Betsy Devos Signals She May Be Open to Changes to Loan Forgiveness Program for Public Servants

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Media Outlet: MarketWatch

Alexander Holt was quoted in MarketWatch about how Congress could use reconciliation to make changes to the Public Service Loan Forgiveness program:

But even if Congress or a new administration decides to tweak the requirements for the program or cap the amount of forgiveness offered through it, it’s unlikely that those who already have loans -- particularly if they’ve certified for PSLF -- won’t be grandfathered in, said Alexander Holt, a policy analyst at Washington-based think tank New America. Still, he said it’s possible lawmakers may make some changes to the program through a process known as budget reconciliation, which allows Congress to speed through consideration of certain debt limit, tax and spending legislation. Absent any congressional moves however, Holt said based on DeVos’s answer he doesn’t believe her Education Department would make significant changes to the way PSLF is currently run.

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Even the Obama administration proposed capping the forgiveness offered by the program. It’s also possible lawmakers could be swayed by the arguments of some policy wonks who say PSLF favors graduate students who incur high debt levels, but are also on track to earn high salaries. “It tends to be a regressive benefit,” he said.

Holt and others have noted that the existence of PSLF combined with the fact that the government provides unlimited loans to graduate students also makes it easier for graduate programs to charge high tuition for programs that in certain fields, like teaching, are essentially a requirement for participating. What’s more, he says, the qualifications for the program are relatively arbitrary. For example, a doctor working in a nonprofit hospital has access to PSLF, while a doctor doing the same work in a for-profit hospital doesn't.

“It’s not fair,” he said.

In the News:

Alexander Holt was a policy analyst with the Education Policy program at New America. He studied the economics of higher education as well as the effect of the nonprofit sector on the U.S. economy.