spending

The Coming Public Service Loan Forgiveness Bonanza

This campaign season, candidates on both sides of the political aisle have said the federal government should help public service workers repay their student loans.

Presidential candidates and other policymakers may be surprised to learn that the federal government already provides a large public service loan forgiveness program.

Anyone with a federal student loan who works in public service can currently cap his monthly payments at a fixed share of his income and the government will forgive all remaining debt after 10 years. Two distinct programs are at work here: Income-Based Repayment (IBR) and Public Service Loan Forgiveness (PSLF).

Policymakers appear to know little about these programs. It is fair to wonder then whether lawmakers really intended for PSLF to be an open-ended loan forgiveness program for a quarter of the jobs in the economy.

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