• Michael Kostelnik

Student Loan Forgiveness is Going Nowhere

The political season is starting to heat up. Without getting into many of the heated topics that will no doubt be a part of the debate, I want you to know the one you do not have to worry about. Public Service Loan Forgiveness is going nowhere.


The last four years have carried a lot of talk about the current administration wanting to eliminate PSLF, but while it has been a talking point in the media, there is nothing to fear. Let's talk about why.


Please note, this is not an endorsement of any candidate or party.


1. $ 350 Million


Recently a Republican congress and the Trump administration passed legislation to grant $350,000,000 to cover some of the loopholes in the for the first round of forgiveness applications. They did change the program, but they did put aside a large chunk of money to help people that would have qualified had they been on the correct payment plans.


This $350 million is a great sign to the livelihood of the PSLS program. With all the talk about this administration and the Republicans wanting to remove the program, the fact that they dumped more money into it is a positive sign. Do you spend more money on a program you are going to eliminate?


Oh, and, the Democrats wanted even more money put toward this temporary fix.


2. Entitlements do not go away


When is the last time our government did away with an entitlement program? I seem to remember a particular presidential candidate promising to get rid of his predecessor's healthcare bill. He won, had, and the Republicans had control of the House and Senate. Obamacare is still here.


Entitlements do not go away. They may change, but they do not go away.


3. Changes will be proactive, not retroactive


I do expect changes to the program. Right now, a majority of the people receiving the most benefits are higher income. Do not get me wrong, it is helping the middle class, but the most significant benefactors are often in the medical, legal, and or have other graduate or higher level degrees.


I suspect there may be caps on the dollar amount of loans forgiven, similar to teacher forgiveness that has a $17,000 cap. There may also be an increase in the number of payments required. Currently, it is at 120 payments; it would not surprise me if it increased, possibly even based on the profession or value of loans a borrower has.


4. It would be political suicide


Entitlements do not go away, and the number one reason is job security. Student loans most affect Gen X, Y, and Z. The total population of these three generations is more than half the population. While a majority of Gen X may be out of the woods with student loans, Gen Y (millennials) and Gen Z are nowhere near out. Just those two generations add up to over 150 million people. Try getting them mad and winning re-election.


In Conclusion


PSLF is not going away. Other forgiveness programs will not be either. These programs may see changes, but they will not be leaving. If I had to predict, I would even expect to see expansions in the coming ten years.


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michael@saveforyourfamily.com   |   440-490-7526

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