In short, the PSLF program allows borrowers to have their federal student loans entirely forgiven if they make 120 qualifying (not consecutive) payments while they work in a non-profit/government sector job. The PSLF program was created in 2007 and the first cohort of individuals with 120 qualifying payments became eligible last year for the generous loan forgiveness program. Some people are concerned whether the PSLF program will get cut under Donald Trump’s presidency. Others have heard that some borrowers were denied relief even if they met the 120 qualified payments. There have been no official announcements from the Department of Education or the White House on changes to the PSLF program. The media has inaccurately reported that the Tax Cuts and Job Act (TCJA) defunded the PSLF program, but that is not true; there is no mention of the PSLF program in the text of the passed TCJA bill. While the 2019 federal budget proposed by President Trump does eliminate the PSLF program, the budget proposes an alternative more “streamline[d]” solution to borrowers: the streamlined version would “cap a borrower’s monthly payment at 12.5 percent of their discretionary income” and the debt would be forgiven after 15 years. Graduate debt would be forgiven after 30 years. More importantly, this would only affect “loans originating on or after July 1, 2019,” hence, current borrowers would be grandfathered in.

Ara Oghoorian, CFA, CFP®, CPA is the President & Founder of ACap Asset Management.

ACap Asset Management, Inc. is a “Fee-Only” investment management firm headquartered in Los Angeles, CA specializing in helping doctors and healthcare professionals make sound financial decisions.

Contact ACap at info@acapam.com or 818-272-8511.