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STUDENT LOAN FORGIVENESS PROGRAM
AVAILABLE TO MILLIONS WHO AREN’T
UTILIZING IT, CFPB SAYS
WASHINGTON — More than 33 million workers qualify to have their student loans forgiven because
they work in schools, hospitals or city halls, but too few take advantage of the options because the
programs are overly complicated and often confusing, the government’s consumer advocate said
Wednesday.
Roughly a quarter of the U.S. workforce could take advantage of federal rules that give favorable
loan repayment options to those in public service fields, including the military, according to the
Consumer Financial Protection Bureau. The agency recommended Congress review the loan
forgiveness programs and encouraged employers to make sure their workers know they are
available.
“Teachers, soldiers, firefighters, policeman – public sector careers invariably involve some effort,
some inconvenience or some sacrifice. People give up higher incomes to serve their city, their state
or their country,” said Richard Cordray, director of the CFPB. “We believe that people who
contribute part of their talents, part of the benefits of their education, to society as a whole should
not be mired in debt because they stir themselves to the calling of public service.”
Student loan debt has topped $1 trillion, the consumer advocate estimates, and has been a drag on
the economy as recent graduates are forced to choose between paying down their loans and
buying a house or a car. That sends millions of dollars to lenders instead of keeping that cash in the
local communities.
For many graduates, there are multiple programs in place to ease the financial burden of taking
lower-paying jobs to help their communities. But the system is fraught with complications and
competing options and a firm number of how many graduates could benefit is hard to come by.
“The data is quite weak in this area. We don’t have a sense of how much money is left on the table,”
said Rohit Chopra, the CFPB’s student loan ombudsman. “But we suspect it’s a substantial sum.”
The consumer advocacy bureau knows how many people qualify because they work under the
broad umbrella of public service.
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“We estimate that one in four working Americans has a job that meets the definition of public
service under this program. Many of these teachers, health care workers and other public servants
could be eligible to have their college loans wiped out after ten years,” Cordray said.
The definition is broader than that, though. For instance, clerks at the state department of motor
vehicles office, secretaries at city hall and accountants at non-profit arts groups also qualify for the
loan forgiveness programs – positions not typically seen as public service jobs.
But the largest group of beneficiaries would be those in education – more than 6.8 million people.
The Education Department’s statistics arm estimates the nation’s schools will need 425,000 new
teachers by the end of the decade. But college graduates aren’t necessarily going to flock to the
classroom without some incentives; the National Education Association pegs the starting salary of a
teacher at less than $36,000.
“Public service employees – most especially teachers – never get into the teaching profession to get
rich. They have a deep passion,” said Jeffrey Bourne, the chairman of Virginia’s Richmond School
Board.
But it’s tough to recruit teachers, he said, and loan forgiveness programs make it easier for new
teachers to take lower starting salaries than their classmates as they start their careers. He said too
few of those in his districts know about their options.
Similarly, the demand for nurses, police officers and social workers is expected to outstrip supply of
these often lower-paid professionals.
“With high expectations and increasing budget pressures on cities, it’s become more important
than ever to attract, retain and reward outstanding individuals,” said Peter Buttigieg, the mayor of
South Bend, Ind., who has pledged to help his city’s employees navigate the programs.
“You’ll run into some people who think starting their career in a public sector job is a luxury they
cannot afford because of their student loan debt,” Buttigieg said. “The reality is that crushing
student loan debt is making it more difficult for our employees to stay in public service.”
Original article from the Huffington Post (http://www.huffingtonpost.com/2013/08/28/student-loan-
forgiveness-cfpb_n_3833832.html?utm_hp_ref=mostpopular)