Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog
President Trump signed an executive order titled Restoring Public Service Loan Forgiveness a couple days ago. While this should have to go through the normal channel of rulemaking which will take approximately one year, it appears that PSLF will be excluded for non-profits which engage in a “substantial illegal purpose” including:
(a) aiding or abetting violations of 8 U.S.C. 1325 or other Federal immigration laws;
(b) supporting terrorism, including by facilitating funding to, or the operations of, cartels designated as Foreign Terrorist Organizations consistent with 8 U.S.C. 1189, or by engaging in violence for the purpose of obstructing or influencing Federal Government policy;
(c) child abuse, including the chemical and surgical castration or mutilation of children or the trafficking of children to so-called transgender sanctuary States for purposes of emancipation from their lawful parents, in violation of applicable law;
(d) engaging in a pattern of aiding and abetting illegal discrimination; or
(e) engaging in a pattern of violating State tort laws, including laws against trespassing, disorderly conduct, public nuisance, vandalism, and obstruction of highways.
While some believe this is a slippery slope, I see these changes to PSLF being done to otherwise further the Trump agenda. It appears clear that any agency with a DEI policy would be excluded from public service loan forgiveness. I am pleased to see the word “substantial” be included, although I anticipate litigation over whether an agency has substantially engaged in conduct that would exclude it from participation as a qualifying employer under PSLF. However, for most folks PSLF should remain unchanged under this Executive Order.
Importantly, it does not reverse the waiver process which I believe refers to the IDR Recount or the Cares Act allowance for PSLF credit during Covid despite the suspension of payments.
If you have years left before you are eligible for a PSLF discharge, you might want to look closely at your employer. If you work for what Trump has called an “activist organization” you might think about a Plan B in that you may be excluded from participation in PSLF.
If you have a short time left before you can apply for PSLF, we recommend either going into IBR – as soon as the online portal reopens or the paper application is processed. You can also make payments on the 10 year Standard Plan (make sure it’s amortized under 10 and not 20-30 years) and these payments will count toward PSLF. That’s important to know if IDR processing is shut down for more than a couple weeks or if you don’t have the partial hardship required for IBR enrollment.
To help determine your options and which repayment plan is best in your specific situation, think about reaching out to us for a student loan strategy session – click the blue box below to schedule by Zoom or phone. You can also call 813-258-2808.
