|Borrowers who had amassed between 97-120 qualifying payments as of December 2016.|
The Public Service Loan Forgiveness (PSLF) program was created by Congress to provide an incentive for talented individuals to enter and remain in public service positions by forgiving their federal student loans after a certain period of time. Eligible public service employees include teachers, police officers, firefighters, and nurses, among a variety of other professions. The goal of the program is to encourage students, through promised loan forgiveness, to enter fields that are crucial to society but lack the compensation found in the private sector.
To qualify for forgiveness under PSLF, borrowers who enter full-time employment at qualifying public service organizations must make 120 on-time monthly payments–which total 10 years of payments–while enrolled in a qualified repayment plan. Qualifying payments under PSLF need not be consecutive, so students who make an occasional late payment or who exit and re-enter public service can still qualify for PSLF with only those non-qualifying payments excluded.
Because most of the qualified repayment plans are income-driven, borrowers in low-paying fields will likely have a loan balance remaining after the 120th payment. To receive forgiveness of the remaining balance, a borrower must have verified their qualifying public service employment via an employment certification form (ECF) and be currently employed by a qualifying employer.
|Cumulative number of borrowers who have submitted at least one employer certification form.|
Enacted in 2007 through the College Cost Reduction and Access Act (CCRAA), PSLF will see its first cohort of eligible borrowers receive forgiveness after October 1, 2017. Certain lawmakers, policy analysts, and writers have criticized the program over its first decade for the potential number of unintended beneficiaries and the possibility of a large hit to the federal ledger. However, limited data prevent a full understanding of the true cost of the program.
At the December 2016 Federal Student Aid (FSA) Training Conference for Financial Aid Professionals, the Department of Education (ED) indicated only 139 borrowers had submitted at least one ECF and had amassed between 97 and 120 qualifying payments toward forgiveness. Borrowers who have submitted at least one ECF reached 669,426 through June 30, 2017.
|...it remains more important than ever to advocate for the value this program brings to both students and society, while also considering options for ensuring the program's effectiveness and financial viability moving forward.
While the first borrowers are beginning to be eligible to receive loan forgiveness, both President Trump’s fiscal year (FY) 2018 budget proposal and the FY 2018 House Budget Resolution propose eliminating PSLF altogether for new borrowers. Beginning in his FY 2015 budget, President Obama proposed capping forgiveness under PSLF at the aggregate loan limit for independent undergraduate borrowers, which is $57,500. Similarly, a 2014 NASFAA Task Force developed a proposal to strengthen the program by also introducing caps on forgiveness. With Higher Education Act (HEA) reauthorization pending, it remains more important than ever to advocate for the value this program brings to both students and society, while also considering options for ensuring the program’s effectiveness and financial viability moving forward.
|A cap on the maximum amount of forgiveness combined with proportional forgiveness may ensure that students are discouraged from over-borrowing.
1 20 U.S.C. 1087e(m)
2 “Public Service Loan Forgiveness,” presentation from ED, 2016 FSA Training Conference for Financial Aid Professionals, December 2016
3 Public Service Loan Forgiveness Employment Certification Forms through June 30, 2017, from FSA Data Center
4 NASFAA PSLF letter to ED, October 2016
Publication Date: 10/16/2017