Did the Public Service Student Loan Forgiveness Law Change?
The first wave of 10-year faithful payers under the public service student loan forgiveness program (PSLF) will soon mature. These payers should have their loans forgiven under this program for their 10 years of work as a public employee. Now, it appears that the Department of Education is signaling that such generous loan forgiveness may never happen as promised.
The Public Service Loan Forgiveness Program (PSLF)
The U.S. Congress created PSLF through the College Cost Reduction and Access Act of 2007. To qualify, the participant was required to work for any qualified public or non-for-profit employment. In addition, they were required to make 120 on-time, monthly payments (10 years of payments). Upon completion, the student loan borrowers would be rewarded with the entirety of their student loans being “forgiven” under this law. At least, this was the story everyone participating was told. The way things are going it looks like the government may be going back on their word.
Signs That a Law Change to PSLF is Coming
U.S. Department of Education is taking legal steps to reduce the number of qualified recipients under the program. The Republican budget proposal also eliminates the funding for such a program. The U.S. Government is realizing that the cost of the program far exceed original expectations. Essentially, the government is not going to be able to afford the payouts required to indefinitely continue the PSLF program.
Will Anybody Receive the Promised PSLF Relief? Will They Retain the Full Balance of Their Loans?
Although it is too soon to be sure, doubts are arising as to whether the original participants in the program will receive any student loan forgiveness. The first wave of qualified participants should be in October of 2017. With dubious legal challenges as to who qualifies along with a lack of budget funding, many are getting nervous. If you are currently participating in the PSLF program, make sure to keep an eye on how the first wave of participants are treated. If you are intentionally working in the public sector due to this program, the defunding or eligibility shifting that may soon occur may force you to rethink your employment options.