33 Million Qualify for Student Loan Forgiveness, but Most Don't Ask For It

UC Berkeley students attend the 2004 commencement convocation at the Greek Theatre on the UC Berkeley campus in Berkeley, Calif.
Alamy
By PHILIP ELLIOTT

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.

"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."


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11 Comments

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betty_brock

If you aren't smart enough to get a scholarship, maybe you don't belong in college.

August 29 2013 at 4:13 PM Report abuse -1 rate up rate down Reply
betty_brock

STOP BURDONING THE TAXPAYER with giveaways.

August 29 2013 at 4:12 PM Report abuse +2 rate up rate down Reply
kropeheatn

If you read the program it\'s only after ten years of payments.

August 29 2013 at 8:59 AM Report abuse rate up rate down Reply
vlady1000

The public sector is now one of the better paying fields, less layoffs, better benefits (saves you $$), etc. If anything, lease are the ones that should NOT be forgiven.

August 29 2013 at 12:08 AM Report abuse +2 rate up rate down Reply
1 reply to vlady1000's comment
vlady1000

oops, if anything, THESE are.......

August 29 2013 at 12:09 AM Report abuse +1 rate up rate down Reply
kayo1025

It\'s a loan made off the backs of the tax payers. They should pay it back. Students are passed without having to meet the requirements to do so. Now, they have the option to get out of paying their bills, too? No wonder this nation is where it is. Lawyers are so desperate for business, they spend most of their time helping people come up with excuses and making false allegations against creditors to get their clients out of paying their bills. Stupid and arrogant people.

August 29 2013 at 12:00 AM Report abuse +3 rate up rate down Reply
1 reply to kayo1025's comment
Rhett C. Bowling

It took seven years but I paid off my student loan with about $3,500.00 in interest. No one footed the bill for me. I want my money back. All of it. That's includes all the taxes I have paid through out the years too.

August 29 2013 at 8:26 AM Report abuse rate up rate down Reply
Shelly

That BS!!! Why those jobs? I think all of the doctors out there saving people's lives should be eligible for loan forgiveness. What about lawyers keeping white collar crooks out of jail? Maybe they should have their loans forgiven. How about changing the loan system from the other end? People who borrow money and waste it by dropping out pay back the entire amount plus outrageous interest. Students who make it to graduation but take longer than necessary should pay back all the money but have average interest. Students who graduate on time or early and make the best grades (cum laude) should be eligible for some forgiveness and have extremely low interest rates.

August 28 2013 at 10:00 PM Report abuse -1 rate up rate down Reply
tfarnon

The problem is that in order to qualify for this loan forgivenness program, you have to have worked for 10 years, full-time at one of the qualifying employers. I started paying on my student loans more than a year before I landed a job at a qualifying employer, and I\'m paying the amount that will pay the loan off in 10 years anyways. There won\'t be anything left to forgive by the time I\'m eligible. I\'m not complaining--I\'m glad to be earning enough to where paying the loan off isn\'t a huge burden, and I don\'t regret a second of the education I took the loan out for.

As for why veterans would graduate with debt, it\'s not as likely now that the GI Bill more accurately reflects actual college costs, but under the pre-9/11 GI Bill, the stipend paid barely covered the costs of tuition at a less-expensive state school, much less books, expenses or anything else. Still, even the new GI Bill doesn\'t cover all costs for every student.

August 28 2013 at 9:54 PM Report abuse rate up rate down Reply
rickahight

Most police and military are the types that wouldn't ask for forgiveness. They leave that up to those that want something for nothing.

August 28 2013 at 9:04 PM Report abuse rate up rate down Reply
paddleman1928

of course -put it on the taxpayers\' backs

August 28 2013 at 8:07 PM Report abuse +1 rate up rate down Reply
crimeslawyer

Who the heck did the \"forgiving\" here? Some liberal? Enough. You borrow you pay back.

August 28 2013 at 7:35 PM Report abuse +3 rate up rate down Reply