Uncle Sam can wipe out some student debt

The government's consumer agency says the programs are there, but teachers, firefighters and other public servants aren't being informed about them.

By Jason Notte Aug 30, 2013 8:08AM
Image: Graduation cap (© Stephen Wisbauer/Getty Images)When even the government is pointing out that it's too difficult for you to get the free money it is offering, it's a pretty good sign you're getting cheated out of a better existence.

The Consumer Financial Protection Bureau announced Wednesday that the $1 trillion in student loan debt currently crushing the U.S. workforce, dampening the housing market and making life miserable for millions of recent graduates doesn't have to be this bad.

More than 33 million workers qualify to have their student loans forgiven because they work in schools, hospitals, firehouses, police stations, city halls, the military or other areas of public service.

Unfortunately, according to the government's consumer advocate, too few people take advantage of it because the programs are ridiculously complex, fraught with redundancy and hidden from plain view. The CFPB thinks that's nonsense and has called on Congress to review the loan forgiveness programs. It also wants employers to make sure their workers know they are available.

By forcing recent graduates to choose between paying down their loans and buying a house or a car or taking a lower-paying job that fulfills a public need, the CFPB says U.S. workers are sending millions of dollars to lenders instead of keeping that cash in the local communities. It also actively discourages college graduates from entering public service fields.

"We estimate that one in four working Americans has a job that meets the definition of public service under this program," said Richard Cordray, director of the CFPB. "Many of these teachers, health care workers and other public servants could be eligible to have their college loans wiped out after 10 years."

Even that's a low estimate. Workers at state departments of motor vehicles and even accountants at nonprofit arts groups qualify for the loan forgiveness programs. Their numbers pale compared to the 6.8 million people in education who could receive the benefit. The Education Department says U.S. schools will need 425,000 new teachers by the end of the decade, which is a tough draw when the National Education Association puts the starting salary of a teacher at less than $36,000.

The demand for nurses, police officers and social workers faces similar supply problems thanks to low starting salaries. The government is willing to help them out, but it seems content to just let student loan cash flow to big lenders instead. While streamlining the process would require action from a polarized, painfully slow Congress already embattled in several heated debates over benefits, the alternative of funneling even more cash to already reviled lenders could give aspiring public sector workers the financial reprieve they need.

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Aug 30, 2013 2:42PM
Really?  I made 14k my first year out of college and never once thought about getting out of paying back my debts.  I was 35 when I finally paid it off, by something called sacrificing . That is something this new, younger entitled generation knows nothing about.  They just stick their hands out and expect a free ride.  There are more affordable ways to get an education(one is going to community colleges your first two years) .  I knew there were some colleges I would never be able to afford when I was a young person, and that is just a part of life.  I am disgusted with this new generation of people, expecting everything for NOTHING.
Aug 30, 2013 8:44AM
The government now has complete control over student loans - is there any way this WON'T end badly?

Aug 30, 2013 10:08PM

  Federal government needs to get out of the loaning money business.  You would see education cost drop. As long as colleges know taxpayers are footing bill they will never bring down cost.

Same goes for mortgages.  Federal government is not suppose to be piggy bank for everyone to borrow from and then don't pay back.  Take money out of my pocket and give to losers for college and mortgages they can't pay back.  What a ponzi scheme .  I thought banks are suppose to be the ones in business of loaning money and taking the risk not the american taxpayer.

World is upside down 

Aug 30, 2013 3:03PM
We have one of the highest costs of education worldwide, and our economy keeps tanking. Several countries have free or at least attainable education, and often a better economy, workforce, family life, health etc. They recognize that the key to having a functioning workforce is to be sure your citizens can work. No country or economy is perfect, but ours could use a lesson in this. You can whine about a lazy generation, but maybe people (not just 'this' or 'that' generation) are tired of sacrificing so someone else can make money off of them. My guess is that a better educated and less stressed workforce would lower the need for welfare and lower healthcare costs substantially.
That said, these programs are almost impossible to take advantage of. To correct a few things, you can take your hardship and economic deferrances and forbearances, but that time does not count towards the time of the 'payment period'. The 10 year payment plan is mentioned, but there is also a 25 year plan. Payments must be made to the equivalent of 25 years, then the remainder is forgiven. You must also work, if able, in order to enter into some of these plans. 
It would help if however our program were, that high school students were better educated on the hows and whys of post secondary education and financing. 

Aug 30, 2013 11:27AM
All you people who hate the idea of an individual getting any kind of deal or break at all, not to worry.  There are so many stipulations to these "write offs" they don't even work, that is why people aren't taking advantage of them.  I am a teacher and I looked into it, this is what I found.  First of all, it must be a federal loan, private loans do not qualify.  Then it has to be a certain type of federal loan financed for a certain amount of time.  This amount of time is usually the same amount of years that it will take you to pay it off yourself anyway.  For example the loan is not discharged until you have paid on it for at least 10 years in a row, no breaks for hardship forbearances, etc.  Almost all loans are financed for at least 10 years.  If they are financed for more than that, they usually don't qualify for this.  Believe me, the banks aren't going to lose a penny.  Very few people can take advantage of this deal.
Aug 31, 2013 12:57PM
Maybe you can get them to wipe out my car loan and my house loan too. I didn't mean to borrow the money it just happened and now I don't want to pay it back so just throw that on with the student loans and I'm good to go.
Aug 30, 2013 10:50AM

Another give away (welfare) program. Everyone wants free stuff. Phones, food, housing, college education. You do realize that someone ultimately pays for all of it.

