Despite objections from the Trump administration and even President Trump himself, the new $3.1 trillion federal spending bill was signed into law last week. To the surprise of many, the bill included $350 million to be put towards student loan forgiveness, which could help thousands of borrowers over the next several years.
Since taking office, President Trump has held a tough stance on these types of programs, with the Public Service Loan Forgiveness (PSLF) program getting much of the administration’s criticism. However, by making the spending bill official, people are now wondering: Is Trump’s view on student loan forgiveness changing in favor of borrowers, or will the administration continue to side with lenders?
The Public Service Loan Forgiveness program gives borrowers who work full-time for qualifying employers a way to eliminate student debt for good after meeting certain requirements. These requirements include making 10 years of on-time payments – or 120 qualified payments in total – on one of the following types of loans:
During his time in the White House, President Obama was a big supporter of the PSLF program. In recent months, however, the Trump administration has taken a different outlook on the program, saying it wouldn’t likely be funded – and may be done away with completely.
For student loan borrowers working at government organizations and 501(c)(3) non-profit organizations, Trump’s position on the subject has stirred plenty of controversy. Yet, with the signing of the new bill, not only are opinions on the subject changing, but policies on the types of student loans eligible for the program may be as well.
Many financial experts have come out recently saying the Public Service Loan Forgiveness program is failing due to a lack of interest from the Trump administration, not to mention a lack of funding. With the 2018 omnibus spending bill now signed, the White House is showing signs of flexibility on issues that affect student loans, as well as borrowers and lenders.
Today, student loan borrower debt stands at roughly $1.4 trillion, or just less than half of the entire omnibus spending bill that was recently signed into law. This has made some lawmakers skeptical of the long-term benefits the bill would ultimately have on the student loan industry. With only $350 million to play with, the number of applicants who will get approved for the program will only scratch the surface.
However, speaking about the immediate impact the bill would have, Massachusetts Senator Elizabeth Warren said, “I’m very glad that, for the first time, we got some money to help public servants unfairly trapped under a mountain of debt.” But she also mentioned that the fight on behalf of millions of Americans continues.
What’s interesting about the 2018 omnibus bill is that it now gives borrowers who normally don’t qualify for the PSLF program a way to earn forgiveness on their student debt. And with so many borrowers going into student loan default – which totaled nearly 5 million last year alone – the bill offers hope to those who choose a career in public service.
Until this bill was signed, only borrowers with income-driven repayment plans could take advantage of the PSLF program. This is all changing now, as borrowers whose loans don’t normally qualify for the program – including graduated or extended repayment plans – may become eligible.
In a statement, Senator Tim Kaine said of the bill signing, “Americans who honorably serve our communities have earned much-deserved relief… But unfortunately because of confusion around a provision in the program, we were at risk of breaking that promise to … teachers, social workers, nurses and military service members.”
One important thing to note: The $350 million going to support the PSLF program will be given out on a “first-come, first-served” basis, meaning those who have already applied will get top priority. So, if you’re someone who qualifies for the PSLF program and you haven’t submitted your paperwork, you’ll want to get it completed as soon as possible to ensure your place in line.
If you’re one of thousands of borrowers who qualify for PSLF, but your loans do not, you may be in luck! The Department of Education announced in May 2018 a new short-term loan forgiveness program named Temporary Expanded Public Service Loan Forgiveness (TEPSLF) that could help.
You can only qualify for TEPSLF if you’ve applied for loan forgiveness through the PSLF program and been denied for certain nonqualifying loans. In addition, you’ll also have to meet other program requirements before getting approved.