President Obama’s latest budget proposal includes new initiatives to help Americans’ deal with their hefty loads of student debt, including expanding eligibility for Pay As You Earn, the most protective income-driven repayment plan. However, the budget also proposes a cap on Public Service Loan Forgiveness (PSLF) that will have the unintended consequence of steering Americans away from public service.
What you need to know.
The purpose of PSLF is to help make public service careers financially viable. It does so by allowing Americans to earn forgiveness on their student loans after they have repaid them for ten years while working at a wide range of government and nonprofit careers. Let’s look at why this is necessary.
According to the ABA, the average 2012 graduate of a public law school borrowed over $122,000. Including undergraduate debt, many law school graduates are burdened with $150,000 or more in student loans. And, according to the National Association for Law Placement (NALP), the median salary for a 2012 law school graduate taking a government job was only $52,000 and the median public interest salary was an even lower $44,621.
If the President’s proposal becomes law and forgiveness is capped at the aggregate loan limit for independent undergraduate students – this is currently set at $57,500 – most law school graduates who pursue careers as public defenders, legal aid attorneys, or at nonprofits will still be paying off their student loans 20 years after they graduate. Many of them – and many social workers, teachers, doctors and others along with them – will be unable to make this sacrifice. The people who will be hurt the most by this will be the poorest and most vulnerable among us.
What you can do.
It is important to note that there will be no immediate impact on graduates already repaying their loans. Additionally, for this change to become law, Congress would need to pass the budget in its entirety which is extremely unlikely. Forgiveness also does not require an appropriation, so Congress cannot simply withhold funding.
That said, if you are a graduate counting on earning PSLF, it is a good idea to send in the Department of Education's Public Service Loan Forgiveness Employment Certification Form) annually to show you are relying on the program.
For current and prospective students: The President’s budget does set the table for future negotiations (over reauthorization of the Higher Education Act for example) and might inspire some standalone legislation. Either of those could mean the caps on PSLF would be in effect by the time these students graduate, so we will update you if it looks like this is likely to occur. In the meantime, you can sign a petition on WhiteHouse.gov to help ensure the President reconsiders changing the Public Service Loan Forgiveness program.
Isaac Bowers is Associate Director for Law School Engagement & Advocacy, overseeing the Student Debt, Student Engagement and Law School Relations programs. He was previously responsible for the organization's educational debt relief initiatives. In that capacity, he wrote a weekly blog for U.S. News, conducted monthly webinars for a wide range of audiences, advised employers, law schools and professional organizations, and worked with Congress and the Department of Education on Federal legislation and regulations. Prior to joining Equal Justice Works, he was a Fellow at Shute, Mihaly & Weinberger LLP in San Francisco, where he represented citizen groups and local agencies in environmental litigation and land use and planning issues. Isaac received his J.D. from New York University School of Law.