Why Obama’s Proposed Budget Has A Bunch Of Public Service Workers Worried About Their Student Debt
"Part of President Barack Obama’s proposed 2015 budget has some student debtors—specifically those working for public service and nonprofit organizations—nervous," The Boston Globe reports.
"The budget would bring a big change to the Public Service Loan Forgiveness (PSLF) program, which allows public servants (like teachers, law enforcement officials, government workers, public health workers, and more) and employees at 501(c)(3) nonprofits to see the remainder of their federal student loan debt forgiven after 10 years of repayments. (Private loans do not qualify for the program). The policy was put in place in 2007, so nobody enrolled in the program has yet seen its benefit.
The Obama proposal, however, would put a cap on the amount which can be forgiven at $57,500. That means that some debtors with debt greater than that total after 10 years would not see their outstanding debt disappear. ...
In online forums, and in some of the emails Boston.com has received in our call for student debt stories, people currently enrolled in PSLF have expressed concern as to whether they would see loans already in repayment subjected to the cap if the proposal came to light. However, both Minsky and Jarvis think it’s extremely unlikely that any change to the program would affect current debtors. Instead, current debtors would likely be grandfathered in to the current capless system.
They point to the fact that the promissory notes students sign specifically mention potential forgiveness programs—meaning it might be illegal to simply pull an about-face. What’s more, they say, it’s hard to imagine such a blatant act against people who may already be several years into the PSLF program, which would amount to pulling the rug out from underneath a generation of public service workers. Student debt website Educated Risk also sites an education department spokesperson, speaking on background, as saying the proposal would not affect current borrowers.
So it at least appears that current debtors shouldn’t worry too much about falling subject to the cap. Still, [lawyers Adam] Minsky and [Heather] Jarvis say, the cap proposal could have major negative effects on future students looking to go into public service or nonprofit work."
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