One of the most cited and debated topics on the 2020 Presidential campaign trail is the fate of student loans. In today’s political sphere, generally a Democratic candidate may be known to be pro student loan forgiveness (or pro fiscal spending), and a Republican candidate may be known to be anti-student loan forgiveness (and anti-fiscal spending). However, not much more is often known on each candidate’s plan to tackle this contentious and amorphous issue.
As we move into the final days before the presidential election, many people saddled with student loan debt wonder how nominee Biden and President Trump compare on student loan forgiveness. While Presidential nominee Biden’s proposals fall a little further in line with Sen. Warren and Sanders’ popular and well-known plans, he maintains stark differences in who and what types of loans may be eligible. Likewise, President Trump, and his Education Secretary Betsy DeVos, have made it very clear in their attempted shrinking of the U.S. Education Department that they intend to collect all outstanding and future student loans through a continued income weighted repayment plan.
The sheer size and complexity of the student loan crisis prohibits any one blog from being written convincingly and succinctly enough to be a worthwhile read without honing in on a specific facet of this nationwide epiDEBTic. Thus, I will focus on one aspect of this financial crisis: The Public Service Loan Forgiveness Program (PSLF). The PSLF is an integral program for borrowers to “pay” off their debt by providing essential and often thankless public services, and this program is worth being examined further.
What IS the Public Service Loan Forgiveness Program (PSLF) and Its Ensuing History?
The Public Service Loan Forgiveness program was signed into law in 2007 by President George W. Bush and offers a pathway to loan forgiveness for borrowers who are “full-time employed in eligible federal, state, or local public service jobs and made 120 on-time payments to their loans over a period of 10 years.” Even if a prospect for forgiveness left an eligible role, their eligible payments made would remain paused at the current number until that employee re-entered a qualified position. The program includes any full-time employees at not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code. Typically, recipients of loan forgiveness under the program include members of the Armed Forces, Civil Servants, Public Defenders, and those acting in full-time capacity with AmeriCorps or the Peace Corps.
The extremely popular bipartisan program was put into place to inspire graduates to enter the public workforce without loan paralysis. While other professions may also offer forgiveness programs to the scores of employees entering their field, the PSLF widely encompasses the most vital and oft rewarding domain of benevolences.
As of 2019, over 99% of applicants to receive public service loan forgiveness were denied. Many of the
applicants were not being rejected for missing the mark on their public service, but rather on confusion and misinformation on which types of loans were eligible and which repayment plans an applicant could enter (over 53% of applicant rejections were due to nonqualifying payments). There are numerous reasons for these failures, and luckily, slowly the government has made attempts to alleviate the otherwise “guaranteed not to turn pink in the can!” feel of the PSLF program. The income-based repayment plans, such as the Income-Based Repayment (since 2009), Pay As You Earn (since 2013), and Revised Pay As You Earn (Since 2016), are all more easily understood and successfully invoked than the previous Income-Contingent Repayment plan.
Direct Loans, the only loans eligible for this program, became the primary loan type in 2010 by replacing the Federal Family Education Loan program that was composed of private lenders providing federally guaranteed student loans. By 2012, the government began to offer prospective forgivees the Employment Certification Form for use every year to track eligible progress under the program. In case none of the previous options allowed borrower participation, Congress attempted to remedy this astounding rejection statistic by passing the Temporary Expanded Public Service Loan Forgiveness program, to help allow those that were subject to a previously ineligible repayment plan. With each passing year the number of eligible borrowers and current applicants grows. With each additional amendment to the otherwise illusionary program, there is hope that the acceptance rate will skyrocket ten to twenty-fold over the next four years and continue trending for its purposed use well into the next administration…
What are the two candidates saying about PSLF?
Joe Biden
When it comes to the PSLF, VP Biden does not shy away from the prevailing majority view of his political party. On his campaign site, VP Biden shows support for the 2019 “What You Can Do For Your Country Act” brought forth by Senators Tim Kaine and Kristin Gillibrand. The Act, among numerous other helpful changes to the existing PSLF program, includes stopgaps to common mistakes, 50% forgiveness at five years (instead of all or nothing at 10+), and allowing all types of federal loans to qualify under the program. Even further, VP Biden currently pledges to support a new program that would allow for up to $10,000 a year forgiveness for up to five years of national or community service work. While it doesn’t match the trillion+ plan to forgive EVERYTHING student loan orientated as Senator Sanders’ plan did, Presidential nominee Biden’s $750+ billion plan to help students certainly doesn’t add to the current crisis and makes a full-fledged effort to begin to eradicate some of the major underlying issues. It is not in any way an understatement to say that Biden’s plan strongly opposes his Republican counterparts’ current and future plans regarding the same program.
Donald Trump
In turn, Donald Trump and Education Secretary Betsy Devos have made clear their intentions to end the Public Service Loan Forgiveness program as part of a proposed $5.6 billion cut in funding to the U.S. Education Department. Specifically, they plan to cut the PSLF entirely to future borrowers and applicants, currently grandfathering in those involved with the program in real time. Just this past February, President Trump stood with Devos and proposed total elimination of the program under his proposed budget, with the potential to then be passed by congress. His stated reasoning has been simple: eliminating the program will save the federal taxpayers from having to forgive billions of dollars of federal student loans.
Instead, Trump has proposed a plan that will act for both public and private employees as one that would forgive federal student loans for undergraduate borrowers after 15 years of student loan payments. Currently, borrowers can get relief after 20 years (undergraduate) and 25 (graduate). Trump’s current plan does not include any relief for those with graduate loans. While it is still unclear if this budget will be signed, or if these proposals and ideas will live through this Tuesday’s election, one thing is for sure: the Trump Administration does not see the student loan crisis as one that is worthy of any sort of taxpayer relief, unlike the 400 wealthiest Americans were deemed to be.
What I believe is the correct path forward
Both Vice President Biden and President Trump have spoken about the PSLF program in their plans for election and reelection. These plans vary significantly and would chart a very different path to loan repayment for current and future borrowers. The whole idea of the PSLF program was to entice graduating college and university students into public sector jobs that this country relies on. When the private firm or corporation comes in with the six-figure offer just out of school, it can certainly be tough to pass over. You may have taken out $200,000 in loans over the course of your undergraduate and graduate education, and all you can think about is that grace period ending six months (and not a second more) after graduation day. The saving grace is the PSLF program. It allows you to not compromise your goals, dreams, and wishes if they happen to be in the public realm. Your Peace Corps volunteer, public defender, and firefighter all may be working for “Big Corporation C” if not for PSLF.
It is not the abolition of this program that we need, but rather the enhancement. We all want the very best public parks and services, servants, teachers, and more for ourselves, our spouse, and our children, but we don’t always want to pay for it. The PSLF can keep everyone happy by allowing those drowned in debt to continue to stimulate their local economies with the small price of a discounted education. The PSLF program needs to become more inclusive, more renowned, and more available to the selfless servants in American society.
William Heikkinen is a student at Loyola University Chicago School of Law and wrote this blog post as part of the Education Law Practicum.
