Since 2007, students entering public service—such as teaching, law enforcement, firefighting, non-profits, or full-time volunteering with the Peace Corps—were eligible to have their student loans forgiven. At the time the measure was created, it offered an incentive to draw college graduates into serving their communities, their country, and the world.
In 2017, however, the Promoting Real Opportunity, Success, and Prosperity through Education Reform Act or PROSPER Act was introduced into Congress. It seeks to “support students in completing an affordable postsecondary education that will prepare them to enter the workforce with the skills they need for lifelong success.” Upon further review, however, the PROSPER Act could change and even end public service loan forgiveness (PSLF).
How Public Service Loan Forgiveness Works
The PSLF program doesn’t simply wipe your student loans off the books, at least, not immediately upon graduation. To qualify, you need to make “120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.”
In other words, you need to work for at least 10 years in critical fields while making payments on time, and then the government will erase whatever remaining balance you have at the end of that period. Payments don’t count toward that number if you’re still in school, in your grace period immediately following graduation, or if you’re making them late.
You also need to be working 30 hours a week or more for an employer in the public service sector at the time the payments are being made, although they don’t have to be consecutive. You could make several payments with one employer, take a position with a non-qualifying employer, and then later take another position at a qualifying employer again, and your previous payments will still count. You also need to be on an income-driven repayment plan in order to be eligible for student loan forgiveness.
How the PROSPER Act Would Impact Public Student Loan Forgiveness
While the Act is billed as a reform of the 1965 Higher Education Act—the laws that govern financial aid—there are several parts to the bill that would change how loan forgiveness works.
The Act proposes eliminating all public service loan forgiveness programs, making public service or volunteering less attractive to college students. The point is to shift responsibility for loan repayment more to graduates as opposed to the federal government.
What’s the Status of the PROSPER Act?
Currently, the Act is in the House of Representatives; it was introduced in late 2017. It is sponsored by Rep. Virginia Foxx (R-VA), chair of the House Committee on Education and the Workforce.
Twenty other Republican lawmakers have joined the bill as co-sponsors, and while it’s not expected to become law, the bill remains in the House. It has not been voted on at the time of this writing, and no vote is scheduled.
What’s Happening With Public Student Loan Forgiveness Now?
The PSLF program is still ongoing and borrowers who were already participating would be grandfathered in even if the PROSPER Act is signed into law. The program is still accepting new borrowers. In fact, Rep. Brendan Boyle (D-PA) introduced HR 4399, the PSLF Technical Corrections Act, in November 2017.
HR 4399 looks to extend PSLF benefits to college graduates who didn’t understand the qualifying payment restriction and made payments thinking they were going toward their 120-payment requirement when they weren’t qualifying payments after all. Like the PROSPER Act, the Technical Corrections Act is still in the House awaiting debate.
In the meantime, if you’re hoping to get your student loans forgiven for entering public service, you’ll want to get into the program as soon as possible.