The slow growing tide against PSLF

Jason Delisle does a nice job describing the majority of the arguments used to suggest that PSLF should be severely curtailed or destroyed in “The coming Public Service Loan Forgiveness Bonanza” for the Brookings Institution.

PSLF will be revised at some point if no other reason than this:

In 2014, the CBO estimated that the Obama administration’s proposal to cap the amount that could be forgiven under PSLF at $57,500 would save $265 million over 10 years (2015 to 2024). The agency recently revised that figure to $6.7 billion.

I don’t think the people making these programs had any idea how much graduate school costs and the incentives they were promoting through potentially unlimited forgiveness.

I still think current borrowers will be grandfathered into the program, and I think politically it is for more likely for forgiveness to capped +/- changes to eligibility rules than for the program to just disappear.

Delisle also lumps all IDR programs together as IBR and says that IBR, PAYE, and REPAYE are functionally equivalent. This certainly isn’t true for pre-2014 borrowers, but also doesn’t take into account REPAYE subsidy or changes to the payment cap (for example) and their effect on the amount forgiven under the PSLF program.

And while he discusses how a cap would help combat the perversion of this program in justifying tuition increases to students, this would really impact longer degrees like law and medicine. A $57,500 cap would still be very enticing to people going for masters degrees in things like social work or speech-language pathology.

You’ll be seeing more like this over the next year (presumably including profiles of rich suddenly loan-free doctors) as the first round of forgiven loans happens in 2017.