A College Education in America is a huge benefit, but opposite of that, there’s the nearly inescapable debt attached. Many organizations including the federal government have worked tirelessly to combat student loan debt in America. One such measure was the Public Service Loan Forgiveness, created in 2007 to encourage graduates to enter public sector jobs such as early childhood education, public health, and public safety. A new piece of legislation proposed by two representatives from the House Committee on Education and the Workforce, however, may threaten this student loan forgiveness method.
The PROSPER Act stands for Promoting Real Opportunity, Success and Prosperity through Education Reform Act and its primary purpose is to reduce taxpayer money that goes to funding federal education. The act would reduce federal aid programs, reduce regulations that limit federal funding, and end the Public Loan Forgiveness program. While the entire bill is more than 500 pages, apparently there are some positive implications in the bill for for-profit schools. PROPSER would eliminate the minimum thresholds for graduates’ debt-to-income ratios and also remove the rule that for-profit schools can’t receive more than 90% of the revenue from federal aid.
Other Student Loan Debt Factors
PROSPER would also significantly reduce student loan repayment plans available to graduates now. Where there are currently eight different options, the PROSPER act would narrow that to just two. While the legislation does appear to propose changes PAYE and REPAYE, anyone already in a repayment program would not be affected.
Understanding the loan payback process is crucial to you or your student’s financial wellbeing. Therefore, it’s important to pay close attention as the bill moves through the House. It hasn’t been voted on yet but is likely to be soon.