Administration Proposes to End the Public Service Loan Forgiveness (PSLF) Program

With the $5.6 billion cuts to the Department of Education, the Administration’s proposal for the fiscal year 2021 included eliminating the Public Service Loan Forgiveness (PSLF) program. In 2007, the Bush Administration created the PSLF program under the College Cost Reduction and Access Act of 2007 (P.L. 110-84) for individuals who work ten years in “public service” and pay for their on their federal student loans (120 payments over ten years) can have the remaining loans forgiven. Covered public service jobs include full-time employment (at least 30 hours a week) in an eligible federal, state, or local government, a non-profit, or a tribal organization. This include the following industries:

• Any level of government, including the military, public safety, law enforcement, the Peace Corps or AmeriCorps;
• Public education, including early childhood education;
• Social work in a public child or family services agency;
• Public interest legal services, including prosecution, public defense, or legal aid in a low-income community as part of a non-profit organization;
• Public or school-based libraries;
• Public service in child care, service for individuals with disabilities, or the elderly;
• Any other work at a tax-exempt public charity established under 501(c)(3) of the tax code; or
• Teaching at a tribal college or in a high-needs area as determined by the Department of Education.

The program has failed to pay-off loans due to the confusion in its implementation. Both the President and the Education Secretary Betsy DeVos have been unsuccessful in its efforts to eliminate the program, including the proposed measure in last year’s fiscal budget and previous years. In 2019, a modification of $350 million was passed by Congress for the temporary expansion of Public Service Loan Forgiveness (TEPSLF). These funds are to provide Public Service Loan Forgiveness for public servants who were denied Public Service Loan Forgiveness solely because they were in the wrong federal student loan payment plan. The funds go out on a first-come-first-served basis.

The Public Service Loan Forgiveness program is essential to attracting and retaining individuals who enter the public service and non-profit field, like child welfare. Many of these positions pay lower salaries than other sectors, and elimination would impact millions of student loan borrowers.