WTF Is Going On With Student Loan Forgiveness Right Now?
Under the Trump administration, promises of loan forgiveness for individuals who took jobs in the public sector may be broken.
If it seems like the US is collectively freaking out right now about student debt, that’s because it is: Student debt recently surpassed credit card debt for the first time ever, and according to the Federal Reserve, it’s presently sitting at $1.4 trillion.
I’d like to point out that this is a fourteen-digit sum, for those of us who hear the word “trillion” and think, “Oh, it’s a little bit more than a billion, which is a little bit more than a million.”
Younger generations in particular are saddled with more debt than ever before, with the average student in the class of 2016 coming out of it with a $37,172 obligation—a figure that will impact their financial futures in a way it never did older generations.
So what’s a gal with a $40,000 loan shackled to her social security number to do? Depending on the career path you choose, there are—or were, but we’ll get to that in a minute—ways that the government could help ease your burden.
A decade ago, the Public Service Loan Forgiveness program was created, which essentially meant that anyone who worked for the government or a nonprofit could have their federal loan balance erased after 10 years of making on-time monthly payments and staying in those public service jobs.
So, for instance, if a newly graduated law student with hundreds of thousands of dollars of debt opted to work as a public defender rather than on Wall Street, that seemingly insurmountable debt could be forgiven at the end of 10 years.
Under the Obama administration, the program was expanded even further. For students not working in public service, the income-driven repayment plan was put in place, which adjusted monthly payments based on income (generally 10 percent of discretionary income.) It dictated that if those payments were made on time for 20 or 25 years, depending on if you signed up before or after July 2014, the remaining balance would be forgiven.
A teacher loan forgiveness program was put in place as well, where teachers who taught for five consecutive years fulltime in an elementary or secondary school serving low-income students, could have between $5,000 and $17,5000 of their loans forgiven.
It’s been a very popular initiative, successfully incentivizing educated individuals to take jobs that bolster our public education and public service sector, when they might’ve otherwise passed over them—an especially important motivator in the face of a nationwide teacher shortage.
Earlier this week in Oklahoma, for example, the state Board of Education approved 631 emergency teaching certificates in order to fill positions in public school districts. And in California, the California State University’s Mathematics and Science Teacher Initiative Annual Report projects a need for 33,000 new math and science teachers over the next ten years.
Clearly, the need for more teachers in the public sector is dire, and the loan-forgiveness program is an essential component to bringing new teachers to the table. But since President Trump has taken office, the future of the program has suddenly become uncertain. On Tuesday, the Department of Education filed a motion asserting there has been no final decision on whether participants in the program will have their student debt forgiven.
This means that the first group of participants from when the program was first implemented 10 years ago may be in jeopardy of staying saddled with the debt they were promised would be erased. And that would really, really suck.
On top of that, the Obama-era rules that were put in place for students who were tricked into taking out loans by their institutions are also in the lurch; the Obama administration approved 28,000 claims of borrowers being defrauded, and President Trump has approved zero so far. According to the Washington Post, 65,000 pending claims are awaiting decision.
All of which is to say: The country’s frightening student loan crisis potentially just got a whole lot scarier, with the Trump administration and Secretary of Education Betsy DeVos demonstrating they are considerably less inclined to provide forgiveness.
It’s potentially disastrous for current borrowers, and on top of that, the message this sends to prospective students, amidst a climate of tuition that is rapidly becoming inaccessible, is a grim one indeed.
Words: Deena Drewis
Photos: Alexey Kuzma/GIPHY