Understanding the future of education can be a difficult task, especially with the overwhelming amount of sources and sites out there. Luckily, all the information you need is right here, particularly information regarding the Public Service Loan Forgiveness program. The latest in PSLF news is the advancement of the PROSPER Act, which stands for Promoting Real Opportunity, Success, and Prosperity through Education Reform. For those who rely on PSLF, this latest piece of legislation could mean major changes coming their way.
The Impact of the PROSPER Act
Along with impacting student loan interest rates and capping graduate federal loans at $28,500 per year, the PROSPER Act also makes it nearly impossible to qualify for PSLF. According to the latest news, the direct loans and repayment plans previously needed to qualify for the program will be completely eliminated, making new borrowers ineligible for this program.
Instead, the Act intends to create a new system (called the Federal ONE Loan Program) and get rid of the majority of repayment plans, leaving only two options for potential borrowers: a 10-year repayment plan with 120 equal payments or a income-based repayment plan based on a single income. Essentially, bringing in the ONE Loan Program erases PSLF, Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income Based Repayment (IBR). If this bill passes, these rules would only impact new borrowers starting July 1, 2019. Those who currently have PSLF and direct loans would not be directly impacted by this news.
While this Act would definitely simplify the loan process logistically, the impact it could have on students could prove to be detrimental, especially those entering public service fields. Many careers that qualify for PSLF do not produce much of an income for their employees.
For example, managers and executive directors who work for 501(c)3 organizations, one of the criteria needed to qualify for PSLF, make an average of $50,000 to $64,000 every year. While this may sound like a decent income for many people, you also have to consider the cost of a college education. For the 2017-2018 academic year, the average yearly cost of tuition and fees alone is $34,740 for private universities, $9,970 for state residents at public universities, and $25,620 for out-of-state students at public universities. This cost doesn’t take into account the loans required to pay for books, housing, and living expenses associated with college. If one of those non-profit directors went to college for four years, on average they would owe at least $39,880, assuming they went to an in-state public university.
For those looking to benefit from PSLF in the future, this news isn’t the brightest, but luckily there are plenty of other options out there. Connect with us today to stay on top of the latest updates about the PROSPER Act and to connect with professionals who can help you determine the best route for your career success.