Friday, March 7, 2014

Potentially Huge Changes to the Public Service Loan Forgiveness Program

Attending law school for some people is a step towards fulfilling a goal to serve the public (for much less pay than their counterparts in the private sector but essentially the same amount of student loan debt). Programs like Public Service Loan Forgiveness (PSLF), serve as a way "to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, borrowers may qualify for forgiveness of the remaining balance of their Direct Loans after they have made 120 qualifying payments on those loans while employed full time by certain public service employers."

This week, the White House proposed massive changes to PSLF in the Budget of the United States Government, Fiscal Year 2015.  The proposed changes have many students and professionals worried. Notable proposed changes include:
  • A $57,500 cap on amounts forgiven.  Borrowers with student loan debt exceeding $57,500 will need to make 25 years of payments (a 15 year increase from the original 10 years).
  • Payment calculations for married borrowers filing will be made on combined household adjusted gross income, rather than the borrower's income alone.
The proposed changes have sparked interesting responses from many outlets including Above the Law and the Wall Street Journal.  A petition on the White House site to retain the program in its current form is up and running as well.  The petition has received over 6,000 signatures since it was created yesterday but needs over 93,000 more signatures by April 5.  For more information about the proposed changes and how they might impact PSLF, visit student loan expert Heather Jarvis' website where she explains her thoughts on the proposed cuts to the program and their impact on existing borrowers.

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