Answer: Don’t Ask The Wall Street Journal.
According to Josh Mitchell’s, “U.S. Student-Loan Forgiveness Program Proves Costly,” 295,000 people are signed up for Public Service Loan Forgiveness, which cancels federal student loans after 10 years of payments with no tax liability afterwards, unlike other income-based repayment plans.
But before going further, a few compliments:
(1) The WSJ is correct that PSLF is a “forgiveness program,” in contrast to at least one past instance when the WSJ called IBR a “student-debt forgiveness program.” More accurately, IBR is a monthly-payment-reduction program.
(2) Moreover, I don’t think I’ve ever defended PSLF, so the WSJ’s examples of doctors taking advantage of the program, even though there’s a good chance they could repay their loans, are more believable than past reporting.
(3) Again, it’s nice to see the spotlight turned away from law grads.
However, the WSJ still doesn’t answer the question: How many of the 295,000 debtors (and projected 600,000 over the next decade) on PSLF will earn high enough incomes to compromise PSLF? Does the program work on net? If the IBR deadbeat is a myth, then shouldn’t we be just as critical of the PSLF deadbeat?
I don’t really have a dog in the PSLF fight, and it should be fairly easy to reform it to take the advantages away from the deadbeats, but the right questions still aren’t being asked. If the unfair beneficiaries are few in number, then they shouldn’t be sensationalized. (Amusingly, the New America Foundation argues that PSLF should be eliminated entirely because the WSJ made it look so bad that it could lead to further backlash against IBR, which, of course, the NAF has never engaged in.)
Speaking of asking the right questions: Is the problem PSLF, or is it the Grad PLUS Loan Program?