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Fears about Public Service Loan Forgiveness are overblown

October 18, 2017 by Ben Caldwell

money for loan forgivenessStudent loan debt has been a regular topic here, as it should be. Mental health professionals need to have graduate degrees, which often means taking on significant debt. The American Psychological Association reports that PsyD students in psychology now graduate with a median of $200,000 in student debt just from their graduate studies. The federal government offers loan forgiveness for those who work in government and nonprofit organizations, through its Public Service Loan Forgiveness program.

Recently, there’s been some concern over the fate of that program. Therapists and counselors currently working in nonprofit settings wonder whether they will in fact be eligible — or whether the program will still exist — by the time they complete 10 years of service. But their concern is (at least so far) not supported by what’s actually been happening.

Two sources of concern

A few months ago, the Department of Education — which has been receiving paperwork from applicants to the program for years now — said it hadn’t actually made any final determinations as to whether those people who had been submitting their paperwork were eligible. They said they only make those final determinations *after* the 120 payments had been made. That made a lot of borrowers nervous about their own future eligibility, and even led the American Bar Association to sue the federal government. (The ABA is nonprofit. But as a member organization, it is classified under section 501(c)(6) of the federal nonprofit statutes, raising the eligibility questions for its employees. Most clinics where therapists and counselors work are nonprofits under section 501(c)(3), which are definitely eligible work settings.)

Meanwhile, President Trump indicated he would like to kill off the program entirely, primarily out of cost concerns. Almost a quarter of the US work force works in positions that would qualify for the program. But even if the program is ended — a major “if,” since the President’s budget (where the proposal to end the program exists) is little more than a friendly suggestion to Congress — that would only impact borrowers taking out loans in 2018 and beyond.

What you need to know

The most important things for the overwhelming majority of people participating in the program (or interested in doing so) are these: The program still exists, the eligibility rules have not changed, and the program is still set to begin issuing loan forgiveness this fall.

If you make 120 consecutive on-time qualifying monthly payments on your loans while working in a qualifying employment setting, the remaining balance on any direct federal student loans you have can be forgiven. There are a lot of key terms packed in there, so definitely pay a visit to studentaid.ed.gov for more information on the program and its requirements.

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  • Exam Prep
    • California LMFT Clinical Exam Prep
    • California LMFT Law & Ethics Exam Prep
    • California LPCC Law & Ethics Exam Prep
    • California LCSW Law & Ethics Exam Prep
  • CE Courses
    • California Law and Ethics 6-Hour for LMFTs, LPCCs, & LCSWs
    • California Law and Ethics for BBS Associates (AMFTs, APCCs, & ASWs) – 2025
    • Telehealth for California LMFTs, LPCCs, and LCSWs
    • Supervision of California BBS Associates
    • Supervision for Clinical Effectiveness
  • Books
    • Basics of California Law for LMFTs, LPCCs, and LCSWs (11th ed)
    • Preparing for the 2025 California MFT Law & Ethics Exam
    • Preparing for the 2025 California Clinical Social Work Law & Ethics Exam
    • Saving Psychotherapy
  • Resources
    • Think Like the Test™ Podcast
    • Exam Prep Articles
  • Blog
    • Blog home
    • Psychology
    • Professional Counseling
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    • Clinical social work
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