Relief From Student Loan Debt for Public Service Workers

New York Times ^ | September 10, 2013 | ANN CARRNS

[reaganaut1]

Raha Wala, a 30-year-old lawyer for an international human rights organization, is facing $200,000 in student loan debt. But if all goes according to plan, most of that burden will be forgiven after 2020 under a federal program aimed at helping those who enter public service jobs.

“It’s enabling me to do the work that I love,” said Mr. Wala, who graduated in 2010. “It wouldn’t be possible, otherwise.”

The federal government is trying to encourage more participation in the Public Service Loan Forgiveness program, which was created in 2007. The program and other debt assistance options have been underused because of complex rules and sometimes conflicting benefits.

Last month, the Consumer Financial Protection Bureau created a tool kit for employers — like nonprofits, school systems and police and fire departments — to help make their workers aware that they may be eligible. The public service program allows those with high student loan balances relative to their income to have the balance of their loans canceled if they work in government or nonprofit jobs for 10 years.

Mr. Wala hasn’t calculated exactly how much the forgiveness program will save him, but he expects it could be many thousands of dollars. “I definitely am looking at it as something that will have to happen, if I want to maintain a stable lifestyle,” he said.

The program works best with income-driven student loan repayment programs — options that let you make lower loan payments based on your pay. (That’s because if you stayed on the standard 10-year loan repayment plan and made all your payments on time, you wouldn’t have any loan balance to forgive.)

[GOPJ]

What percent of Detroit is collecting disability? It’s being used as the new welfare - those folks don’t have to pay back their student loans either.

Only productive citizens are punished.

[GailA]

This is BS. Son got a student loan, attended the tech school, they have NO record of him, no grades, yet he has to pay back a loan on a school that has no records of him attending? And Yes he did attend. ITT is a crock of you know what, they teach to the lowest level of their students.

[wildbill]

Interesting proposal, but it’s not clear to me why anyone who makes a contract to pay back a loan should get 20% off if he/she is paying taxes, presumably because they have a job.

I obtained two MAs and taught at the University of Houston
after retirement from self-employment.

My observation on the educational system is that there are simply too many students that are encouraged to go into debt for majors that have no value in the regular job market and there are too few jobs in academia to support them and pay off the loans.

It isn’t good policy to encourage debt by any tax policy that rewards bad outcomes.

[Old North State]

I don’t disagree with you, I just wanted to make the point that if we are doomed to use the tax code to subsidize behavior, let’s at least subsidize the right behavior.