Betsy DeVos’ proposed budget for the Department of Education (DE) confirms the worst fears of graduates hoping for promised loan forgiveness.
During the George W. Bush administration, a bill was passed that promised students who entered less lucrative non-profit or public sector careers would eventually have their student loans forgiven if they worked in those jobs for at least ten years. This program was known as the Public Service Loan Forgiveness Program. The first crop of graduates who signed up for the Bush-approved program are due to have their loans forgiven this year. However, that promise may be broken if the DE budget outline is approved by Congress.
Originally, the Public Service Loan Forgiveness Program had been criticized by detractors as overly burdensome to taxpayers, as the graduates who signed up for it often have much higher student loan balances from law school and med school. Former President Barack Obama capped the amount that would be forgiven at a little over $57,000 for graduates who signed up for the program in 2015 or later. However, the program may now be totally eliminated.
As the Washington Post reported, the Trump/Devos budget aims to slash more than $10 billion from the agency’s $69 billion budget, which would result in a large number of DepEd’s programs being severely cut or eliminated entirely. One of those programs is the 10-year loan forgiveness program, which approximately 550,000 graduates are counting on.
The proposal isn’t entirely a surprise. In a March report in the New York Times, a legal filing from one of the top officials at DepEd suggests that the administrator of FedLoan Servicing, which would be the party that signs off on loan forgiveness, doesn’t actually have any binding authority to forgive graduates’ loans. DepEd has already been sending letters to borrowers who graduated in 2007 saying that their loans would not be forgiven. At least four borrowers are now suing DeVos’ agency with help from the American Bar Association for going back on its word.
Tom Cahill is a senior editor for the Resistance Report based in the Pacific Northwest. He specializes in coverage of political, economic, and environmental news. You can contact him via email at [email protected], or follow him on Facebook by clicking here.