Public Service Loan Forgiveness Program Research Articles

Waivers for the public service loan forgiveness program: Who could benefit from take‐up?

AbstractFor workers employed in the public and nonprofit sectors, the Public Service Loan Forgiveness (PSLF) program offers the potential for full forgiveness of federal student loans for those with 10 years of full‐time work experience. A year‐long waiver issued by the Department of Education in 2021 to address administrative problems in program access provided a new path to PSLF relief for many borrowers. We explore the overall impact and distributional implications of potential full participation in loan forgiveness enabled by the PSLF waiver program using the 2018 Survey of Income and Program Participation (SIPP). Our estimates identify more than $100 billion in loan forgiveness available to as many as 3.45 million borrowers through the PSLF waiver program. Potential beneficiaries of this initiative are disproportionately employed in occupations like teaching and health care. Full take‐up of the PSLF waiver would lead to a narrowing of the racial gap in student debt burden. However, the distributional impact of the PSLF waiver depends critically on the take‐up rate and there is some evidence that those borrowers with relatively high income or advanced degrees have been most likely to access benefits.

Demographic Characteristics and Career Plans of First-Generation Medical Students at a Single Medical School in the United States.

Recruitment of first-generation medical students is essential to improving diversity and inclusion in US medical colleges. First-generation students offer unique experiential insights that foster empathy and cultural competency in the learning environment and improve health outcomes for patients. However, little is known about their demographic characteristics or career goals. It is important to identify these factors to provide insight on ways to better support first-generation students. This exploratory pilot study aimed to describe background, demographic characteristics, and goals of students. We administered a secondary analysis of a quality improvement and health disparities survey to third-year medical students at a large, private medical school in Philadelphia, Pennsylvania. Measures included demographic information, interest in loan forgiveness programs, and other career goal items. We conducted χ2 goodness-of-fit tests to examine differences by first-generation status. Thirteen percent of respondents identified as first-generation medical students (n=26). First-generation medical students were more likely to be male, aged 21-26 years, White, and non-Hispanic/Latino. First-generation students were significantly more likely to report wanting to care for underserved populations during their career and enter loan forgiveness programs, with Department of Education's Public Service Loan Forgiveness program most often cited. This study provides an exploratory profile of characteristics of first-generation medical students and their career intentions. Our results suggests that enrollment of first-generation students may increase the number of physicians who are willing to serve underserved populations. However, first-generation students may also need more financial support through loan forgiveness programs which has important implications for medical education.

Money Talks: Pilot Financial Wellness Programs to Promote Positive Financial Planning Behaviors Among Residents.

Graduate medical education programs and national organizations are becoming more involved in promoting trainee financial wellness. Current literature reports residents have poor financial knowledge, high debt levels, low concern about their finances, and deficits in financial preparedness, but there has been little published on best practices for implementing financial wellness programs for residents or measuring meaningful outcomes of such programs. From June 2017 to 2019, the authors invited 277 internal medicine residents from the Stony Brook University Hospital, Montefiore Medical Center, and Johns Hopkins Bayview Medical Center residency programs to participate in financial wellness programs. Each institution held at least one 90-minute financial planning session; Stony Brook also had biannual financial wellness check-ins. Participants were invited to complete a presession, an immediate postsession, and a year-end survey to assess changes in financial planning behaviors. Survey response rates were 49% (135/277) for the presession survey, 47% (130/277) for the immediate postsession survey, and 22% (61/277) for the year-end survey. Ninety-six percent (125/130) found the sessions helpful and 98% (120/123) recommended continuing the program in the future. At year-end, the most frequent completed financial planning actions prompted by the session included saving emergency funds, creating a monthly budget, consolidating loans via the Public Service Loan Forgiveness program, contributing to retirement savings, and participating in an employer's retirement plan. Residents liked that some sessions were during intern orientation before the selection of retirement plans. Postgraduate year (PGY) 1 residents were more likely to complete positive financial planning actions and to agree or strongly agree that the session prompted them to take financial planning actions than PGY-2 and PGY-3 residents. While financial wellness programs are well received by internal medicine residents, more robust evidence is needed on curricular delivery methods and program features that promote positive financial planning behaviors.

