and private ambulance workers are among those who do something that’s considered a public good and might work for nonprofit organizations.
“Technically, they could be eligible for forgiveness since some of them work for nonprofits, even if they aren’t 501(c)(3) groups,” Fleischman said. “However, if the ABA loses this action, it could financially harm workers in this gray area.”
It’s also important to remember that the Trump administration has promised PSLF will remain intact for people already in the program, said Fleischman.
So, even if the Department of Education’s budget proposal to eliminate the Public Service Loan Forgiveness program goes through, people who are already in the system are supposed to be able to continue — assuming the PSLF application is approved at the end of 10 years’ worth of federal student loan payments.
What about recent grads choosing a public service career?
A bigger issue, said Fleischman, is that recent grads might be reluctant to take on public service jobs if PSLF disappears.
“When choosing a career, it’s difficult to get excited about a low-paying public service job when the incentive of forgiveness is taken away,” Fleischman explained. “It’s a gamble too when you realize you could work for 10 years and still have your application rejected.”
However, Fleischman emphasized that he didn’t think the current program would penalize police officers, teachers, government workers, and workers at 501(c)(3) organizations.
“I can’t imagine the government taking a protection currently in place away from student loan borrowers,” Fleischman said. “There are too many borrowers who have already declared their intentions. And these are members of politically significant groups.”
Fleischman would understand if some recent grads rethought their career paths, though. Without the assurance of PSLF, it might be worth it to start an income-driven repayment (IDR) plan right now and then look for a job that pays a higher salary.
“Anything that lowers your federal payment to an affordable level today is something you should do, regardless of Public Service Loan Forgiveness,” Fleischman said. Check your eligibility for IDR plans and evaluate which works best for you if you’re having trouble paying your student loans.
Plus, it’s still worth it to turn in the paperwork to certify that your employment makes you eligible for PSLF. Even though the Department of Education claims the right to reject your application, it doesn’t hurt to start the paperwork.
Double-check your PSLF eligibility
With the first forgiveness applications coming up, and given the uncertainty surrounding the PSLF program, it’s a good idea to double-check your eligibility. You should also calculate how much student loan forgiveness you can expect to receive under PSLF.
“It’s incumbent on every borrower to see if their loan, employer, and employment qualifies them for forgiveness for maximum peace of mind,” said Fleischman.
At the very least, Fleischman said, figure out if you’re eligible for IDR and use it to get your federal student loan payments under control. Keep making your payments and look for ways to improve your finances.
Additionally, you can check your eligibility for other student loan forgiveness or repayment programs offered by:
- State governments
- The military
- Public service organizations
- Professional organizations
And if you aren’t eligible for IDR, PSLF, or alternative programs, or if you have private student loans, consider student loan refinancing.
Although you won’t receive the same protections you would with federal programs, refinancing can help you manage your budget if you don’t qualify for other programs.
Interested in refinancing student loans?Here are the top 7 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.45% APR (with Auto Pay) to 7.49% APR (with Auto Pay). Variable rate loan rates range from 2.14% APR (with Auto Pay) to 6.79% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of September 6, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 09/06/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for SoFi.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
4 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.19% effective August 10, 2019.
6 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
7 Important Disclosures for College Ave.
College Ave Disclosures
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1College Ave Refi Education loans are not currently available to residents of Maine.
2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 08/01/2019. Variable interest rates may increase after consummation.
|2.14% – 6.79%1||Undergrad & Graduate|
|2.14% – 7.84%2||Undergrad & Graduate|
|2.43% – 6.65%3||Undergrad & Graduate|
|2.43% – 7.60%4||Undergrad & Graduate|
|2.14% – 8.01%5||Undergrad & Graduate|
|2.06% – 8.93%6||Undergrad & Graduate|
|2.74% – 7.24%7||Undergrad & Graduate|