Nearly 99 percent of applicants for a federal student loan forgiveness program are being turned down. Should more be accepted?
Created in 2007, the Education Department’s Public Service Loan Forgiveness (PSLF) Program aims to help erase student debt for graduates who go into important public sector jobs such as the military, police officers, firefighters, teachers, and public defenders.
But under Education Secretary Betsy DeVos, the Trump Administration tightened the rules for eligibility. As a result, almost 99 percent of PSLF applications have been denied. Only $10.6 million out of the $700 million Congress appropriated for the program has been spent.
What the bill does
The What You Can Do For Your Country Act would greatly expand eligibility for the PSLF program, so that almost everybody who deserves the student loan forgiveness would receive it.
Specifically, it would allow all types of student loans and all types of repayment plans to qualify (currently only some types are eligible), and also allow the loan forgiveness to take effect beginning five years after the start public service rather than the current 10 years.
The bill’s name references President John F. Kennedy’s inaugural address, featuring the iconic line, “Ask not what your country can do for you, ask what you can do for your country.”
It was introduced on April 11 as bill number S. 1203, by Sen. Kirsten Gillibrand (D-NY).
What supporters say
Supporters argue the bill ensures the government lives up to the promises it’s been pledging for more than a decade since the program’s 2007 enactment.
“The current [PSLF] program is a bureaucratic nightmare, and the Department of Education is failing to meet its obligation to help ease the student debt burden for our nation’s public servants,” lead sponsor Sen. Gillibrand said in a press release.
“As a result, millions of teachers, social workers, members of the military, nurses, public defenders, and countless others have been denied the support they have earned through their hard work and service to our communities.”
“It’s time for Congress to fix this program and create a fairer and simpler process for public servants seeking loan forgiveness,” Sen. Gillibrand continued. “The Public Service Loan Forgiveness program [should be] truly available for the millions of Americans who have chosen careers in public service.”
What opponents say
Opponents say that even though the rate of rejection may be eye-popping, the reasons are actually legitimate — and that rate will plummet of its own accord in the next few years.
Only federal _direct _student loans are eligible for PSLF. Currently, almost all new loans are direct, but that wasn’t always the case,” American Enterprise Institute education policy research analyst Preston Cooper wrote for Forbes. “In 2007, when PSLF took effect, only 21% of outstanding federal student loans consisted of direct loans; most of the remainder fell under a now-defunct guaranteed loan program that was not eligible for PSLF.”
“Therefore, most borrowers who theoretically could have been making PSLF-qualifying loan payments since 2007 will not be eligible for discharge, since their loans are not direct,” Cooper continued. “But almost all borrowers who take out loans today and meet the other requirements _will _be eligible for PSLF, since almost all new federal loans are direct loans.”
Odds of passage
The bill has attracted 17 Senate cosponsors, all Democrats or Democratic-affiliated independents. It awaits a possible vote in the Senate Health, Education, Labor, and Pensions (HELP) Committee, but with Republican control of the Senate, odds of passage aren’t high.
In March, DeVos proposed eliminating the PSLF program altogether. However, she proposed the same in both 2017 and 2018, and the at-the-time fully Republican Congress maintained the program regardless, so it’s almost certain to remain in place.