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Rumors of the demise of Public Service Loan Forgiveness have been greatly exaggerated


Last month this column admonished law students not to rely on the public service student loan forgiveness (PSLF) program.  The many variables of life make it a dangerous six figure bet.

Shortly after publication of this advice, news broke that 99 percent of borrowers who applied for PSLF were rejected.

At the risk of sending mixed messages, however, I would tell law students and young lawyers not to give up on PSLF either.

The rejection rate will drop

A 99 percent rejection rate is certainly an imposing figure, but closer examination makes it clear that qualifying for PSLF isn’t the student loan equivalent of winning the lottery.  Rather, it just requires some attention to detail.

A whopping 28 percent of the applicants were rejected due to “missing or incomplete” information.  Others were rejected for mistakes such as not having made enough payments, being on the wrong repayment plan, or having ineligible loans.  As time passes these mistakes will get cleaned up.

While there is definitely justified criticism about the confusion associated with securing PSLF, young lawyers should be capable of understanding and meeting the requirements of PSLF.

The big fear with most law students and lawyers is that the PSLF program will be eliminated…

Will PSLF be eliminated?

PSLF is more than some Department of Education program.  It was actually signed into law in 2007.

Changing the law would be very difficult from a political perspective.  In addition to the normal gridlock of DC, eliminating PSLF would be very unpopular with law enforcement, teachers, and other public servants.  No candidate wants to anger these groups.

Public servants also have allies in congressional staffs.  Many of the young people researching issues and advising our leadership have student debt.  These staffers have a huge incentive to keep things unchanged.

There is also a major contractual issue.  The Master Promissory Note, the loan contract between borrowers and the federal government, includes PSLF as one of the terms.  Elimination of PSLF would present a major contractual issue for the federal government.  For this reason, all prior plans proposing to eliminate or limit PSLF have grandfathered in existing borrowers.

While we cannot say for certain that PSLF is here to stay, there are a lot of protections in place that should give borrowers some comfort.

The message to young lawyers

The Public Service Loan Forgiveness Program was created so that passionate public servants could work for the public good without their federal student loans getting in the way.

PSLF has its fair share of warts, and borrowers should tread carefully.  The fact remains, however, that PSLF remains a viable path to debt elimination… just be sure to have a backup plan.