Proposed Education Budget Could End Public Student Loan Forgiveness

Proposed Education Budget Could End Public Student Loan Forgiveness

Attention new grads: If you're hunting for jobs in public service specifically so you can pay off your student loans, you may want to hit the brakes for the moment.

The Washington Post broke the news on Wednesday that the Department of Education plans to propose eliminating the Public Service Loan Forgiveness Program (PSLF) as part of its efforts to cut $10.6 billion from federal education.

The PSLF program was enacted in 2007 to encourage college grads to consider public service, government and nonprofit jobs in exchange for having some of their student debt forgiven, as long as they make on-time payments over the course of 10 years. This October marks the first time workers would be eligible to receive the benefit; The Post reported at least 552,931 people were on track to have their loans forgiven.

It's unclear if ending the program would affect this group or simply apply to future graduates. (Either way, those currently enrolled aren't necessarily home free.  In March a number of borrowers who had applied for PSLF and been assured, years ago, that they'd be eligible, were then told their employers didn't qualify for forgiveness after all.)

What's also unclear is the extent to which eliminating the PSLF program would deter new grads from pursuing careers in public service. Research shows that millennials are more motivated by mission than by money, with many willing to take a pay cut to pursue what they believe to be a worthy cause. But it can also be pretty hard to subsist on a non-profit salary, especially if you actually have to pay back the more than $30,000 graduating students have borrowed on average.

The Post's reporting is based on a working version of the budget documents that it obtained — the White House hasn't officially released the budget to the public yet, though it expects to next week. Congress would still have to approve the changes before they could take effect.

Still, for those who are already in the throes of a public service career, it's probably a good time to consider what your backup plan could be for eliminating your student debt. Here are some ways to get creative about paying off your student loans faster and figure out if refinancing could lighten your load.

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