Obama's Budget To Limit Student Loan Forgiveness

Obama’s Budget To Limit Student Loan Forgiveness

Among Obama’s provisions in his proposed budget, there is one to change the way that public student loan forgiveness programs work.

Specifically, the amount that a public employee could have forgiven would now be capped at $57,500, with the remainder to be paid out over a 25 year span.

Among the changes proposed in March, individual borrowers would face new limits on how much debt they could get forgiven.

But remember that the budget proposal itself cannot, does not, and never will determine whether any future cuts to student loan forgiveness would apply to existing borrowers.

The amount forgiven for public-sector workers would be capped at $57,500.

Borrowers with debt loads above $57,500 would make payments for 25 years.

Payments for married borrowers filing separately would be calculated on their combined household adjusted gross income.

The way the program currently works is essentially as follows:

The program applies to those people working in public sector or non-profit jobs. After the person makes 120 on time payments on their loans while working in a qualifying job, the remainder of the loan is forgiven.

This allows people who have staggering debt loads from higher education to pursue work in the public or non-profit sector without having to pay off their loans for the rest of their lives.

Without this sort of program, individuals with large debt loads will have an even greater incentive to go out and work in the private sector where they can actually make enough money to pay off their crushing debt loads.

The overall result would be a decline in the number of highly qualified candidates to go and work for the public.

There is a petition over at the White House site here to keep the program as it is.

For the sake of good government, let’s hope they leave the program just like it is.