The Trump Administration’s Education Cuts Could Spell the End for Student Loan Forgiveness

Although a final version is expected to be released next week, The Washington Post obtained preliminary budget documents for the Trump Administration’s education spending. The proposed budget would end the federal student loan forgiveness program for public sector and non-profit workers, and cut funding for college work-study programs in half.

The Public Service Loan Forgiveness Program (PSLF) allows those with student loan debt working in public service to have their federal loans forgiven after 10 years of payments. The program has been a subject of concern for those with debt amid signs they may not receive the forgiveness they were promised. If the reports are true and the Trump administration wants to end the PSLF program, they still needs Congressional approval before the budget cuts take place.

The program was created by the Bush administration in order to encourage more Americans to pursue careers in public service, but has been criticized as a subsidy for expensive graduate degrees.

PSLF was signed into law in 2007 which means later this year the first group of borrowers will be eligible to claim forgiveness. The Government Accountability Office (GAO) estimates there are 4 million workers eligible to receive loan forgiveness through PSLF, however only 500,000 have submitted the necessary documentation to receive loan forgiveness. Gauging enrollment in PSLF is difficult due to borrowers’ ability to retroactively claim benefits for work and payments as far back as 2007.

In 2015 the Obama Administration proposed capping the amount of debt that could be forgiven at $57,500, but President Trump and Secretary of education Betsy DeVos would go a step further by eliminating the program entirely.

Proponents of ending the program say the cost of the program will be much greater than originally anticipated. Research from the Department of Education suggests that many PSLF enrollees spent as much as $100,000 to finance their degrees, and these beneficiaries stand to have their entire degrees paid for by the federal government through loan forgiveness. The Brookings Institute reported the Congressional Budget Office’s estimates that President Obama's plan to cap the program would have saved about $6.7 billion, but eliminating it entirely would certainly save more.

Not all parts of the budget are shrinking as a result of the cuts. The Post reports that the Trump administration will be expanding funding for charter schools and vouchers, and spend $1 billion to entice districts to adopt school choice policies which aligns with new Secretary DeVos’s initial priorities.