Public Service Student Loan Forgiveness Update

06/26/2009

6/26/09: The new Public Service Loan Forgiveness program is underway at the Department of Education. As previously reported, NTEU backed this program when it was passed by Congress with the assistance of Representative John Sarbanes (D-MD), as part of the College Cost Reduction and Access Act of 2007. Last year, the regulation process to implement the new law took place at the Department of Education. The program allows the forgiveness of the balance on qualifying federal student loans after a recipient makes payments for ten years, beginning in October, 2007. The first cancellation of student loans will not take place until 2017 for full-time employees in public service, including qualifying federal employees. But for those with high debt, this is a very positive option.

While the actual loan forgiveness is down the road, those of you with high debt, may wish to investigate this program to see if your loans qualify, or if loan consolidation avenues are available for you. In general, the student loans must be a part of the government’s Direct Loan Program, or be eligible for consolidation. Click here for a fact sheet with useful information. Another helpful site is: http://www.finaid.org/loans/publicservice.phtml. While this is not a government site, it is used by many in the financial aid arena.

Finally, it should be emphasized that this new program is separate from the existing student loan reimbursement program that is currently available for federal agencies to use. Under this program, government agencies may provide up to $10,000 a year for loan repayment to federal employees with a lifetime maximum for one employee of $60,000 under current law. Unlike the new College Cost Reduction and Access Act, however, this program must be funded out of the individual agency’s budget and too few agencies choose to offer this benefit. NTEU has been critical of federal agencies who do not take advantage of this existing flexibility in order to attract and keep talented employees.