Last week, we got a glimpse of the Trump administration's proposed budget cuts for the Department of Education. Among the programs facing the chopping block is Public Service Loan Forgiveness (PSLF), created in 2007 during George W. Bush's second term in office.
The idea is to scrap the PSLF program altogether — in the name of saving money. The estimated 552,931 borrowers hoping to receive student debt relief from PSLF would not be impacted by this proposal. However, PSLF would no longer be available to any new federal student loans borrowers as of July 1, 2018 and later.
Deficit hawks in Congress and the current administration might feel that PSLF is one easy way to trim the budget. Since PSLF was created by statute, the assumption is that Congress would need to formally end the program. This could be done as part of a budget bill or through some other means, such as voting to repeal PSLF.
Analysis by the Brookings Institute indicates that the median debt load of those enrolled in PSLF is more than $60,000. The total amount forgiven is likely to be billions of dollars. A Government Accountability Office report put the amount of student loan debt forgiven through income-driven repayment on student loans taken between 1995 and 2017 at about $108 billion. That same report also estimated that some projections for PSLF costs were under by about $4.4 billion.
But can we really place a price on the benefits to society PSLF opens up?
Education expert Mark Kantrowitz pointed out that PSLF is a way of allowing workers to follow their callings in public sector and non-profit jobs. It removes student loan debt as a disincentive for talented workers to pursue jobs as social workers, public defenders, teachers, and primary care medical professionals in rural areas.