August 11, 2008

Buried in Vast Higher-Education Bill Is Another Expansion of Loan Forgiveness

Washington — A little less than a year after it passed legislation to provide Stafford loan forgiveness to public servants, Congress has voted to expand the benefit for public-interest lawyers, early-childhood educators, and several other categories of borrowers.

The new programs, which are buried in a huge bill to renew the Higher Education Act (HR 4137) that awaits President Bush’s signature, would provide loan forgiveness to borrowers who commit to working in a high-need, low-paying field for at least three years.

Public defenders and state and local prosecutors would enjoy the most forgiveness: up to $10,000 a year or $60,000 total. Civil legal-assistance lawyers would get slightly less: up to $6,000 a year, or $40,000 total.

Borrowers employed in several other “high need” occupations would get up to $2,000 a year, or $10,000 total. Among them are early-childhood educators, nurses, foreign-language specialists, librarians, child-welfare workers, speech-language pathologists and audiologists, school counselors, certain public-sector employees, nutrition professionals, medical specialists, mental-health professionals, dentists, physical therapists, and occupational therapists. Also covered are employees in science, technology, engineering, or mathematics; superintendents, principals, and other school administrators; and “highly qualified” teachers serving low-income or underrepresented students, or those with limited English proficiency.

Last year Congress forgave the remaining debt of borrowers who spend 10 years working for a government or tax-exempt organization and make monthly payments on their loans. In the new bill, lawmakers clarified that members of Congress are ineligible for the program.

Loan-forgiveness programs are designed to help employers recruit and retain employees in shortage areas. —Kelly Field

Comments

1. Sure, very nice, but I can’t help but think that the money would be better spent increasing Pell Grants so that needy students would have a better chance to aspire to these jobs they need to get their loans forgiven.

   — DS    Aug 11, 03:39 PM    #

2. Last year I got a job working for the federal government at more money than I made as a private sector attorney—-after I paid off my student loans. If people have problems paying off student loans on the wages they earn, it seems to me that tuition should be reduced. The best way to reduce tuition is to reduce the “push” market or “loan market” that propels higher tuition. In other words, don’t borrow—find a cheaper school!

   — Dave    Aug 11, 03:44 PM    #

3. Generally public sector employees are lower paid than those in the private sector; with some exceptions. I would like to see this program expanded to anyone who is a teacher at ANY public institution. PK-12 and higher ed. In my PhD program, less than 15% of the students are in higher ed because of low wages and many leave shortly after completing their doctoral work for the private sector. Those of use who stay in higher ed do it not for the money. I am a professor at a state university with one of the lowest tuition rates in the nation for in-state residents. My salary reflects this. I love what I do, but some help with my student loans would be appreciated. I am not asking for complete forgivness, I have been paying for nine years. Thank you.

   — Mark    Aug 11, 04:18 PM    #

4. So, should one go to an inferior school simply because it is cheaper?

   — JFB    Aug 11, 04:19 PM    #

5. Comment #4 or JFB, If you cannot afford your “superior” school, then I think you should go to the “inferior” school you can afford. When I say “afford” I mean after calculating your future wages and if you cannot afford to pay back the debt against these future wages, then your school does not measure up to your expectations. So no, you should not go to the expensive school because it cannot support your future wages. Who do you take yourself for you prima donna?!

   — Dave    Aug 11, 04:39 PM    #

6. We cannot recruit doctors into our rural area because they do not make the salary doctors do in the cities. Meanwhile, my sons are in medical school and even the most “inferior” medical school would require extensive loans for them to get through the minimum eight years(not including a fellowship after residency) that is required to become a doctor. They both worked hard in college and maintained a 3.8-4.0 while working at least one job per year and sometimes as many as 3 jobs a year. I, for one, see both sides of debt forgiveness and think that if we are to have any quality of care at all in the urban or rural areas, we must offer this option or doctors will be forced to take the higher paying jobs in order to pay back their student loans.

   — DL    Aug 11, 04:58 PM    #

7. Comment #6 or DL, What “rural” area are we talking about? What state or “town” do you demand this type of pork? Your sons do not know how to relocate their talents like everyone else? I am sure they work hard in college, as everyone else, but what makes them so special to have their debts paid for on the backs of everyone else? Don’t you think the free market should prevail and your sons should find the employer that will pay the wages to provide for their tuition? I suppose by opting for this Congressional benefit in the Higher Education Act that you agree that your children’s wages should be supplemented at taxpayers expense.

