Want A Break on Student Loans? Do This
NEW YORK ( MainStreet) As the student loan debt clock continues its trillion dollar plus countdown, pressure is being put on colleges to provide more actionable information on student loans as the first line of defense against excessive borrowing and default. People in public service careers may be well-positioned to benefit.
A report issued several weeks ago by the Consumer Financial Protection Bureau found that one in four American workers could be eligible for student loan debt forgiveness programs available to public service employees. Included are teachers, social workers and public health workers who need master's degrees to get hired in most states, along with cops and firefighters who are less likely to have four-year degrees.
They may be eligible, but many not know it. It's the result of a lack of disclosure about student loans that educators and students are asking for.
"The Department of Education's Public Service Loan Forgiveness Program (PSLF) eliminates student loan balances for public service employees after 10 years of on-time payments," said ED spokesperson Jane Glickman, describing the ten year public service loan. But unaware of this option, many public service workers may hit the job market in search of higher-paying private sector jobs to keep up with loan payments.
People often back into public service occupations that they didn't expect would become their life's work when they started school, driven in many cases by the vagaries of the job market and their loans. But it's not always a fool-proof solution. When private sector hiring tanked with the 2008 credit freeze, the public sector was also hit by shrinking tax revenues that led to lay-offs in many civil service occupations.
There are recent exceptions. In 2010, during the depths of the recession, the Federal Deposit Insurance Corporation was hiring as examiners and other employees needed to scrutinize and close down hundreds of failing banks, but for less than they'd be paid in many comparable private sector jobs.
"People give up higher incomes to serve their city, their state, or their country," said CFPB Director Richard Cordray in a conference call with reporters last month. "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."
Cordray and other state and local officials stressed the need to recruit well-educated public service employees, as many professions are expected to face a shortage in the coming years. The National Center for Education Statistics estimates that nearly a quarter million teachers will be needed by the end of the decade to replace retiring Baby Boomers. The Health Resources and Services Administration expects a shortage among skilled nurses and nurse practitioners to hit the one million mark in 2020.