President Trump’s proposal to eliminate public service is not nearly as bad as the headlines make it appear. Basically, 99.5% of folks are being denied for PSLF right now because they do not know how to qualify. Their federal student loan servicers are doing a poor job of communicating to the borrowers what is necessary for forgiveness. It’s not hard, we do this type of work for our clients all the time, but then again, we know what to do.
President Trump proposes to simplify the process and have one income driven plan for all. Won’t matter where you work etc. The payment would consist of 12.5% of discretionary income for 15 years. Right now those seeking public service forgiveness pay between 10-20% discretionary income over 10 years. So it adds five years for those in public service. But it drops ten years for those employed in the private market who are often on a 25 year IBR plan. That’s huge — who wouldn’t want ten years shaved off! And if you were to ask someone in public service if they would rather pay for 15 yrs and have the certainty of forgiveness tax free, as opposed to 10 years, with only ½ of one percent getting approved, I’d say the vast majority would select the new plan. The current program is a nightmare.
Current borrowers could stay in the 10 year plan if they wished as well. I know, I know, that’s what they said when President Obama was pushing Obamacare, but that’s what the proposal states.
I think it’s a good idea. And I’m a student loan advocate for consumers.