House backs student loan forgiveness for public servants

The House 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 College Cost Reduction Act passed the House by a vote of 273-149. It 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 measure would provide loan forgiveness of $5,000 for graduates who go into public service professions. It also 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.

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

But supporters of the 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.

"What we are seeing is increasing debt load for a broader set of graduates," said Max Stier, president of the nonprofit Partnership for Public Service, on Wednesday. "Unfortunately, people are likely to have debt for more than 10 years. This is a good incentive for people to stay on the public service road."

The measure also seeks to correct a portion of the income-contingent repayment program that includes what backers characterize as 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.

The White House on Tuesday issued a policy statement threatening to veto the bill, arguing that it creates new mandatory federal programs and policies that are poorly designed and would have significant long-term effects on taxpayers.

"Overall, the administration is concerned that the bill's loan forgiveness provisions are a costly and inefficient way to encourage students with debt to pursue specific professions," the policy statement said, noting particular concern with the proposed loan forgiveness for public sector employees.

The bill would boost overall college financial aid expenses by nearly $20 billion over the next five years. But sponsor Rep. George Miller, D-Calif., 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.

Miller has 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.

"The idea of making it easier for people to serve their country by forgiving debt is smart management and the right thing to do," Stier said. "This legislation is a good step forward."