Budgets and Bills and Politics…
Loan forgiveness. It’s a big deal, not only for those trying to qualify for PSLF, but it’s also a hot topic on the campaign trail for the Democrat Presidential Primaries. Various candidates have offered different terms on loan forgiveness for both graduate and undergraduate education.
The current administration has offered proposals to limit or eliminate Loan Forgiveness, particularly with their current budget proposal for the 2021 fiscal year. Here’s why this isn’t that big of a deal (yet) and why you, dear reader, shouldn’t be overly concerned:
- White House budgets are pure politics – this is their idealized version of what the budget will look like.
- Congress – the House and Senate respectively, are the ultimate bodies that create and pass budget legislation. The White House can influence the budget, but that really depends on party composition in the House & Senate, and also how much political capital the White House wants to spend to get what they want.
- Since budgets start in the House, and the House is currently Democrat controlled, it is less likely that Loan Forgiveness Programs will be dramatically altered.
- There have been Loan Forgiveness modification proposals over the past decade, but they haven’t ever become a part of a voted upon bill. Notably, there have been proposals to both expand and decrease the scope and coverage of loan forgiveness for medical professionals.
If you’re curious, here’s the exact text of the Fiscal Year 2021 White House Budget that refers to Loan Forgiveness (page 41). It’s really pretty vague in reality. Take a look at the last sentence, which ostensibly, is referring to doctors.
Protects Students and Taxpayers from Growing Student Loan Burden. The Budget protects students by eliminating default for impoverished borrowers and providing expedited loan forgiveness for undergraduate borrowers who make 15 years of responsible payments. In addition, the Budget protects graduate and parent borrowers from racking up crushing debt, often never repaid to taxpayers, by instituting sensible annual and lifetime loan limits. In addition, the Budget closes loopholes currently allowing high-earning graduate-degree holding borrowers to avoid repaying their student loans, leaving taxpayers holding the bag.
Now if you take a look at the actual budget line items at the end of the budget document (page 114), there is an actual PSLF call out. Note that figures are in millions:
In Conclusion…
In my opinion, given the current composition of Congress, I don’t see a dramatic change in Loan Forgiveness ocurring. While there can be changes made through the executive branch, drastic changes really need to be passed into law via bills from the House and Senate making their way to the desk of the President.
What is on the horizon, however, is a much larger population of medical professionals with large Federal Loan balances that will begin to qualify for PSLF. Record keeping has improved since the program was first implemented and I believe that this will be the first real test of whether the PSLF program will live on. As larger and larger sums will be forgiven, there will be increased scrutiny of the forgiveness programs.
Have questions or want to leave some thoughts? Drop a note in the comments!
-SurgeonJourney