Earlier this month, amid the passing of the Senate tax bill, Chairwoman Virginia Foxx (R-NC5) introduced a bill to reauthorize the Higher Education Act called the “Promoting Real Opportunity, Success, and Prosperity through Education Reform Act” (the “PROSPER Act”) in the House Education and Workforce Committee. This bill went through markup last week and is now heading to the House for a vote. While it is meant to reform higher education to help students, the changes it makes to Public Service Loan Forgiveness, interest rates on student loans, and graduate borrowing limits would hurt a lot of students. Graduate and professional students in particular certainly won’t prosper if this bill becomes law.
The biggest impact will come for current and future students interested in earning Public Service Loan Forgiveness (PSLF) for their work in the public sector. Perhaps to prevent an uproar, the bill does not outright eliminate the program—instead, it makes eligibility essentially impossible for new borrowers by eliminating the Federal Direct Loans and repayment plans eligible for PSLF, and instead creating new “Federal ONE Loans” with limited repayment options that are not eligible. Congresswoman Foxx is effectively making PSLF unattainable for any new borrowers.
In addition to dismantling PSLF, the PROSPER Act eliminates other programs that graduate and professional students rely on. With the new limited repayment options for Federal ONE Loans comes a new income-driven repayment plan, one that is not eligible for PSLF and varies from most of the current income-driven repayment plans available. For married borrowers, the new repayment plan will base one’s monthly payments on the combined income of the borrower and their spouse, no matter how they file their taxes. This could mean a drastic increase in monthly payments for public servants who have a spouse working in the private sector, making substantially more than them.
The bill also caps how much a student can borrow for graduate or professional school at $28,500 per year. (Under the current Direct Loan system, a student can borrow as much as it costs to go to graduate or professional school.) As a result, many borrowers will be forced to seek help from private sector lenders. Those without the financial resources to obtain private loans would simply not be able to attend graduate or professional school. This increase in private sector lending will harm borrowers, because private loans lack the borrower protections of federal loans.
There are other provisions that will impede access to graduate or professional education for students across the country. It eliminates the loan cancellation available in twenty or twenty-five years under the current income-driven repayment plans; does away with honors scholarships for students that work hard in high school and college; and repeals the Thurgood Marshall Legal Educational Opportunity Program, which helps low-income, minority, and disadvantaged secondary school students get into graduate or law school.
You may think the PROSPER Act will not impact you directly if you have already graduated or are near graduation, but it is important to recognize the repercussions for the future. The elimination of Public Service Loan Forgiveness alone would make it difficult to recruit and retain qualified police officers, nurses, attorneys, teachers, firefighters, and other vital public sector employees. Now is the time to act. Call your Representative and tell her or him to oppose the PROSPER Act and to protect PSLF by joining the House PSLF Caucus.
Equal Justice Works provides support to public interest attorneys, and helps law students learn more about all aspects of managing their student debt. We have a debt relief newsletter, free student debt webinars, an informative website, and a free student debt e-book, Take Control of Your Future.
Brandon Hanson is the Student Debt Specialist at Equal Justice Works, where he helps students, lawyers, and law school professionals manage their student debt through education, outreach, and policy analysis. Brandon is a graduate of the University of St. Thomas School of Law in Minneapolis and the University of Iowa, and has worked with political campaigns, non-profit organizations, and state government.