Reminds me of the MetLife commercial where the cartoon characters want insurance for 5 cents.

Aug 30, 2013 2:38PM
This is assuming you have student loan debt with the US Department of Education. If you have a private loan, you are screwed. Where is the regulation of private banks exploiting lower income students with flashy advertising enticing them to get "free" money for college?

Aug 30, 2013 1:10PM

The number of people this program applies to is pretty limited and probably not at all the group described above.  First off, it has to be a federal loan and you have to make 10 years of on time payments after October 2007 (meaning no loans will be forgiven under the program until 2017).  Second, you have to make payments according to one of the allowable repayment programs which are basically the ten year repayment plan, or one of the income contingent repayment plans.  Most public positions requiring a degree get very generous salaries so the income contingent payments will still be pretty significant.  The likelihood of having a significant balance to be forgiven after 10 years is therefore very low.


But, anyone who works for a not for profit can also qualify as a public employee under the program.  So you can get a very low paying job with a not for profit or government agency like the peace corps that doesn't pay much, make 10 years of very low income contingent payments, then get your loans wiped out... 

Aug 30, 2013 8:00PM
Great article.  I was able to have 50% of my student loans forgiven by being in the military for 4 years!  Those four years taught me good management and leadership skills that benefited me in subsequent jobs.  This is truly a win-win scenario BUT I don't think the present student generation nor the millenials will take it since they have displayed a 'no burden' solution and working in a social service or military or civil service will be viewed as a burden since it won't get them to the director-level jobs they expect... 
Aug 31, 2013 5:05PM

Since the article centers on the fact that it is difficult to find these forgiveness programs in the first place, how come it doesn't have a link or several links to government websites where people can find out if they qualify?  This article is no different than the government. It says that there are programs available and then doesn't tell you where to look. It is useless to know this information and complain about the lack of knowing where to find it, and then not tell people where to look. Obviously the media knows where to look and is content with keeping people in the dark. The only other alternative is that they really do not care about people and only did enough investigative work in order to complain about the government. That my friends, is being lazy. If you want to really serve customers then for God's sakes do it! Quit piddling around.

Aug 30, 2013 9:24AM
They should NOT wipe out any debt, unless it is in exchange for 5-10 years of service at reduced pay.
Aug 31, 2013 11:33PM

Where is there a shortage of nurses?  A few weeks ago my gf went to the ER and what 1 woman used to do 10 years ago now 3 women do.  Before she even saw a DR 6 different nurses did something or other for her to be seen.  When I was a kid and went to the ER I saw 3 people.  The gal that entered the insurance stuff, the nurse that took my BP and temp, and then the Dr. 


Now 1 woman enters her insurance info in the computer, 1 has her fill out and sign forms, 1 takes her bp and temp, 1 wheels her around because heaven forbid they walk and fall then get sued, 1 asks her whats going on and puts the info in her file, then 1 was standing around making sure everyone was doing their jobs correctly.


It blows my mind how all other fields because of technological advancements are having less people do more work EXCEPT medical!  THey now have more advancements and use more peopel to do the work.  Why since the BP and temp are done by machines cant the nurse having her fill out forms do that?  Or the nurse asking why did you come in today?  Its ridiculous.  No wonder medical costs are out of control.  These gals all are RNs making over $25 an hour

Aug 31, 2013 6:54PM

Never said the entire population gets funding. Some countries realize that a combination of public and corporate support makes for a rising standard of living for all. I am paying off a relatives student loan because I know it will make their life better and all that are near.

Aug 31, 2013 11:39PM
I find it funny how it says after 10 years of employment they will forgive it.  The max you can go on repayment for undergrad loans is 12 years.  Yes you can file to postpone payments but if you are working they require payment or it goes on your credit as unpaid which kills your score. 
Sep 1, 2013 2:47PM

Some idiot said: "The government now has complete control over student loans - is there any way this WON'T end badly?"

No, it has been definitively proven that the real problems began when they privatized college education. Hint: those same folk who dominate the banking industry, managed to get billions in free money, and STILL go on their worldwide gambling sprees while WE pay the costs (FDIC and bailouts) in case anything goes "wrong".

Aug 31, 2013 8:20AM
Usually these public service agreements are before the fact, not after. How many people paid off their student loans and would want to watch others be given a free ride when, maybe, if they'd have known they'd have done the same thing. One of the first lessons you learn in life is to pay your just debts. You don't need a college degree to be a cop, firefighter, or go into the military. It may help you advance further or open a door or two. RN's, LPN's, Tech's, etc. need training and certification in their field. Instead of loans, more grants are what's needed. Then, it can be a free ride. 
Aug 30, 2013 8:59AM

Why can't we have free college tuition like some countries do instead of propping up defense industries and being the ugly American ?  Think the big banks might have a finger in it ?

Aug 30, 2013 12:23PM
It gets so tiring to hear the constant whining from alll those folks so quick to pounce on the idea that someone else is getting a better deal than they are. Also the people so quick to blame it all on our evil, monstrous government.   We elected the ones in elected office, amd tjhere are a whole lot of dedicated non-elected public servants that are at least as dedicated as the ones who spend their days throwing rocks.
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