   — Dave    Aug 11, 05:13 PM    #

8. Actually #6 Rural and underserved areas have long had the possibilities to get docs with special deals for the docs. Many don’t because the local docs don’t want the competition from a low paid Govt. doc.

   — gl    Aug 11, 05:37 PM    #

9. Dave- Obviously being a lawyer in the private sector, you made more money than most people. And you seem to be implying that rural areas do not deserve good doctors or teachers etc. because they can’t compete with the outrageous salaries big cities can pay doctors. This is precisely due to the free market. Let’s hope you never have to go to a hospital in a small town.

   — AM    Aug 11, 07:12 PM    #

10. Dave—We do not owe anyone anything and have always paid our own way. I do not “demand” pork. Certainly, my sons will pay their own way as we have always done, and if the small towns do not want to pay them to practice there, they can always do like everyone else and go to the cities. You missed my point—the rural and urban areas in Texas or anywhere else cannot compete for quality health care. I suppose I mistakenly believed that one could post to this site without being personally attacked. My mistake.

    — DL    Aug 11, 07:15 PM    #

11. Dave – you sound a bit resentful and like a prima donna. Perhaps you are not fully aware of the economics of higher education, but the last time I checked no student pays the full cost of his/her education because:

    1 – the college endowment is big enough to subsidize the cost so that even supposed “full pay” students benefit; or,

    2 – federal and state funds are allocated to the college to help subsidize the cost; or,

    3 – tuition is set at a rate that permits the college to “discount” the cost to those who cannot afford “the sticker price” (those discounts are generally called institutional scholarships or grants.)

    So, how many of the above did you benefit from as you completed your undergraduate and graduate educations? At least one, possibly more. And you are earning a good salary now, I suppose, so in recognition of the support you received I assume you will be making substantial annual contributions to your alma maters so that others may enjoy the benefits of education just like you.

    Of course, if we forgive loans as part of the bargain, maybe we will encourage more persons to make the commitments our nation needs in order to assure appropriately educated persons teach in our schools, provide medical care, and engage in other occupations that are necessary for the common good, even in those geographic locations that might initially be less appealing because salaries do not meet the need to repay loans. In my experience the free market has done a poor job of distributing necessary resources across society, so I am not as convinced that it does not need help from time to time (see #1, #2, & #3 above and then add loan forgiveness as #4.)

    Oh, yes, it took me the full 10 years to repay my loans for undergraduate and graduate school. And it was difficult as I did raise a family, sent 3 children to college while repaying loans and hope to support grandchildren to do so if I live long enough. And I believe it is an excellent use of both my personal funds and of tax payer funds to subsidize education whether through Pell grants, subsidized Stafford loans or loan forgiveness. There is no better investment in our nation’s future than investment in education. Our progress as a nation has depended on this and will continue to do so.

    Your attack on DL and the other posters was inappropriate. I hope you will re-think your attitude.

    — Rick    Aug 11, 07:41 PM    #

12. I’m sorry Rick, but I did not mean to attack DL. It’s just when DL states, “the rural and urban areas in Texas or anywhere else cannot compete for quality health care,” one has to wonder whether it is “rural” areas, “urban areas,” or just the whole state of Texas that needs to subsidize its medical student loans. As to the “benefits” that you suggest—-I got nadda!!! Yep! That’s because “aid” is a federal student loan at 7% and any endowment does not apply to law school. Lawyers, you see, have to pay full freight—there aren’t any student discounts. Now, I went to a cheap undergrad which is what I suggest all of you do!!!~

    — Dave    Aug 11, 07:49 PM    #

13. Dave – again, I think you misunderstand the economics of higher education. Your 7% loan was not a free-market, market-rate loan. It was a subsidized interest rate loan supported by taxpayers like myself and DL and the many rural residents of Texas who pay taxes (sales, income and other) and who also need medical care, teachers, and even lawyers. No, you got something, you got a break on the rate of your loan and an opportunity to pursue a career that can allow you to support yourself and contribute to society. That is not nothing.

    Law schools, medical schools, business schools generally don’t offer scholarships or grant aid because of the expectation that once the student has earned the degree, the income potential over the career lifetime of the student will easily repay the cost of the education. Problem is that the income potential in many rural areas (let’s say like Appalachia so we don’t pick on Texas), and inner city areas of many of our cities, do not provide well-trained professionals the income needed to repay as easily the loans. Our efforts to help the free market really reflect a commitment to serve a wider community than the free market would encourage. Again, I believe that is sound social policy. No one system is perfect, that is why we should constantly look for the ways to come up with the proper blend of individual incentives and social policy that encourages service to those who might otherwise be left out.

