The Department of Education (DOE) is expected to see some $10.6 billion in cuts under the coming White House budget. Among those cuts is reportedly the elimination of the Public Service Loan Forgiveness Program (PSLFP), which encourages borrowers to work in the nonprofit/government sector in exchange for student loan forgiveness.
Created in 2007, the program grants borrowers loan forgiveness if they spend 10 years working for a government or nonprofit entity.
To cap – or to scrap – a complex program:
The Government Accountability Office estimates that almost 25 percent of Americans work in jobs that may qualify for the program.
But whether the program should be capped, scrapped, or expanded is an ongoing debate:
- DOE estimates released last year found that many PSLF enrollees borrowed over $100,000 to finance graduate degrees. Critics of the program have said that using PSLF toward graduate work creates an unsustainable “back door subsidy.”
- The Obama administration in 2015 proposed capping federal loan debt that could be forgiven at $57,500.
- Estimates from the Government Accountability office say the Obama-era cap would have saved $6.7 billion, while eliminating the program entirely would likely save more.
The budget, at present, does not define what would happen to borrowers currently pursuing forgiveness under PSLFP.