Student loan forgiveness for public service a program the feds should keep

The Department of Education has doubled down on its assertion that letters from FedLoan Servicing certifying employment for Public Service Loan Forgiveness (PSLF) are legally non-binding.

 

In a legal brief filed recently, the Department of Education insisted that decisions about PSLF aren’t made until after a borrower has made their required 120 payments and submitted an application.

 

The brief is part of a lawsuit brought by the American Bar Association and four other plaintiffs who claim they had already received information from FedLoan Servicing indicating they worked for an employer eligible for PSLF.

{mosads}Some student debt experts, including lawyer Jay Fleischman, insist that teachers, police, and firefighters probably won’t see their eligibility affected, no matter what happens with the ABA lawsuit.

“The ABA was trying to pull a fast one,” Fleischman said. “It’s a very gray area with regard to nonprofit professional organizations like that.”

“Federal, state, local, or tribal government workers, as well as those working for 501(c)(3) organizations, are very clearly eligible under the Department of Education requirements,” Fleischman explained.

However, the future of PSLF is uncertain, even for people serving in professions many of us would consider “safe” for student loan forgiveness.

The Department of Education recently proposed a budget that, if adopted, would eliminate PSLF for future borrowers. Now, the Department of Education has continued to insist it can decide someone doesn’t qualify after they’ve spent ten years in a low-paying job with the expectation that their loans would be forgiven.

We should reward public service employees with loan forgiveness

Public service workers do some of the most important work for our society.

The police officers and first responders who keep us safe and the teachers who provide an education for the next generation work hard for the benefit of everyone. Many health care professionals forgo lucrative pay to work in underserved communities.

Members of the military and many government workers give their time and effort for lower pay than they might get elsewhere — and the rest of us reap the benefits.

It seems only fair that people who are willing to give 10 years of their lives in professions that support our society should receive student loan forgiveness.

Even if Fleischman is right and the ABA lawsuit doesn’t stop our teachers and law enforcement officers from receiving PSLF, the fact that the Department of Education has been so cavalier about the situation should give us pause.

Instead of forcing recent college graduates to gamble their financial futures on PSLF in the hope that the government won’t renege on its promises, a clear system needs to be put into place from the beginning.

The Department of Education needs to fix its PSLF system

Instead of insisting that employment certification letters sent by FedLoan Servicing are non-binding, the Department of Education should create a system where PSLF participants can receive certification from the first year of employment. Clear guidelines related to employment with nonprofit professional organizations (like the ABA) and other private organizations that employ security guards or ambulance drivers should be established. 

College graduates should know immediately — and receive binding certification letters — whether their employment qualifies them for PSLF. They should have all the information they need to make this decision about their careers.

And PSLF should be continued. It’s a program that helps incentivize graduates to take jobs that are essential to our society. We may not prioritize these jobs by providing higher compensation for them, but they provide a service to the rest of us. It makes sense for us to provide student loan forgiveness as a type of compensation, especially for people who work in these jobs for a decade or more.

What to do if you’re unsure of your PSLF status

For people who are already more than halfway through their 10 years of service, it might make sense to keep moving forward.

The Trump administration has promised to honor current PSLF participants, even if its budget proposal to ax the program makes it through Congress. So, complete the paperwork and save employment certification letters to bolster your case.

If you’ve just graduated from college and are trying to figure out whether to choose a low-paying career in the hope of Public Service Loan Forgiveness down the road, you might be tempted to go another route. 

However, no matter your situation, it’s worth looking into programs that will help you pay your student loans. Even without PSLF, income-driven repayment plans can help you manage your payments — at least until you can find a higher-paying job. 

And if the federal government fails you, there are state governments, charitable organizations, and professional organizations that offer student loan repayment help for people who devote their time and energy to underserved areas. Research your options to find out if you can get some help with repayment, even if your loans won’t be completely forgiven.

PSLF is a great program. Unfortunately, its future is uncertain, and the Department of Education hasn’t done much to provide clarity.

The best you can do right now is weigh your options, consider your own finances, and research other programs. Use income-driven repayment to manage your payments and see if you qualify for alternative programs. The more options you cultivate — especially if you decide to go into a public service job — the better off you’ll be.

Miranda Marquit is a senior writer for Student Loan Hero, a group that helps organize, manage, and repay student loans. She is also an ambassador for Women’s Money Week.

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