While Democratic presidential candidates are proposing sweeping student loan forgiveness programs, President Donald Trump’s budget proposes eliminating one that already exists for public workers – for the fourth year in a row.
Congress has never adopted the proposal to end the Public Service Loan Forgiveness program for new borrowers and there’s little chance it will be accepted this year. Democrats, who control the House, have repeatedly come to its defense.
Teachers, nurses, social workers and other public sector workers benefit from the program, which cancels their remaining federal student loans after they’ve made 10 years’ worth of payments.
The program was signed into law by President George W. Bush in 2007. It gives workers incentives to stay in lower-paying public-sector jobs while they paid down their student debt. The first time anyone would have made enough payments to qualify was under the Trump administration, during the fall of 2017.
But the program is not without problems. Congress didn’t make all federal loans or repayment plans eligible and some borrowers have found out they didn’t qualify only after paying off their loans for several years. In an ongoing lawsuit, the American Federation of Teachers union is suing the Department of Education alleging that it has mismanaged the program.
Just about 1% of the 110,000 people who have applied for forgiveness had successfully received debt relief as of September, according to Department data.
Overall, the administration is proposing to cut the Education Department’s budget by 7.8%, to $66.6 billion. It also would eliminate subsidized student loans for low-income students – a provision rejected by Congress in previous years.
It calls for streamlining the loan repayment system and limiting how much graduate students and parents can borrow from the federal government, as well as making Pell grants available to incarcerated students and those enrolled in short-term certificate programs.