This is a YouTube video titled "Can President Donald Trump Cancel PSLF?" containing a detailed monologue by Jim Dahle discussing the political and legislative realities surrounding the potential elimination of the Public Service Loan Forgiveness (PSLF) program. Recorded in January 2025, Jim Dahle explains the legislative process required to end PSLF, the likelihood of such changes under Republican control, and advises listeners on financial strategies related to PSLF. The content also includes a disclaimer noting that the hosts are not licensed financial advisors.
Can the Trump presidency, the Trump administration, by itself, eliminate Public Service Loan Forgiveness? All right, Just the question we've all been waiting for. Let's talk politics. My crystal ball's cloudy as usual. I don't know everything, but here's the deal with Public Service Loan Forgiveness that I think is really important to remember. I think a lot of people last fall were freaked out a little bit, right? They saw the Biden administration put out this new program, right? This save program, which looked awesome for doctors. Right. You know, whether it's good for the taxpayer or not, it's a totally different argument. But it's awesome for indebted doctors. Right. It's just a really more generous form of these income driven repayment programs. Well, that was not passed by Congress. That was just something the administration did and it got challenged in court. And, well, it's not completely done in court at the time of this recording, it looks like it's almost surely gone. And people worry, well, is that same thing going to happen to Public Service Loan Forgiveness? Well, you got to understand the difference, right? Public Service Loan Forgiveness, I think it was passed in like 2007. Start started taking effect, obviously after 10 years of payments. The first time would have been 2017. It was the first time somebody could have received Public Service Loan Forgiveness. And almost no one knew about the program back in 2007. So no one was making qualifying payments and so on and so forth. But that was not an executive directive or fiat or whatever they call them. It just comes out of the executive branch. It is not just the president that passed that. It was an act of Congress that put Public Service Loan Forgiveness in place. So can the Trump presidency, the Trump administration, by itself, eliminate Public Service Loan Forgiveness? No, it cannot. It cannot. It takes an act of Congress to do that. What does that mean? That means it has to pass the House. That means it has to pass the Senate, probably with a filibuster proof majority. So not just half the senators have to vote for it. 60% of them do. And that's just the way our political system works. And then the President's got to sign off on it, Right? I feel like I got to take you guys all back to third grade and do Schoolhouse Rock again. Right? The bill that goes to Capitol Hill. Right. And all that. That's what has to happen for Public Service Loan Forgiveness to go away. Now, I'm not saying that can't happen. It could. Right now the Republicans control the House. Well, I guess not. Right now, as you listen to this, I think the inauguration is like a week after you'll listen to this. But basically, very soon, the Republicans will control the House, they will control the Senate, and they will control the White House. And as a general rule, Republicans aren't big fans of, of student loan forgiveness. They're not big fans of the Department of Education. They're not big fans of government being in the student loan business at all. So is that increase the risk of public service going, loan forgiveness going away? Yes, it does. Especially because they control all three of those things. And so it's possible they could pass a law that gets rid of public service loan forgiveness. Now, keep in mind, getting things through the Senate is not as easy as getting things through the House. And they barely have a majority in the House to start with. It's only like two people or something, majority. So they got to keep everybody on board in getting rid of Public service loan forgiveness. And then they've got to somehow deal with this filibuster issue in the Senate. And there's some ways they've gotten around it in the past, but typically not for a law like this. So the likelihood of finding 8, 7, 8 Democrats to vote on getting rid of public service loan forgiveness completely seems awfully low to me. The odds aren't zero. It could happen, but it seems awfully low to me. Okay, so let's say this happens, this becomes this big priority sometime this fall of just getting rid of public service loan forgiveness. The House passes it, somehow it gets through the Senate. President Trump signs off on it. What's going to happen? Is it just going to go away this year? Almost surely not. Almost surely not. Right. That sort of change is not popular at all with taxpayers. So what would typically happen is those in the program are going to be grandfathered in, those who already have loans, where on the promissory note it talks about public service loan forgiveness are going to be grandfathered in. Those in residency, those in med school, even those that just have undergraduate debt are likely already grandfathered in. And public service loan forgiveness is still going to be there for them. So even if this gets passed this year, this program's probably still around for four years of undergrad, a couple of gap years, four years of med school, five years of residency, two years of fellowship, and somebody might need another four, five, six years of payments after that. This thing's around for another 15 or 20 years. In that period of time, maybe it gets reinstated by a different administration and a different Congress. Right. So I think the likelihood of this going away is pretty darn low. And for Those who are already counting on it to not get it in some form, that risk is awfully low, Right? You're just so much more likely to be grandfathered in. Now, if you're worried about this, what do you do? You save up a public service loan forgiveness side fund. This is what Everybody was doing 10 years ago, right? They heard about public service loan forgiveness in 2015, they're like, holy crap, look at this. I could get $400,000 in student loans just wiped away. I wonder if this is really going to happen. I bet it changes. I bet nothing happens. They worried about it. So what did I tell them to do? I said, save up a PSLF side fund. Instead of making those extra payments to your federal loan servicer, make the minimum payment and make the extra payment into your brokerage account. Invest it along the way so it's growing. And then if something happens, either in your personal life, you change jobs, you're no longer at a job that qualifies for pslf, or the program changes, whatever, right? Then you can take the money out of that brokerage account, pay whatever taxes are due, and send it to the lender and wipe out your student loans. And that's a PSLF side fund. So do I think it's going away? I do not. If you are more worried about it than I am, I would recommend a PSLF side fund. What I would not do is if this was otherwise your plan. You're already in a PSLF qualifying job or you fully expect to get one. I would not bail at this point just because Donald Trump was elected president, just because the Republicans control Congress. I think that's a terribly shortsighted move. Give it a little bit of time, a little bit of patience. Things like this become much more obvious of what you should do in a year or two. And PSLF is a 10 to 18 year program, right? So there's no rush. Take your time. Make your decisions deliberately and thoughtfully and make sure you're doing the right thing for you.
The hosts of the White Coat Investor are not licensed accountants, attorneys or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.