Waivers for the Public Service Loan Forgiveness Program: Who Would Benefit from Takeup?

Waivers for the Public Service Loan Forgiveness Program: Who Would Benefit from Takeup?

The magic and misdirection of public service loan forgiveness in the United States

AbstractIn recent years, the Public Service Loan Forgiveness program has garnered more attention among student loan borrowers in the United States as a potential source of loan relief. However—at least prior to the PSLF Program Overhaul introduced in October 2021—arduous eligibility criteria, opaque communication on the part of the U.S. Department of Education and contracted loan servicers, and ongoing threats to the continuation of the program made for a skittish and frustrated group of enrollees. This article leverages a mixed methods study to explore the meaning borrowers ascribe to prospective loan forgiveness and interrogates how magical thinking contributes to enrollees' perspectives on prospective loan forgiveness. With several of these sources of meaning standing in conflict with each other and with confidence in personal prospects of loan forgiveness fairly low, we argue that magical thinking overlays the meaning of potential loan forgiveness among some borrowers.

APA applauds changes proposed by loan forgiveness program

The American Psychological Association (APA) applauded the U.S. Department of Education for making administrative fixes to the Public Service Loan Forgiveness (PSLF) program that will affect hundreds of thousands of borrowers, including many psychologists with federal student loan debt, APA officials stated in a news release.

Trainee Reliance on Public Service Loan Forgiveness

The Public Service Loan Forgiveness (PSLF) program is an option to trainees to help alleviate federal education debt. The prevalence of PSLF utilization and how this may impact career decisions of trainees is unknown. The purpose of this study was to understand the prevalence, impact, and understanding of PSLF participation on trainees. IRB-approved anonymous survey asking study subjects to report demographics, financial status, and reliance on PSLF. In addition, study subjects were asked to report their participation in PSLF, the possible impact of PSLF participation on career decisions, and to identify the qualifications needed to complete PSLF. Online anonymous survey. The survey was offered to all physician trainees in all specialties at the University of Texas, Southwestern, University of Wisconsin, Madison, and University of Michigan, Ann Arbor. There were 934 respondents, yielding a 37.6% response rate. A total of 416/934 (44.5%) respondents were actively or planning on participating in the PSLF program with 175/934 (18.7%) belonging to a surgical specialty. Those belonging to a surgical specialty were more likely to be PSLF participants compared to medical specialties (53.1% versus 42.6%, p = 0.01). For those participating in PSLF, 82/416 (19.7%) stated this participation impacted career decisions. A total of 275/934 (29.4%) respondents obtained and 437/934 (46.8%) wanted to receive formal training/lectures in regards to the PSLF program. Of those actively or planning on participating in the PSLF program, only 58/416 (13.9%) were able to correctly identify all of the qualifications/criteria to complete the program. A large proportion of trainees rely on the PSLF program for education loan forgiveness with approximately 20% reporting participation impacted career decisions. Additionally, the majority may not fully understand PSLF criteria. Programs should strongly consider providing a formal education regarding PSLF to their trainees.

Washington Hotline

Public Service Loan Forgiveness program overhaul announced The U.S. Department of Education (ED) announced on October 6 an urgently needed overhaul to the federal Public Service Loan Forgiveness (PSLF) program, assuring the program will “live up to its promise” of benefitting borrowers serving in public services careers, including librarians and educators. ALA, joining with the Coalition to Preserve PSLF, has lobbied in favor of changes for PSLF participants, many of whom face rejection despite making years of loan payments.

