The future of an already-embattled loan forgiveness program geared toward public servants could be in jeopardy under President Trump’s nominee for Secretary of Education, Betsy DeVos.
DeVos didn’t commit to defending the Public Service Loan Forgiveness program (PSLF) in written answers to questions asked by Sen. Patty Murray (D-Wash.), published this week. When asked by Murray whether she would protect the program to ensure “thousands of students enrolled in the program can obtain the debt relief they were promised” and “actively oppose any efforts to undermine” the program, DeVos responded with:
“If confirmed I will faithfully implement the Higher Education Act and will look forward to discussing these issues with you as Congress considers its reauthorization.”
DeVos’s answer could signal she may be open to changing PSLF as part of the process to reauthorize the Higher Education Act — the broad statute that governs higher education and the student loan program — which Congress is expected to undertake this year. Natalia Abrams, the executive director of Student Debt Crisis, a student loan advocacy organization, said past proposals to curb the program have made her worry it could be at risk under a new administration. DeVos’s answer doesn’t do much to mollify her concern, she said.
“We’ve had a lot of fears that the program is under attack,” she said. “We’re on the side of making it a stronger program and we think it doesn’t go far enough. We can’t go backward on this program, we need to go forward.”
Under the PSLF program, federal student loan borrowers who do nonprofit or government work for 10 years and pay their student loans during that time can have the remainder of their debts forgiven. The first cohort of borrowers will become eligible to have their loans forgiven in 2017, but there are indications that, even without changes to the program, many of the teachers and social workers who qualify for it may struggle to get the forgiveness they’re counting on.
The Government Accountability Office estimates roughly 4 million borrowers may be eligible for PSLF, but just 10% of that number has taken the steps necessary to have student loans forgiven at some point, in part because of confusion and a lack of publicity surrounding the program. What’s more, public interest lawyers who took out student loans report planning their own financial lives around potential forgiveness and then having the rug pulled out from under them when the Department of Education appeared to change the rules about who qualifies for the program.
But even if Congress or a new administration decides to tweak the requirements for the program or cap the amount of forgiveness offered through it, it’s unlikely that those who already have loans — particularly if they’ve certified for PSLF — won’t be grandfathered in, said Alexander Holt, a policy analyst at Washington-based think tank New America. Still, he said it’s possible lawmakers may make some changes to the program through a process known as budget reconciliation, which allows Congress to speed through consideration of certain debt limit, tax and spending legislation. Absent any congressional moves however, Holt said based on DeVos’s answer he doesn’t believe her Education Department would make significant changes to the way PSLF is currently run, based on her answer.
There are indications that PSLF could be under fire in a new administration and a Republican Congress. A recent Government Accountability Office report found that the feds may have miscalculated the cost of PSLF, making it a possible target for reforms to the student loan program that some leading Republicans have indicated they’d like to make.
Even the Obama administration proposed capping the forgiveness offered by the program. It’s also possible lawmakers could be swayed by the arguments of some policy wonks who say PSLF favors graduate students who incur high debt levels, but are also on track to earn high salaries. “It tends to be a regressive benefit,” he said.
Holt and others have noted that the existence of PSLF combined with the fact that the government provides unlimited loans to graduate students also makes it easier for graduate programs to charge high tuition for programs that in certain fields, like teaching, are essentially a requirement for participating. What’s more, he says, the qualifications for the program are relatively arbitrary. For example, a doctor working in a nonprofit hospital has access to PSLF, while a doctor doing the same work in a for-profit hospital doesn’t.