With recent legal challenges to income-based loan repayment plans, the already tedious and frustrating process of receiving student loan forgiveness has complicated further, taking more money out of students’ and professors’ pockets while exposing massive flaws in how post-graduate education is financed.
The Public Service Loan Forgiveness (PSLF) program, authorized in 2007, allows full-time employees of a governmental or nonprofit organization to apply for loan forgiveness after 10 years of qualified employment and 120 months of payment. Under the Biden administration, the program underwent significant changes to expand eligibility and streamline the application process by creating an online portal for borrowers. Prior to 2021, only 7,000 applicants had received loan forgiveness, but as of October 2024, over $74 billion had been cleared from the accounts of over 1 million borrowers. Beneficiaries of this policy can be found in the ranks of UTD faculty, as professors of public universities qualify for the program.
Employees of tax-exempt 501(c)(3) nonprofits and government organizations on the federal, state and local levels are eligible for loan forgiveness if they carry a federal Direct Loan and are enrolled in a standard ten-year repayment plan or an income-driven repayment plan. These include Saving on a Valuable Education (SAVE), Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR). Of these, SAVE is generally the most affordable, offering lower monthly payments and an interest subsidy that was designed to ensure borrowers wouldn’t find the value of their loan outpaced by the amount of interest they build up over time.
As of Feb. 20 , the 8th Circuit Court of Appeals extended and expanded an injunction to block the SAVE plan, as well as suggesting the program may be shut down in the near future. If the program is dismantled, borrowers would need to switch to one of the other payment plans, significantly increasing their monthly payments. The case comes as the result of a legal challenge piloted by several red states arguing the plan offers too much leniency, going beyond Congress’ initial intent in authorizing income-dependent repayment plans. Since the preliminary injunction in August 2024, borrowers under SAVE have been placed in forbearance, meaning their loans are essentially frozen. During forbearance, expected to last throughout 2025, no interest accrues on the loan, but no payments can be made, meaning that the time spent in forbearance cannot count towards PSLF unless the borrower switches to another eligible plan, which could take months of processing time.
PSLF is also available to borrowers who graduated prior to the program’s development. Michael Farmer, associate professor of Chinese history at UTD, completed his Ph.D. in 2001 at the University of Wisconsin-Madison. By the conclusion of his academic career, he had taken out multiple loans which were consolidated into about $100,000 of debt under a 30-year repayment plan. According to Farmer, these monthly payments amounted to “the functional equivalent of a second mortgage.” In 2010, under the newly developed PSLF program, he was able to earn credit for loan forgiveness by tracking ten years of repayment and qualified employment as a professor at UTD. In 2020, at the 10-year mark, he submitted his application for loan forgiveness and was rejected.
Prior to the Biden administration’s expansion of the program, 99% of applicants to PSLF were denied. As of 2018, two out of three denials were lumped together under the generic header of “not meeting program requirements.” This could mean their payment plan or initial loan was ineligible, but under the first Trump administration, applicants like Farmer were not made aware of the problem at the time of their denial.
“There was no explanation given other than ‘Your application for loan forgiveness has been denied,’ and phone calls got me nowhere,” Farmer said. “No one could tell me why my application had been rejected … We figured that was a lost cause, and we kept paying.”
This silence from PSLF continued until October 2021, when the Department of Education released a statement announcing the program had been updated, encouraging previous applicants to reapply. At that point, Farmer was informed that his loan type had been discontinued, and he would have to reconsolidate his remaining balance into a direct consolidation loan. This would have been possible to complete in 2020, but under the DOE during the first Trump administration, Farmer and those in similar positions were not informed the loans they were actively documenting and paying off were technically ineligible for forgiveness.
The October 2021 reforms allowed Farmer to reapply for PSLF, placing his loan under forbearance for the processing period. In February, he was informed that his remaining loan balance of almost $70,000 was officially cleared. At that point, he had made active payments for 20 years and had paid over $150,000 on the initial $100,000 loan due to the accrued interest. Since 2007, federal student loan interest rates have hovered between 3-7% for undergraduates and 6-8% for graduate students, with the notable exception of 2020, when interest rates reached record lows. This means it is not uncommon for loans to nearly double in size by the end of a standard repayment period.
“I was not given the right information,” Farmer said, regarding his choice to take out his student loans. “I made the best decisions I could based on the information I had … If I had known what the job market in the humanities was going to look like, I would not have taken out $100,000 worth of debt.”
Looking forward, Farmer said current students considering a career in academia should make the availability of financial aid a priority.
“You get a fellowship, your university’s investing in you, you get an assistantship, they’re partially investing in you,” Farmer said. “If they don’t give you anything, they’re just taking your money. I think that these days, this is how you have to look at it.”
Corroborating this stance is Mai Wang, assistant professor of literature. Wang completed her undergraduate degree at Yale in 2010, an MFA at Boston University in 2015 and her second master’s and Ph.D. at Stanford. Throughout this process, she was able to receive financial aid and competitive merit-based fellowships for the bulk of her educational financing. She graduated debt-free and began her professorial career at UTD without the weight of a student loan, which she partially attributes to the information she received as an undergraduate.
“I was an English major at Yale and they had at least one round table panel specifically for English majors seeking out academic careers,” Wang said. “They also told us about the importance of going to a program … that is fully funded.”
Wang, who currently runs a graduate course for master’s and Ph.D. students in the literature program, said she feels her students are not being adequately prepared to make informed financial decisions regarding higher education because financial concerns and opportunities are not discussed openly. She noted that faculty mentorship at UTD is mostly oriented toward degree progression, and the university developing a workshop devoted to personal finances would be useful.
Both Farmer and Wang felt students should consider the question of graduate and doctoral work very carefully, pointing to uncertain prospects for higher education in the current economic climate. Currently, the applicant pool is much larger than job availability, and currently, programs are shrinking, not expanding. Additionally, House Republicans have floated policy proposals that would raise monthly student debt payments and limit PSLF eligibility. Wang recommends students avoid taking on debt entirely if possible.
“For any given academic position, there’s easily 100, sometimes even as many as 300 qualified applicants,” Wang said. “It’s really important to stay out of debt throughout this whole process because at least if it doesn’t work out, then you’re not going to be also saddled with student loans.”
Instead, Wang suggested students should look toward finding part-time work in related fields such as tutoring or consider seeking teacher certification to expand their options. To Farmer, this is especially true for students in the humanities.
“Your options as an undergraduate are pretty broad, but with the master’s degree you’ve narrowed it down,” Farmer said. “With a PhD, you’ve become even more specialized.”
Although job prospects are not nonexistent, both Farmer and Wang emphasized the need for students to be realistic about their options by reaching out to professors in their interest areas and researching the availability of relevant positions, as well as the lifestyle those positions lead to. Wang recommended students look at the recent job placements of the graduates of any program they may be interested in, while Farmer warned against relying solely on teaching after graduation.
“[Students need to] find ways of utilizing [their] skills and passions … in a way that’s not going to have you teaching six classes a semester for $2,000 a class with no health insurance [at] four different community college campuses,” Farmer said.