Bill Overview
Title: PSLF Payment Completion Fairness Act
Description: This bill removes the requirement that a borrower must be employed in a public service job at the time of loan forgiveness under the Public Service Loan Forgiveness (PSLF) program. Under the current PSLF program, the Department of Education must cancel the balance of interest and principal due on a borrower's Federal Direct Loans after the borrower makes 120 monthly loan payments while employed in a public service job and, at the time of loan forgiveness, the borrower is employed in a public service job. This bill removes the requirement that the borrower must be working in a public service job at the time of loan forgiveness.
Sponsors: Rep. Houlahan, Chrissy [D-PA-6]
Target Audience
Population: Individuals with federal student loans who have completed 120 payments under PSLF but left public service employment.
Estimated Size: 100000
- The Public Service Loan Forgiveness (PSLF) program is relevant to those with federal student loans working in public service careers.
- Many individuals who have completed 120 qualifying payments under the PSLF program may no longer be working in public service but were in such jobs for a substantial period.
- Removing the constraint of having to be employed in public service at the point of forgiveness could benefit those who have left public service roles after fulfilling the initial employment criteria.
- The U.S. Department of Education’s Federal Student Loan portfolio indicates millions are repaying loans, with a notable portion employed in public service roles.
- PSLF applies specifically to U.S. federal student loan borrowers, which inherently makes this relevant only within the United States.
Reasoning
- The policy targets individuals who have federal student loans and have made 120 qualifying payments under the PSLF program but are no longer employed in public service. It is pertinent to consider a wide range of backgrounds in terms of age, occupation, geographic location, and current employment status.
- The $5 billion budget cap in year one and $50 billion over ten years implies a significant number of individuals can be aided, assuming an average loan forgiveness amount and expected uptake.
- Those who have formerly been in public service and completed their PSLF criteria but moved to the private sector or retired early due to different reasons form a key demographic.
- The estimated population size is 100,000 which guides the commonness of the kind of interviewees chosen in terms of their presence in the general population.
- We should expect varying levels of direct impact from the policy change (e.g., financial relief, emotional relief), and secondary effects on their career and life choices, notably among those nearing forgiveness eligibility.
Simulated Interviews
former teacher, now private tutor (New York)
Age: 35 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- This policy change is a breath of fresh air. I left teaching because of local school budget cuts, but I’m glad to see my past dedication will still count.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
non-profit manager (California)
Age: 40 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 8/20
Statement of Opinion:
- I worked in non-profits for years and planned my finances around PSLF. This change relieves the stress of staying in a less fulfilling job solely for loan forgiveness.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 7 |
| Year 2 | 9 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 5 |
librarian (Texas)
Age: 28 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 7.0 years
Commonness: 4/20
Statement of Opinion:
- This will potentially allow me to pursue better salary opportunities without the fear of losing loan forgiveness eligibility.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 3 |
retired social worker (Ohio)
Age: 55 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 15.0 years
Commonness: 6/20
Statement of Opinion:
- Not being tethered to my previous job for forgiveness helps ensure a financially stable retirement.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 7 | 4 |
| Year 3 | 7 | 4 |
| Year 5 | 6 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 5 | 3 |
pharmacist (Florida)
Age: 42 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 7/20
Statement of Opinion:
- My switch to private practice was financially necessary; staying in the public sector for loan payoff was limiting my career.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
government employee (Illinois)
Age: 31 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 11/20
Statement of Opinion:
- The change provides peace of mind in case I decide to leave for the private sector before hitting 120.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
software developer at a non-profit (Massachusetts)
Age: 27 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- I feel more flexible whereas before, the need to stay in non-profits for forgiveness was stressful.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 3 |
stay-at-home parent, former public health officer (Colorado)
Age: 50 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 15.0 years
Commonness: 5/20
Statement of Opinion:
- This change is a huge relief. I left my job to focus on family, but worried about losing forgiveness.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 5 |
| Year 2 | 8 | 5 |
| Year 3 | 8 | 5 |
| Year 5 | 7 | 4 |
| Year 10 | 7 | 4 |
| Year 20 | 7 | 3 |
retired firefighter (Nevada)
Age: 60 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 9/20
Statement of Opinion:
- This helps ensure my service and payments count without worrying during retirement.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 4 |
| Year 5 | 6 | 4 |
| Year 10 | 5 | 3 |
| Year 20 | 4 | 3 |
police officer (Washington)
Age: 33 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 8.0 years
Commonness: 13/20
Statement of Opinion:
- Switching to private security wouldn't have been viable before policy; policy change relieves pressure.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Cost Estimates
Year 1: $5000000000 (Low: $3000000000, High: $6000000000)
Year 2: $5000000000 (Low: $3000000000, High: $6000000000)
Year 3: $5000000000 (Low: $3000000000, High: $6000000000)
Year 5: $5000000000 (Low: $3000000000, High: $6000000000)
Year 10: $5000000000 (Low: $3000000000, High: $6000000000)
Year 100: $5000000000 (Low: $3000000000, High: $6000000000)
Key Considerations
- The cost estimates assume the average remaining balance per borrower and the existing distribution of public sector employment among current PSLF participants.
- Administrative changes might be needed to handle increased forgiveness claims beyond current Department of Education capacity.
- The policy may create an incentive for individuals to enter public service initially and then move to other sectors without financial penalty, affecting labor markets for public service roles.