Don’t 'Estop' Me Now: Estoppel, Government Contract Law and Sovereign Immunity if Congress Retroactively Repeals Public Service Loan Forgiveness

This Article considers whether federal student loan borrowers can bring successful legal challenges if Congress retroactively repeals the Public Service Loan Forgiveness (“PSLF”) program. It addresses whether borrowers at litigation could rely on analogies to the promissory estoppel doctrine or assert equitable estoppel claims to challenge the repeal. In doing so, the Article explores the intersection of estoppel and government contract law with sovereign immunity theories in a way that has never been done before. This topic has been given very little attention in prior literature, so I aim to present its legal issues in a clear way while paying tribute to its nuance.The Article addresses the hurdles of sovereign immunity and the Sovereign Acts Doctrine, which the borrowers would encounter at litigation. It concludes that, despite likely overcoming these hurdles, in many cases, the plaintiff-borrowers’ government contract law claims would likely still fail to win on their merits. The Article similarly contends that most if not all equitable estoppel claims would likely fail before a court. The Article then offers an alternative proposal to Congress, which would avoid the issues that would arise at litigation, while solving the problems associated with the program and protecting the most vulnerable members of society negatively impacted by a repeal.

Relief for Servicemembers and Veterans

Policymakers have long acknowledged the link between financial readiness and military readiness and that unique financial stresses imposed by military life can impede America’s national security. In fact, Congress has repeatedly taken steps to mitigate the acute financial burden servicemembers face by crafting military-specific protections during repayment of consumer debt, including interest rate caps and servicing requirements when military consumers are on active duty. Over the last two decades, as the student debt crisis has emerged within the ranks of the military, Congress has targeted repayment benefits and protections to servicemembers with student debt. Congress took action to help servicemembers by establishing the Public Service Loan Forgiveness (PSLF) program, which provides debt relief to borrowers working in public service, including members of the military, after ten years of payments. In practice, the PSLF program has proven to be an essential recruiting and retention tool across each of the military services that supports the financial readiness of our nation’s armed forces. Many servicemembers plan both their financial lives and military careers around the promise of loan forgiveness. But as discussed in an accompanying piece in this compendium, the promise of PSLF has been broken, including for individuals in uniform. While the broken promise of PSLF will undoubtedly harm millions of borrowers, this article focuses specifically on the acute harm military borrowers face in seeking to access vital student loan protections, largely due to needless administrative burdens that are exacerbated by poor servicing practices. Additionally, this article examines the legal authority under which the Secretary of Education can effectuate the intent of Congress to use the HEROES Act to remedy these harms by providing relief for hundreds of thousands of servicemembers and veterans with student debt.

How Trainees Finance Their Medical Education: Implications of Higher Education Act Reform.

The Public Service Loan Forgiveness (PSLF) program is among several repayment programs currently available for recipients of federal student loans. Medical education debt has continued to expand at a rapid pace in the decade since PSLF was created. Proposed changes to the Higher Education Act would substantially transform how future medical trainees finance and repay medical education debt. To better understand relationships between debt and personal stress, as well as between repayment- and forgiveness-program use, in the context of competing legislation. Surveys were sent to all Accreditation Council for Graduate Medical Education-accredited internal medicine residency programs (osteopathic and allopathic). From a potential pool of 579 residents, data were obtained from 403 unique respondents (response rate, 69.6%) at 12 residency programs, for a program response rate of 2.2%. Of these respondents, 290 (71.9%) completed the demographic portion of the survey. Median education debt was $225,000. Residents with the top quartile of debt burden were more likely to use PSLF (odds ratio [OR], 3.27; P=.02), more likely to enter loan forbearance (OR, 2.14; P=.03), and indicated a higher level of stress (OR, 5.94; P<.001) compared with those in the second and third quartiles. Proposed legislative changes to the Higher Education Act would scale back loan repayment options and also eliminate PSLF for future borrowers. Our data suggest that higher debt burdens are associated with increased debt-related stress. Given program popularity and growing use, along with growing concerns of physician burnout, policy makers should weigh the potential downstream effects of policy change on prospective future physicians.

Could the Benefits of the Public Service Loan Forgiveness Program Be Retroactively Curtailed?

