Student Loan Forgiveness for Staff on Chopping Block
One of the more generous benefits for congressional staffers might be on the chopping block in this year’s budget. The House and Senate budgets include cuts for education, employment and training, including the Public Service Loan Forgiveness Program. The program forgives all federally backed student loans for those working for 10 cumulative years in public service — including time spent on Capitol Hill.
Both the House and Senate budgets would cut the subsidy that allows people to not pay interest while they’re in undergraduate studies and for six months after. The Student Loan Repayment Program , which authorizes the House and Senate and select federal agencies to pay back student loans, would not be affected. The budget conference committee started meetings this week to work out the differences between the chambers’ two versions. It’s not clear how many current and former Hill staffers would be affected by discontinuing the forgiveness program, which was was started in 2007. Those eligible would begin receiving their full forgiveness in 2017. Any changes are not likely to affect those already enrolled, but would affect future graduates pursuing public service.
Even the Obama administration is open to modifying the forgiveness program and has called for a cap on the amount of debt that can be forgiven. Not having a cap on the amount is one of the chief criticisms of the concept.
“It creates a lot of incentive for people to overborrow, especially graduate students,” said Kevin James, a research fellow at the American Enterprise Institute’s Center on Higher Education Reform. The program is also cited as overly broad: 25 percent of the workforce work in nonprofit or government sectors, many of whom make salaries that do not widely diverge from their private-sector counterparts. And while even some detractors believe incentives are necessary for pursuing public service careers, they don’t think it should be so narrowly tied to student loans.
“If you are going to provide an incentive for people to go do things, the incentive should be there, whether or not you borrowed for school,” James said.
But cutting the loan program entirely could make loan repayment harder for many. The White House has said ending the public student loan forgiveness program would be “doubling the amount of time many teachers, nurses, and those in military service will need to finish paying their student loans.”
“Budget resolutions are always just talking points,” said Jason Delisle, a former Senate Budget Committee staffer and current director of the Federal Education Budget Project at New America. “The important thing is the reconciliation instruction,” he added.
But Delisle acknowledges the forgiveness program could be facing some changes as student loan debts continue to mount. “The president wants to cap the Public Service Loan Forgiveness program; that was in the president’s budget already for a second year in a row. The president has acknowledged that the program is a little out of control without a limit on it,” he said. “The stars are aligning to make some changes.”
Passing a budget resolution out of conference in itself is not sufficient to make changes to the student loan programs. To do so, both chambers would then have to use the budget resolution to pass a reconciliation bill that cuts funding.
“They would have to change the law to come up with these savings,” said Joel Packer, executive director of The Committee for Education Funding. “A reconciliation bill that does so would be vetoed by the president. But at some point, there is going to be a deal on appropriations and raising the debt ceiling. There is a lot of pressure to raise defense spending. Some of these student loan items could wind up on the table in such a deal.”
Carolyn Phenicie contributed to this report.
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