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Should Borrowers Worry about Republican Plans to End IDR Forgiveness and PSLF?

Some politicians want to end programs like Public Service Loan Forgiveness. The threat to borrowers is currently small, but increasing.

Written By: Michael P. Lux, Esq.


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Republican opposition to student loan relief programs, including student loan forgiveness, has recently grown.

Most recently, a group of representatives, including Elise Stefanik, the chair of the House Republican Conference, proposed new legislation that would dramatically change student loan repayment in the United States.

The Plan to End Student Loan Forgiveness

The comprehensive legislation, titled the Responsible Education Assistance Through Loan (REAL) Reforms Act, calls for several significant changes that would impact student loan borrowers.

The proposed legislation:

  • Immediately ends the student loan interest and payment pause,
  • Eliminates the Public Service Loan Forgiveness program for all new borrowers,
  • Limits the amount of debt graduate students can borrow by ending the Graduate PLUS program,
  • Ends the current income-driven student loan forgiveness program,
  • Blocks the President and Department of Education from creating new income-driven repayment plans,
  • Ends interest capitalization,
  • Caps interest accumulation to ten years, and
  • Streamlines all of the IDR plans into a single repayment plan.

While the plan does offer some improvements over the current system, such as ending interest capitalization and capping total interest, the proposal would negatively impact most borrowers and future students.

Sherpa’s Analysis: I’m not going to take a deeper dive into this particular plan at this time for a couple of reasons. First, as proposed legislation, it could change significantly before becoming law. Second, this bill in any form is unlikely to become law.

However, the mere fact that the legislation has been proposed could have a significant impact on borrowers. This article will focus on that impact.

The Short-Term Risks of the REAL Reform Act for Student Loan Borrowers

This bill doesn’t represent an immediate threat to Public Service Loan Forgiveness or Income-Driven Repayment.

It won’t get a vote in the House of Representatives, and there isn’t companion legislation in the Senate. Even if it did get a vote, it wouldn’t pass. Furthermore, even if this legislation somehow did pass, it would almost certainly get vetoed by the President.

The concern for borrowers comes when Republicans eventually get their turn in charge of Congress and the White House. (There are only two political parties in the United States, and control shifting back and forth between the two is inevitable.)

The Long-Term Concerns for Borrowers

Significant changes to the law in the United States rarely happen overnight. Overturning Roe v. Wade was the result of decades of work on the right; likewise, passing the Affordable Health Care Act was the result of decades of work on the left.

Ideas get introduced, they get debated, and Americans gradually adopt opinions.

Public Service Loan Forgiveness and Income-Based Repayment were created with bipartisan support. Republican President George W. Bush signed the PSLF legislation into law.

Today, efforts to make repayment more affordable or expand loan forgiveness don’t enjoy the same bipartisan support.

If the sentiment behind the REAL Reforms Act grows, it represents a major risk to borrowers planning on PSLF or IDR forgiveness. The more Americans that oppose higher education or student loan relief, the more likely it becomes that a bill like the REAL Reforms Act can pass.

Can Congress Cancel Student Loan Forgiveness Programs?

Changing student loan laws is about more than just public sentiment.

From a legal standpoint, the ability of Congress to end student loan forgiveness programs is a tricky question.

All borrowers sign a Master Promissory Note (MPN). The MPN is the contract between the borrower and the government. The MPN is the document that creates the legal obligation for the borrowers to repay their loans. One noteworthy aspect of the MPN is that it contains language for Income-Driven Repayment and Public Service Loan Forgiveness.

This contract should provide some comfort to borrowers whose financial planning depends on the existing forgiveness programs. However, this protection isn’t absolute. There are a lot of complicated legal theories and concepts that go into this issue. This topic will undoubtedly be the subject of future legal research and scholarly writing.

For now, borrowers should understand that they have some protections beyond the existing law. However, proposals like the REAL Reforms Act should still be a concern.

Borrower Strategy in Uncertainty

If you are a borrower concerned about the growing support to end student loan forgiveness, there are several different things you can do to make a difference.

  • Push back on false narratives – Opponents to loan forgiveness like to call it a program that only helps the rich. Point out that rich people don’t need to borrow money to pay for school. People form opinions based on social media discussions, and sharing facts can help the cause.
  • Let your representatives know how you feel – Politicians go to great lengths to keep getting elected. If enough people voice support for student loan relief, politicians will act accordingly.
  • Vote – In a democracy, we all get a say. If the people who represent you are proposing legislation that is unfair or hurts your pocketbook, vote for someone else.
About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

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