There is a sharp tension between the expectations that hundreds of thousands to millions of persons have or will have regarding their right to have their federal student loan debts forgiven under the Public Service Loan Forgiveness (“PSLF”) program and the legitimate public concerns regarding the large costs and regressive incidence of the PSLF program’s benefits. In 2017, the Trump Administration proposed abolishing the PSLF program for future federal Direct Loans, but this proposal was not adopted. A similar proposal was made in 2019 as part of the Administration’s fiscal 2020 budget proposal, with little chance of adoption. But given the large costs of the program, which I estimate will eventually rise to $12 billion per year or more as an estimated 200,000 people per year who currently have outstanding federal Direct Loans will eventually seek debt forgiveness, and given the regressively skewed incidence of its benefits in favor of relatively affluent mid-career doctors and lawyers, I think that there will be further legislative curtailment efforts made in 2020 or later by the Trump Administration or by members of Congress, this time perhaps a more aggressive proposal for retroactive elimination of the program, or at least a push for a tax law amendment to include this forgiven debt as taxable income as is now done for debts forgiven under the other federal income-based loan forgiveness plans. This Article considers several contractual arguments as well as Constitutional arguments that opponents of such proposed statutes could offer. The contractual arguments against retroactive elimination of the PSLF program include arguments based on: the express loan terms; the implied contractual covenant of good faith and fair dealing; promissory estoppel; and unconscionability. Some of these arguments have considerable merit, at least for those Direct Loan borrowers who can make certain fact-specific showings. Opponents of such legislation might also be able to invoke constitutional substantive due process concerns under the authority of the 1986 Supreme Court case of Bowen v. POSSE. They also could offer a plausible Takings Clause argument against a tax law change if the courts choose to regard the PSLF program’s tax exemption for forgiven debt as a contractual commitment rather than as only a revocable privilege. This Article does not take a strong normative position on these potential legal issues. It does, however, suggest a compromise that might fairly balance the interests at issue: continue the PSLF program in its current form, but repeal the tax exemption for forgiven debt so as to recapture for the Treasury in a modestly progressive manner approximately one-quarter to one-third of the benefits of the debt forgiveness. Such a compromise should probably also include a provision for spreading the payment of those taxes over at least several years after debt forgiveness to avoid unduly burdening these persons with a sudden, large tax liability that is not accompanied by the receipt of funds to pay those taxes.

Paying for Law School: Law Student Loan Indebtedness and Career Choices

Student loan debt has reached crisis levels, topping $1.64 trillion dollars this year and surpassing credit card debt to become the second largest source of debt held by Americans. When discussing student loan debt, it is easy to fixate on the aggregate impact of the burdens this debt places on taxpayers, the economy, and borrowers alike, such as the depressive effects that student loan debt has on marriage, homeownership, and entrepreneurship. Yet, a discussion of which graduates are saddled with the largest student loans and how their debt obligations impacts their career choices is often absent from conversations about student debt and has been understudied to date. This Article contributes to the discourse about student loan debt and its potentially negative externalities by investigating responses from an original survey administered at four law schools, revealing novel findings about law students’ expected debt loads, career choices, and intentions to participate in the Public Service Loan Forgiveness program. In Part I of this Article, the student loan crisis is more closely examined with particular emphasis on its salience for law school graduates. In addition, the first part of this Article provides credible descriptive evidence that rates and amounts of borrowing to attend law school impact law students differentially on the basis of their endowed characteristics, such as race and parental education. Next, Part II explores the Public Service Loan Forgiveness program, describing the program’s creation and implementation, in addition to evaluating its efficacy and the direct and indirect costs of its administration. Part III discusses two pervasive issues within the legal academy with significant social implications — the access-to-justice gap and the public-interest drift — against the backdrop of the student loan crisis and the possible answers that the Public Service Loan Forgiveness program could provide in addressing these issues. Part IV describes the data collected from the original survey, the methods used to analyze these data, and reports and discusses the results. The findings reported in Part IV offer insight into how a law student’s endowed and acquired traits influence their career intentions and provide evidence of the causal relationship between loan debt and career choice and intentions to enroll in the Public Service Loan Forgiveness program. Finally, this Article concludes by suggesting that the Public Service Loan Forgiveness program presents the best available option to address problems stemming from the access-to-justice gap and the public-interest drift, while also offsetting the negative effects of structural stratification in legal education.

