Loan Forgiveness for Public Servants Is on the Ballot. How Would Ending the Program Impact Critical Sectors?
Credit: Al Seib / Contributor / Los Angeles Times / Getty Images- PSLF is a government program that forgives student loan debt after 10 years in a public service job.
- The program can be costly, with borrowers seeing nearly $100,000 in debt forgiveness, on average.
- Some conservatives argue the program places an unfair burden on taxpayers to subsidize education costs.
- Proponents of PSLF say it’s a necessary tool to help nonprofits and government agencies recruit workers.
A student loan forgiveness program may be on the chopping block, depending on who wins the presidency on Nov. 5.
A growing number of advocates and lawmakers have proposed repealing the Public Service Loan Forgiveness (PSLF) program in recent years. PSLF promises total forgiveness of all a borrower’s federal student loan debt if they work in the public sector — including healthcare, teaching, nonprofit, and government work — for at least 10 years.
PSLF crossed a major milestone in October, as 1 million borrowers have now seen debt forgiveness through the program created in 2007.
However, some say the program has led to ballooning college tuition costs and unfair subsidies for high earners.
Lindsey Burke, director of the Center for Education Policy at the right-leaning think tank The Heritage Foundation, told BestColleges that PSLF should be repealed or heavily amended.
“Not only does loan cancellation … transfer large amounts of student debt onto the backs of taxpayers, but it also encourages excessive borrowing on the part of students, confident that after a certain number of years, their loans will be eliminated,” she said.
Burke is the author of the education policy recommendations in Project 2025, which outlines priorities for a potential second term for former President Donald Trump, the Republican candidate facing Democrat Kamala Harris in the 2024 presidential race.
Those recommendations include ending “time-based and occupation-based” loan forgiveness programs like PSLF.
Yet many borrower advocates uphold that PSLF is a necessary tool to help nonprofits and public service employers recruit talent.
Sara Partridge, associate director of higher education at the left-leaning advocacy group the Center for American Progress (CAP), told BestColleges that teacher and nurse shortages may only worsen without PSLF.
Wasteful or Necessary Government Spending?
Opinions on PSLF tend to be divided into two camps: those who believe the program is a waste of taxpayer dollars and those who see it as a necessary incentive to get people to work in public service.
Burke falls into the first bucket.
She pointed to a recent Urban Institute report that found that the average loan balance forgiven under PSLF in 2023 was $98,000. This insinuates that most beneficiaries of PSLF hold substantial graduate school debt, she said.
“Individuals with graduate degrees are far more likely, statistically, to outearn those who did not attend college, unfairly forcing Americans with lower incomes who did not or could not earn a degree to incur the debt of their higher-earning compatriots,” Burke said.
She also pointed to research that links the rising cost of college tuition to the expansion of federal student loans by as much as 60 cents per dollar.
Michelle Dimino, director of the education program at the center-left think tank Third Way, told BestColleges that many public service careers require advanced degrees. For example, to become a licensed clinical social worker, you must earn a minimum of a master’s degree, yet the profession historically does not lead to high salaries.
“These are fields in service that a lot of students are naturally inclined toward,” she said, “but may see a lot of barriers in higher cost and lower potential returns.”
PSLF lowers the barrier of entry.
Burke suggested that states remove degree requirements for many jobs, including social work.
“One could ask whether someone needs a degree from a university to be an effective social worker,” she said, “or whether an apprenticeship with a state agency would be a better route.”
Partridge added that the professions PSLF benefits tend to employ a high percentage of women and/or borrowers of color.
- In 2022, about 8 in 10 workers in all healthcare occupations were women, according to the Bureau of Labor Statistics (BLS).
- Approximately 77% of public school teachers are women, according to the National Center for Education Statistics.
- Black and Hispanic workers are overrepresented in providing childcare, according to the Urban Institute.
