Congress approves student loan forgiveness for public servants

Legislation that would provide student loan forgiveness for federal employees after 10 years of service will now move to President Bush's desk.

The bill (H.R. 2669), sponsored by Rep. George Miller, D-Calif., was agreed upon by a conference committee Wednesday and cleared by the House and Senate on Friday. The president, who had threatened to veto the measure, has agreed to sign it.

The legislation includes language that would make it easier for college graduates who have high student loan debt to accept lower-paying government and nonprofit jobs. High debt has often been cited as a major impediment to the government's ability to attract top talent.

"This summer has been a summer of headlines that have underscored the importance of government, from toys with lead coming from China to tainted food to bridges collapsing," said Max Stier, president of the nonprofit Partnership for Public Service. "The loan forgiveness provision is the step in the right direction to ensure we get the right talent in government to address these challenging issues."

The measure would provide student 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 new legislation argue that the income-contingent program has not succeeded in removing the barriers to public service from high education debt, largely because 25 years is too long.

"Twenty-five years is a time horizon that almost nobody thinks about committing to when they're entering any profession," Stier said. "Ten years … makes the tool of loan forgiveness more realistic."

The bill would boost overall college financial aid expenses by nearly $20 billion over the next five years. But Miller has 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.

"This bill will do more to help students and families in this country pay for college than any effort since the GI Bill," Miller said. "There is no smarter policy, or greater priority, than helping all students afford to get a good college education and pursue their dreams."

Stier added that if the legislation is enacted then agencies will have a great responsibility to publicize the benefit. "Interest in government service is relatively high but knowledge is negligible," he said. "This is an example of an effective feature of government employment that needs to be publicized."