What's Wrong with Public Service Loan Forgiveness and How to Fix it

In the first two years of the Public Service Loan Forgiveness (PSLF) program almost 100,000 student loan borrowers have applied, and the Department of Education’s contractor has denied roughly 99,000 of those applications. The administration blames Congress for an unduly complex program design, and borrowers for applying without understanding the eligibility rules. Given that PSLF has only four basic eligibility tests, and that applicants are college graduates who can presumably read and count, this narrative seems implausible to explain a 99% denial rate. Evidence from oversight agency reports, state attorney general and class action lawsuits, and thousands of borrower complaints logged by the CFPB tell a different story, a story of agency failure to implement and oversee the program, and of widespread contractor errors and misrepresentations. Until Congress, the Department or an independent agency (such as the CFPB) does a comprehensive audit of the program it is impossible to know the rate of erroneous denials or discharge failures caused by servicer misrepresentations and bad practices. Proper implementation of PSLF will require a combination of contract oversight and design, regulatory, and legislative fixes. In particular, USED must adequately compensate its servicer, relax its unduly strict on-time payment rule, make better use of technology and data sharing with the I.R.S. to confirm eligible public service employment, and offer borrowers effective audit and appeal rights to review servicer errors. Congress should allow all borrower payments under all payment plans on all types of Federal loans to count.

Why Are 99% of the Applications for Debt Discharge under the Public Service Loan Forgiveness Program Being Denied?

During the first 18 months after October 1, 2017 that student loan borrowers were able to apply for tax-free debt forgiveness under the Public Service Loan Forgiveness program a striking 99% of the 76,002 applications that have been fully processed have been denied. The more recently adopted Temporary Expanded Public Service Loan Forgiveness program also has a 97% to 99% application denial rate, depending on how it is calculated. This short article discusses the various factors that may be contributing to such a bizarrely high denial rate, and why the number of applications filed and the proportion of applications filed that are approved are both likely to increase significantly over time, particularly after 2024, and to a greater extent if the Department of Education improves its currently inadequate borrower outreach and loan servicer oversight activities.

Will the Public Service Loan Forgiveness Program Ever Forgive Any Loans?

There is a sharp tension between the expectations that hundreds of thousands to millions of persons have regarding their right to eventually have their student loan debts forgiven under the Public Service Loan Forgiveness program, starting this fall, and the legitimate public concerns regarding the large future costs and regressive incidence of the PSLF program’s benefits. The Trump Administration has recently proposed prospectively abolishing the PSLF program for future Direct Loans. Whether or not this proposal is adopted, given the large costs of the program (which I estimate will eventually rise to $12 billion/year or more as an estimated 200,000 people/year or more will eventually seek debt forgiveness), and given the skewed incidence of its benefits in favor of mid-career doctors and lawyers, I think that there will eventually be a more aggressive push by the Administration or members of Congress for retroactive elimination of the program, or at least for a retroactive tax law amendment to include this forgiven debt as taxable income under IRS Code Section 108 as is now done for debts forgiven under the other income-based loan forgiveness plans. As a matter of positive law this article considers several contractual arguments as well as a couple of Constitutional arguments that opponents of such retroactive statutes could offer. The contractual arguments include an express loan terms argument, an implied covenant of good faith and fair dealing-based argument, a promissory estoppel argument, and an unconscionability argument. Some of these arguments against retroactive PSLF program repeal have considerable merit, at least for some Direct Loan borrowers who can make certain fact-specific showings. The Constitutional arguments include the substantive due process issue that would presented by a tax law change that would have retroactive impacts extending back a decade or more. Opponents of such tax legislation might be able to get some traction on the substantive due process issue under Bowen v. POSSE (1986). They also can offer a plausible Takings Clause argument against a tax law change if the courts take the (unlikely) step of regarding the PSLF program’s tax exemption for forgiven debt as a contractual commitment, rather than as only a revocable privilege. Apart from this legal analysis the article does not take a strong normative position on these issues. I do, however, suggest that as a matter of policy a compromise that would arguably fairly balance the interests at issue here may be to continue the PSLF program, but also to retroactively repeal the tax exemption for forgiven debt so as to recapture approximately one-quarter to one-third of the benefits of debt forgiveness, and do so in a modestly progressive manner. Such a compromise should probably also include some provision for spreading the payment of those taxes over at least several years in order to avoid unduly burdening these persons with a “tax bomb” effect.

