The alternately lauded and loathed Public Student Loan Forgiveness appears to be headed in a new direction.  President Trump’s 2020 budget is proposing to eliminate it.

The exact costs of PSLF are difficult to determine.  But with about 25% of the American workforce being eligible for PSLF; coupled with the fact that high debt load borrowers are flocking to public service to become eligible for PSLF.  Estimates of the program costing billions are conservative, with into the trillion dollar range not off base.  Unfortunately, at the time of PSLF’s implementation in 2007, there seemed to be little interest and less ability in assessing exactly how much PSLF might ultimately cost given how many high dollar borrowers might be eligible.

Concerns of PSLF and its high cost are not new.  President Barack Obama proposed capping Public Service Loan Forgiveness at $57,500 for all new borrowers, in his 2015 budget proposal to Congress.  However, because the first round of applicants for PSLF, didn’t become eligible to apply until October 2018; the issue of ironing out (or eliminating) the kinks of  PSLF was not as pressing of a concern for the Obama administration.

It is an oft repeated economic truism that you can expect more of anything you subsidize. That includes the cost of college tuition. In part, college tuitions have increased as precipitously as they have; due to the increased availability of federal student loans.  In a sense, college tuition is subsidized on both the front and back ends—-on the front end by the ability of student borrowers to pay more in college tuition than they ever could/would were they footing the cost themselves upfront.  On the backend, high college tuitions are subsidized through a variety of student loan forgiveness programs.  Which are of course paid for by taxpayers.  And because federal loans are guaranteed, taxpayers cover the costs of any loans that borrowers default on.

I imagine taxpayers are beginning to wonder—-why are we enabling colleges to charge higher costs for tuition, than the market would otherwise bear; for degrees that might not even payoff in the marketplace?  That question is beginning to be asked.  And the colleges and universities, that have behaved more like profit hungry businesses; instead of institutes of higher learning—aren’t going to like the answer. 

It is my opinion, that President Trump’s approach to the Public Student Loan Forgiveness Program is fair and sensible. See the program through for current enrollees.  However, no new PSLF enrollees going forward.  Under his 2020 budget proposal to Congress, PSLF will end July 2020.