Panel approves student loan forgiveness for public servants

A House panel on Wednesday approved major college aid legislation that would provide student loan forgiveness after 10 years for people who pursue careers in public service.

The bill (H.R. 2669), sponsored by Rep. George Miller, D-Calif., includes language that would make it easier for college graduates who have high student loan debt to enter lower-paying government and nonprofit jobs. Many groups have cited high debt as a major impediment to the government's ability to attract top talent.

The public service language is identical to that in a bill introduced by Rep. John Sarbanes, D-Md., earlier this week. "We are seeing a trend where the best and brightest choose to enter the workforce in a place where they can be assured debt relief assistance or a salary that allows them to replay loans quickly," Sarbanes said. "Today, public service is not that place."

The measures would provide loan forgiveness of $5,000 for graduates who go into public service professions. After 10 years, government loans would be forgiven.

In 1993, Congress passed legislation that offers students in general an option to tailor loan repayments to their incomes. After 25 years of repayment, the government will forgive the remaining debt.

But supporters of Miller's legislation argue that the income-contingent program has not succeeded in removing the barriers to public service created by high education debt, largely because 25 years is too long.

"If it's going to be an effective tool to encourage talent to enter into public service, we need to find a more reasonable time horizon," said Max Stier, president of the nonprofit Partnership for Public Service.

Miller's legislation would forgive outstanding debt for borrowers who have made 10 years of monthly repayments on their loans while serving in full-time government or nonprofit jobs.

The measure also seeks to correct a portion of the income-contingent repayment program that includes a "severe" marriage penalty by combining the incomes of both spouses so that the amount the borrower must pay may increase vastly. The bill would attribute only half of a couple's income to each spouse.

Miller's bill would boost overall college financial aid expenses by nearly $20 billion over the next five years. But Miller said the measure actually would be cost-neutral, because the money would come from cuts to what he called "excessive subsidies" to financial institutions participating in the student loan program.

The bill also would provide tuition assistance to talented students who pledge to teach in public schools, and includes new tuition cost containment strategies.

Miller touted the legislation as the biggest investment in students since President Franklin Roosevelt signed the GI Bill into law in 1944, enabling 7.8 million veterans of World War II to participate in education or job training programs.

"This is a tremendous, historic step toward realizing the goal of making college affordable for every qualified student in the country," Miller said. "For years, college costs have been growing rapidly, far outstripping families' ability to pay them."

The bill is endorsed by the American Bar Association, the Association of Law Schools, the American Federation of Government Employees and the National Treasury Employees Union.