A new bill, commonly known as the “PROSPER" Act, from House Republicans could potentially end Public Service Loan Forgiveness (PSLF) for student loans.
What is the PSLF program? The PSLF program was initially passed by a Democrat-controlled Congress and signed into law in 2007 by President George W. Bush. It promised loan discharges to borrowers who are employed full-time—more than 30 hours each week—in an eligible federal, state, or local public service job or 501(c)(3) non-profit job, and who make 120 eligible on-time payments (10 years' worth).
What is the PROSPER Act? The Promoting Real Opportunity, Success and Prosperity through Education Reform (PROSPER) Act, which is 542 pages, would make wide-ranging changes to higher education, including:
Under the Act, participants in the current PSLF program would be grandfathered in, which would allow them to qualify for forgiveness, if eligible. But the PROSPER Act repeals loan forgiveness for new borrowers, likely starting in 2019.
While this bill may not be passed into law, it's something worth keeping an eye on.
Effective date: December 1, 2017