The Public Service Loan Forgiveness Program: The Need for Better Employment Eligibility Regulations

People will start seeking tax-exempt debt forgiveness under the Public Service Loan Forgiveness (“PSLF”) program in October of 2017 after satisfying the requirements of 10 years of post-October 1, 2007 employment in a “public service job.” I estimate that eventually 200,000 people a year or more will obtain debt forgiveness under this program, at a total cost to the Treasury of $12 billion/year or more. Estimates are that up to one-quarter of all employment will qualify as a public service job. For such a large and costly program the precise eligibility criteria are crucial. The statutory definition of a public service job is very broad and specifically lists numerous categories of public service, and is in some ways ambiguous. The Department of Education (“DOE”) in 2008 issued regulations regarding PSLF program employment eligibility, but those regulations have serious deficiencies. First of all, the regulations improperly define a public service job in a manner that is inconsistent with the statute by imposing a “public service organization” employer requirement that is not in the statute. This requirement works to disqualify some statutorily-listed public service employment from debt forgiveness eligibility, in particular public services employment provided on behalf of for-profit businesses or certain non-profit employers, and also improperly allows eligibility for debt forgiveness for some employees of private non-profit employers who are not employed to provide a qualifying public service. Second, the regulations fail to clarify vague statutory language regarding what constitutes “public” service, most importantly regarding the scope of “public interest law services.” The DOE has also recently rescinded several previously granted certifications of employment as qualifying on the basis of a newly imposed restrictive “primary purpose of the employer” requirement that is not in the governing statute nor in the DOE regulations, actions that have been challenged in court by the American Bar Association. Even if this restriction is upheld, which appears unlikely, there is a strong argument that the DOE should be estopped from rescinding prior certifications. In order to avoid unnecessary litigation once the expected large number of applications for debt forgiveness begin to be filed after October of 2017, I recommend that the DOE first seek Congressional action to clarify the contours of the PSLF program’s employment eligibility statute, and while awaiting such action it should rescind its public service organization eligibility requirement that is inconsistent with the statute, clarify that there is no primary purpose of the employer requirement, and provide much more detailed guidance regarding the contours of the various statutorily-specified forms of qualifying public service, especially public interest law service. If PSLF program eligibility is to be either narrowed or expanded this should be done through appropriate legislation, and not through unauthorized and somewhat covert DOE actions.

Medical Education and the Public Service Loan Forgiveness Program: Unnecessary Uncertainties.

In this commentary, the authors discuss how the federal Public Loan Forgiveness program affects affordability of medical school and distribution of the physician workforce. It also considers the po...

Doctors of debt: Cutting or capping the Public Service Loan Forgiveness Program (PSLF) hurts physicians in training

Growing medical student debt has increased reliance on government loan forgiveness plans like the Public Service Loan Forgiveness Program (PSLF). Evidence suggests that delayed financial gratification in addition to stagnant resident salaries has exacerbated problems related to salary gaps and burnout. Although capping the PSLF may help curb national debt in the United States Department of Education, in the case of medical students, this policy is misplaced. The objective of this review is to discuss the implications of capping the PSLF program on medical student education. Policy reform should focus on halting medical school tuition hikes and increasing resident physician salaries.

Is the Public Service Loan Forgiveness program right for you?

The Public Service Loan Forgiveness (PSLF) program was established by the U.S. government under the College Cost Reduction and Access Act of 2007.[1][1] The primary goal of the PSLF program is to encourage individuals with federal student loan debt to pursue a career in various areas of public