A few weeks ago I wrote about the potential for storm clouds surrounding Public Service Loan Forgiveness. A program that Mrs. ROB and I are enrolled in that we can use to combat our student loan debt. The initial controversy stemmed from lawyers who worked at certain non-profit organizations but those organizations weren’t classified as 501 3(c)s, which were the specific non-profits covered by PSLF. Apparently, these lawyers were told that their jobs were initially covered by PSLF, but then later told they weren’t. Subsequently, they filed a law suit. At the time I said I wasn’t worried about it because Mrs. ROB and I both work for organizations that are explicitly covered under the terms of PSLF.
Yesterday, however, Slate Magazine put out an article regarding the Trump Administration’s plan for PSLF and it is not good. It seems that President Trump’s budget, in order to cut 10.6 billion dollars from the Department of Education, wants to cut PSLF altogether. Moreover, he wants to change the rules regarding income-based repayment plans that make it more affordable for students to pay back their student loans. You can check out the different plans here. In essence, Trump’s proposal is to tweak those income based repayment plans and increase the amount you would pay to 12.5% of your income (not necessarily a big deal) reduce the time you would pay those loans from 20 to 15 years for undergraduates but INCREASE the time for graduate students from 25 to 30 years. If this legislation was passed this could re-write the rules for millions of borrowers and tens of thousands of people who are under the PSLF program.
What Does that Mean for Us?
So what does that mean for Mrs. ROB and I? Well nothing at the moment. However, there have been some interesting things going on with our PSLF stuff. For example, every year you should re-certify your employment with the Department of Education so that they keep track of your payments dedicated to PSLF. Mine went through fine. However, Mrs. ROB’s did not. Technically, Mrs. ROB is not full-time. Technically, you need to be a full-time employee of a government organization or non-profit for your loan payments to count. However, there is a loophole in the law because of Obamacare. If you work 30 hours or more per week you can still be considered a full-time employee and that includes having multiple jobs at organizations recognized by PSLF. As long as the jobs add up to 30 hours or more and all of those hours are at qualifying organizations your payments should count to PSLF. Considering Mrs. ROB teaches at multiple places and technically works more than 30 hours per week I submitted her paperwork for re-certification. The government accepted the document, but didn’t give Mrs. ROB any credit toward her PSLF, even though she made all of her payments on time. I am wondering if the Trump administration has moved the goal posts from the previous administration.
In the interim, the Trump Administration’s potential changing of the PSLF rules doesn’t effect us much and probably won’t affect me. First, because if any changes were made I would most likely be grandfathered into the system. Apparently, they have actually put in requirements and potential benefits for PSLF when people sign their student loan promissory notes. The Trump administration can’t just re-write the rules on what is essentially a contract. However, it might affect Mrs. ROB and how we approach paying off her student loans.
Additionally, there is apparently problems with verifying income to determine how much you would pay under income-based repayments. Normally, you would merely go to studentloans.gov, fill out the yearly re-certification application and Student Loans.gov would connect you to the IRS homepage, which would import your past year’s tax returns. They then use that information to determine your student loan payment. Well, it worked fine for me, but not Mrs. ROB. We now have to print out pay stubs and submit a paper copy of income to Department of Education to determine what our new payments will be.
That is fine and we can do it, but it is a huge pay in the ass.
So what do I do if this doesn’t work for Mrs. ROB? Well that is a distinct possibility. She might leave academia and work in the private sector or work part-time if we have children. If that were the case we need to figure out a different plan for those student loans.
I will fully admit that I am not sure what we would do. Pay them off over 20 years and then have them forgiven then? Do we use the equity in our home to pay it off? Try to squeeze every penny from our budget and pay those loans down quicker? Honestly, I don’t know. And I fully admit it keeps me up at night. I like to have a plan and I know I am driving Mrs. ROB crazy as well.
So the storm clouds seem to be gathering more for PSLF. It probably won’t affect me because I would be grandfathered in. But I worry about Mrs. ROB and future beneficiaries of the program and will it be there for them. If not, it curtail people going into public service and create an even greater burden on people with large student loan debt. Let’s hope the clouds don’t turn into a true storm.