400000 were promised student loan forgiveness. Now they are panicking

Bruno Cirelli
Mag 20, 2017

Given the fact more than 1 million borrowers defaulted on their student loans in 2016 alone, she stated asking the American public to put off other financial plans like buying a house until their never-ending student loans are paid off is "both ill-conceived from a policy perspective and just cruel". The program, enacted in 2007 under President George W. Bush, was created to encourage college graduates to pursue careers as social workers, teachers, public defenders or doctors in rural areas.

This October marks the 10th year of the program and the first time anyone will have made enough payments to get their debt wiped away. It's unclear how much the program will cost the government when its starts to forgive those debts. CFPB points out that government's rehabilitation program, which targets people who have defaulted on their debt, allows borrowers to pay back as little as $5 per month during a nine-month period in order to be considered in "good standing" on their debt.

According to the rough draft of the budget, Trump is planning to cut $10.6 billion from federal education initiatives, and the first program to bite the dust, as a result, would be PSLF, according to the Washinton Post report.

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We've reached out to the Department of Education, which manages the program, for comment.

"It would be absolutely detrimental to those of us who have planned our lives around this program". Back in March, the Dept. of Education revealed that some borrowers who believed their federal student loans were going to be forgiven through this program may still be on the hook for this debt, as the Department said the notices of eligibility sent to these consumers were not binding. He's moved states to get a better job that still qualifies him for the debt relief. "Since taking office, President Trump seems to have lost all interest in students and their student loans, as he and Secretary DeVos deliver one blow after another to hardworking borrowers".

Despite rising interest rates, federal student loans are still the best option for borrowers because of the borrower protections they come with.

Some borrowers claim that in recent years they have received notice from FedLoan, the company charged with determining if an individuals work qualifies for the program, that despite being previous qualified for the forgiveness program that they were no longer eligible to have their loans forgiven. All that's needed to enroll is some paperwork that enables contracted loan servicers to confirm borrowers' annual earnings, but experts inside and outside the government say they don't know why this step isn't completed, and distressed borrowers are left stuck in debt collectors' sights. The CFPB found that those troubled borrowers who did not enroll in a repayment plan were five times more likely to default for a second time. The range of widely available income-driven repayment plans that allow borrowers to pay based on income should ensure that payments remain affordable over time. Signing up for that repayment plan alone requires submitting information about your income each year - a process which can take weeks and temporarily stop the clock on your 10 years of payments.

The Trump administration's proposal does retain one major element of the Obama-era initiative - the eventual launch of a single portal borrowers can use to repay their debts. The program is supposed to encourage borrowers to take lower paying jobs that benefit their communities, such as public defenders or teachers.

"For grad students, this is a lousy deal", said Ben Miller, senior director for postsecondary education at the left-leaning Center for American Progress.

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