Burke contends that PSLF is too expansive. She says that short of abolishing it, the program should be more narrowly tailored to “only apply to public service as an earned benefit, such as for military service.”
“Is it the best use of limited taxpayer resources to be canceling student loan debt for government employees?” Burke asked. “Nearly two decades after PSLF was first enacted, I think the overwhelming answer now would be ‘no.'”
Recruiting Tool or Unnecessary Expense?
There also appears to be doubt about the effectiveness of PSLF as a recruiting tool for employers.
“The public sector managed to attract talent prior to 2007; they’ll continue to do so if PSLF is wound down,” Burke said.
Partridge pointed out worker shortages in key public service industries.
The Learning Policy Institute estimates more than 300,000 teaching positions in the U.S. are unfilled or held by people who are not fully qualified. BLS projects about 194,500 job openings for registered nurses (RNs) each year, on average, from 2023-2033.
“We need to incentivize employment here,” Partridge said, “not de-incentivize it.”
Still, are workers drawn to these careers because of PSLF? Or are students choosing to enter public service and finding out about PSLF after?
The answer is hard to quantify.
The Office of Personnel Management (OPM) surveyed government agencies in 2016 to determine how effective loan repayment programs are for recruitment. While not a one-to-one comparison to PSLF, the report does offer some insight into how job applicants consider their student loan debt in choosing a job.
Each department and agency in OPM’s report said loan repayment programs help recruit and retain talent. Since most applicants can get higher salaries in the private sector, these programs help level the playing field and make public sector work more attractive, the report found.
Burke said PSLF’s relatively short existence means it’s still unclear how effective PSLF is specifically.
Additionally, the program has a hefty price tag. As of October 2024, 1 million borrowers have gotten loan forgiveness through PSLF to the tune of $74 billion. That’s billions of dollars that otherwise would go to the federal government’s coffers.
Dimino added that an overlooked benefit of PSLF is that it provides an avenue for historically underrepresented groups to enter public service professions.
By leveling the playing field, nonwhite students can enter fields like social work, teaching, or healthcare without fear of crippling student debt and low salaries. Without PSLF, the people in charge of these professions may not be representative of the populations these workers help.
“That’s really at the core of this program … allowing folks from every background to opt into these career fields and get the training we need,” Dimino said.
How Would PSLF Go Away in Practice?
Congress created PSLF in 2007 through the College Cost Reduction and Access Act, and it was signed into law by then-President George W. Bush. The law passed with 75% support in the House of Representatives and 87% support in the Senate.
All this is to say that PSLF was a bipartisan measure.
That’s not exactly the case anymore. High-ranking Republicans have sought to limit loan forgiveness programs in recent years.
U.S. Rep. Virginia Foxx, chairwoman of the House Committee on Education and the Workforce, co-proposed the Responsible Education Assistance through Loan (REAL) Reforms Act in 2022, which would have repealed PSLF completely.
Former President Trump aimed to eliminate PSLF through his 2020 budget proposal.
Project 2025 is yet another high-profile plea to abolish the program.
Burke said that such an action, however, should come from Congress.
“The Department [of Education] itself has some discretion when it comes to determining eligibility for PSLF,” she said, “and while it would not be unreasonable for the agency to tighten the rules governing who qualifies, Congress should and has the primary responsibility for ending PSLF.”
Dimino doubts whether that’s feasible.
Instead, she said a potential second Trump presidency might gut PSLF through other means. That could include using formal rulemaking processes to limit the reach of the program, thus limiting the volume of student loans forgiven.
She added that a new administration could try stonewalling the program.
This could manifest through many means, such as firing department staff so that processing loan cancellation applications takes longer, Dimino said. Or, as Trump did with borrower defense to repayment during his first administration, just refusing to process applications altogether.
“Ending it would be a major slap in the face to borrowers who entered these fields with the promise of the cancellation,” Partridge added.
Still, completely scrapping PSLF remains a fringe idea. Congressional action seems unlikely, at least for the time being.