President Donald Trump signed an executive order on Mar. 7 that aims to restrict eligibility for Public Service Loan Forgiveness (PSLF). The order instructs the Education Secretary to draft a proposal that would disqualify borrowers working for organizations engaged in “a substantial illegal purpose.”
Despite the strong language in the order, current PSLF-eligible borrowers are not immediately at risk of losing their eligibility. The program forgives federal student loans after 10 years of payments while working in public service roles such as teachers, firefighters, police officers, healthcare workers, government employees, and nonprofit workers.
While the executive order raises concerns, it is important to note that no immediate changes have been made to the PSLF program. The Education Department clarified that no action is required from borrowers at this time.
The order targets certain nonprofit sectors, including those involved in immigration and refugee assistance, support for transgender youth, diversity and inclusion advocacy, and organizations engaged in protests or supporting terrorism. However, the legal basis of the order may face challenges as PSLF eligibility is established by law and cannot be unilaterally altered by the president.
Advocacy groups are expected to challenge the executive order through legal means, and concerns remain about the potential impact on public service workers and nonprofit organizations. The Education Department’s management of PSLF processing and forgiveness could also play a significant role in how the program is affected moving forward.
What Actions Should PSLF-Eligible Borrowers Take Now?
It is advisable not to make any financial or career decisions solely based on this executive order at this point.
Kristen Ahlenius, a certified financial professional specializing in PSLF and director of advice at Your Money Line, emphasizes caution in making rushed decisions during this uncertain time. She suggests understanding your current situation thoroughly before considering abandoning a potentially beneficial program.
The specific actions that the department will take following this order are still unknown. Meanwhile, borrowers can take the following steps:
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Update your PSLF employment certification forms using the
PSLF Help Tool
. -
Download your PSLF payment counts and summary from your studentaid.gov account.
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Review your repayment history to identify qualifying months for PSLF. Additionally, check for any discrepancies. If the Education Department fails to address the errors, consider filing a
student loan complaint
.
Borrowers are advised to be proactive by documenting everything meticulously. Keep records of all payments made along with relevant paperwork, as suggested by experts.
As uncertainties loom, it is crucial for individuals to prioritize their well-being. Seek necessary support to navigate through these challenging times and safeguard mental health and productivity.