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The Uncertain Future of Public Service Loan Forgiveness

Since 2007, more than half a million borrowers have signed up for the Public Service Loan Forgiveness program.
According to the U.S. Department of Education, the program “forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.”
Yet policy analysts suggest that the future of the program faces uncertainty due to potential budget cuts in President Donald Trump’s 2018 fiscal budget. The program has faced a number of criticisms from analysts, who are arguing that it should be eliminated.
BORROWERS’ RANKS EXPLODE
Farran Powell, a reporter for U.S. News & World Report, recently wrote an article about the changes to the program and how borrowers will be affected.
“The Congressional Budget Office estimated this year that the PSLF program will still cost nearly $24 billion for the next 10 years,” Powell says. “That number doesn’t include future borrowers, since it’s based on the CBO scoring a proposal to eliminate PSLF.”
The estimate is based on the number of borrowers who “submitted a form to register for PSLF.” That number grew from 25,683 in 2012 to 669,426 in 2017, according to the Department of Education.
CRITICS VOICE COMPLAINTS ABOUT PSLF
Shannon Achimalbe, a former solo practitioner and contributor for Above The Law, recently wrote an article voicing her criticism of the PSLF program. Achimalbe argues there are many faults to the program — one of which is that it promotes labor inefficiency.
“Let’s keep it real – many law students thought of government and public service work as fourth-tier safety picks in case they struck out at Biglaw OCI,” Achimalbe says. “Something is seriously wrong when people are choosing their careers based on the amount of loan forgiveness when they should instead be choosing careers that will help them pay those loans off.”
Jason Delisle is a resident fellow in education at the American Enterprise Institute, a conservative think tank in Washington, D.C. Delisle is also a critic of the PSLF program. He tells U.S. News that the program has only survived for the past 10 years due to the fact that nobody has actually received forgiveness. Delisle estimates that more than 25% of the US workforce meets the requirement of public service for the program.
“The reason why Congress enacted it and that it survived 10 years is that the assumption has always been that very few people would use it and the very few people would qualify,” Delisle says. “It’s only a matter of time before people figure out how beneficial it is, which ironically will actually tank the program.”
PARAMETERS OF LOAN FORGIVENESS
But some analysts are skeptical about the Congressional Budget Office estimates. Heather Jarvis, a student loan attorney, tells U.S. News that there aren’t enough data points to truly understand who qualifies for the program and who doesn’t.
“I would be surprised if the CBO estimates prove to be correct,” she says. “In theory, while there are a lot of jobs that qualify as public service, that doesn’t mean there will be too many borrowers that qualify, because a person has to be committed to a career in public service.”
According to the Department of Education, the following types of jobs qualify for PSLF:

• Government organizations at any level (federal, state, local, or tribal)
• Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
• Other types of not-for-profit organizations that are not tax-exempt under Section 501(c)(3) of the Internal Revenue Code, if their primary purpose is to provide certain types of qualifying public services

The Department of Education states that applicants are considered full-time if “you meet your employer’s definition of full-time or work at least 30 hours per week, whichever is greater.”
CHANGES WILL AFFECT FUTURE, NOT CURRENT, BORROWERS
Yet Jarvis tells U.S. News there are a number of complexities with the program, which “will hinder or delay borrowers from receiving forgiveness.”
“The system if fraught with traps for the unwary,” she says. “You’ll see borrowers make advance payments accidentally, thinking they are on track with a couple of payments at once, but they only get credit for one of them because of the convoluted rules.”
Michael Lux, a public attorney and founder of the blog The Student Loan Sherpa, tells U.S. News the future of PSLF most likely won’t affect current borrowers. The changes, he argues, will affect future borrowers.
“I certainly wouldn’t bet my future on the program lasting indefinitely,” he says. “I’d suggest to borrowers: Be careful about the total amount of debt they borrow and assume that PSLF will not be around.”
Sources: U.S. News, The White House, U.S. Department of Education, Above The Law