From what I've read, it's likely that one of these things os going to happen. However, there seems to be speculation those who have already begun relying on the program would face retroactive changes.
I will begin clerking next August of 2016 and plan to consolidate my loans and began making payments through IBR/PSLF. My clerkship is a one year term and then I plan to continue in public service. Is there any possibility that PSLF could be slashed prior to the time that I begin making payments?
When is the soonest that PSLF could be capped or eliminated altogether? Forum
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ellewoods123
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A. Nony Mouse
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Re: When is the soonest that PSLF could be capped or eliminated altogether?
This is just my understanding, so don't take it as gospel, but: my understanding is that no one is currently "on" PSLF. You can be employed in a PSLF-eligible job, but you can't get the loan forgiveness until you've made 120 payments on a qualifying payment plan (basically, any of the income-based plans or extended payment plan; technically you're not ineligible if on a standard plan, but you'd pay that off in 10 years so would have no loans needing forgiveness). Only after you've made the payments do you apply to have the loan forgiven.
So, while I don't like this answer, I suspect that strictly speaking the program could be changed or eliminated at any time, because no one is actually taking part in the program until they apply for forgiveness. Before then you don't sign up for anything, you don't get labeled as "on PSLF" in any way, you're not entered into any database or system as "doing PSLF." The closest is that you can file forms with the loan people certifying that a particular job qualifies for PSLF, but that's not required.
I suspect, or maybe just like to think, that there would nonetheless be some kind of grandfathering for people based on the terms in place at the time they took out loans/graduated, and/or on how close they are to the 120 payments (if you've only been doing a PSLF-eligible job for 2 years and they cut the program, in theory you could ditch the PI job, get something better paying, and "catch up" more easily than if you've been working a PSLF-eligible job for 8 1/2 years, say).
But again, this is all me mostly speculating.
At the time the Obama admin put forward the budget proposals for REPAYE, which makes the terms of PAYE available to all student borrowers, REPAYE included a cap on PSLF of $57,500. I have found stuff on the web saying that "According to a U.S. Department of Education spokesperson, current borrowers will not be subject to the proposed $57,500 cap on Public Service Loan Forgiveness. This cap will only apply to new borrowers after July 1, 2015 (if legislation mirrors the proposal). Current borrowers will only be subject to the $57,500 cap if they affirmatively opt into the new PAYE program. Borrowers repaying or applying for PAYE right now will not be subject to the cap." According to this, if you took out loans before July 1, 2015, and then after that date signed up for REPAYE, you would be subject to the PSLF cap (what this doesn't really make clear is that I think REPAYE will be the only income-based plan available at that point).
However, I haven't been able to find anything that actually says the PSLF cap was actually ever enacted. Everything I find seems to date from last February or earlier and to say that the cap was part of Obama's "proposed" changes and that the cap was "on the table" and so on. Admittedly this is me half-assedly googling, but it seems that if the cap actually got put into place, there would be some kind of clear google hit for that, since the proposal got a lot of traction.
Further, the proposed regulations, which were open for comment until early August (http://www.regulations.gov/#!documentDe ... -0161-0002), don't seem to mention any kind of cap on PSLF (they just talk about allowing people who get lump sums from their federal employers to be able to put the lump sums towards PSLF).
Of course, this doesn't mean that the cap won't/can't be enacted in the future. But if/when is anyone's guess at this point.
So, while I don't like this answer, I suspect that strictly speaking the program could be changed or eliminated at any time, because no one is actually taking part in the program until they apply for forgiveness. Before then you don't sign up for anything, you don't get labeled as "on PSLF" in any way, you're not entered into any database or system as "doing PSLF." The closest is that you can file forms with the loan people certifying that a particular job qualifies for PSLF, but that's not required.
I suspect, or maybe just like to think, that there would nonetheless be some kind of grandfathering for people based on the terms in place at the time they took out loans/graduated, and/or on how close they are to the 120 payments (if you've only been doing a PSLF-eligible job for 2 years and they cut the program, in theory you could ditch the PI job, get something better paying, and "catch up" more easily than if you've been working a PSLF-eligible job for 8 1/2 years, say).
But again, this is all me mostly speculating.
At the time the Obama admin put forward the budget proposals for REPAYE, which makes the terms of PAYE available to all student borrowers, REPAYE included a cap on PSLF of $57,500. I have found stuff on the web saying that "According to a U.S. Department of Education spokesperson, current borrowers will not be subject to the proposed $57,500 cap on Public Service Loan Forgiveness. This cap will only apply to new borrowers after July 1, 2015 (if legislation mirrors the proposal). Current borrowers will only be subject to the $57,500 cap if they affirmatively opt into the new PAYE program. Borrowers repaying or applying for PAYE right now will not be subject to the cap." According to this, if you took out loans before July 1, 2015, and then after that date signed up for REPAYE, you would be subject to the PSLF cap (what this doesn't really make clear is that I think REPAYE will be the only income-based plan available at that point).
However, I haven't been able to find anything that actually says the PSLF cap was actually ever enacted. Everything I find seems to date from last February or earlier and to say that the cap was part of Obama's "proposed" changes and that the cap was "on the table" and so on. Admittedly this is me half-assedly googling, but it seems that if the cap actually got put into place, there would be some kind of clear google hit for that, since the proposal got a lot of traction.
Further, the proposed regulations, which were open for comment until early August (http://www.regulations.gov/#!documentDe ... -0161-0002), don't seem to mention any kind of cap on PSLF (they just talk about allowing people who get lump sums from their federal employers to be able to put the lump sums towards PSLF).
Of course, this doesn't mean that the cap won't/can't be enacted in the future. But if/when is anyone's guess at this point.