    Again, I hope you will re-think your position. Odds are you attended elementary and high schools that were taxpayer supported. You probably benefited from a public health clinic at some point or maybe Hill-Burton service from a private hospital. No one, no matter how smart, hard-working or otherwise capable, makes it in this life on their own. Starting with our families that nurture us at birth right through our lives, everything we gain is because of the social network (aka – society) of which we are a member. It is a good thing to encourage this when the free market falls short in this regard. I would rather discuss how we better insure that such support is properly directed than to argue about who got help and who pulled themselves up by their bootstraps.

    — Rick    Aug 11, 09:14 PM    #

14. Rick, I pay big time in property, social security, sales, state and federal income taxes—believe you me!!!! I don’t need to pay another education tax to subsidize some individual from Texas that thinks they should go to a better school than what they can afford. I’m sorry. If the state of Texas expects the rest of the states to support their doctors, then maybe, just maybe they should raise their state income tax like everybody else. Simple. It’s all about taxes, like you suggest. I just don’t feel like paying another one, that’s all.

    — Dave    Aug 11, 09:22 PM    #

15. Dave,

    Actually it isn’t about taxes…..I work for a law school in Atlanta….we are a private law school with no state support….our students pay “full price” and only have federal loans to help with the costs. Currently the Stafford rate of 6.8% and Grad PLUS of 8.5% are the best they can hope for as far as a “break” goes. Part of the problem now is that the avg. salary for a lawyer, not graduating from the top schools, is 55k for private sector in Atlanta and 42k for public sector. The mission of my school is to help underepresented populations. Be that rural, female, minority, ect. without these loan forgiveness plans the students who borrowed in undergrad and now law school would be making payments of about 1500 a month. Even if they earnd 60k a year, after taxes they would only have 1500 a month to live off until the loans were repayed or they received a substantial pay raise. Living on 1500 a month in Atlanta(not a rural area by any means) is impossible. That could get you a place and utilities and maybe some ramen noodles. But you would have to live next to work and have no other debt at all in order to actually achieve this. The only other option would be to get married and have that person help support you…not one I recommend to any of my students. But as a Financial Aid Director I highly recommend the public service loan forgiveness program to my students.

    Like you I pay high property taxes, social security, sales, and other taxes….state and federal I pay minimal…you should have taken tax law and learned how to save your money from the government. But these programs are just as much about giving the lower classes and lower middle classes the oportunity to achive their goals as they are about the public sector. The public sector mainly employees these people and without them people who need the assistance would not have it. There are very few lawyers who would practice as a public defender if there wasn’t something to assist them. They wouldn’t be able to afford it and the government has seen that. Think of it as a benefits package paid for by the government to their employees. I am sure that your employer has some type of benefits package that is pretty nice. This is no different other than it is done for public services and not private.

    — James    Aug 12, 08:24 AM    #

16. I am 34 years old. My parents couldn’t afford to put me through college but I was a fairly smart student. I was not scholarship material but did finish with a respectable 3.3. I worked part time during undergrad while other students lived off their parents money. After undergrad, I attended grad school, I was offered an assistantship which helped offset some of the costs. For the past 8 years, I have been working in the public sector and I love it. How many of you are in debt 60K from student loans? Probably not many of you. I worked during undergrad and grad school but I still came out with loans. I make my monthly payment each month b/c I am responsible, but it would be great, if things were just a tad bit easier. I have read some of the comments on this board and it really makes me wonder if some of you even have a clue?

    — Jason    Aug 12, 09:02 AM    #

17. Dave (#2,5,7, etc.) – You’re a blooming idiot if you think the “free market” works! That figment of the imagination exists only for the rich to oppress the remainder of society for their further accumulation of wealth with NO benefit to the society as a whole. DL is absolutely correct, we need to lower the cost of entry into some professions for those willing to sacrifice some monetary gain in order to contribute to less wealthy segments of our society.

    And Jason (#16) – some here have NO clue. Just read DL’s comments as evidence.

    — Gary    Aug 12, 09:48 AM    #

18. Hi to all recent posters: please keep in mind that this is really a public policy question. We all pay taxes (some of us much more than others due to where we live or the amount of income we have or a combination of the two.) So, the question is ultimately not about whether Dave or any of us “have a clue” personally. The question is: what behaviors do we want to encourage using the leverage of loan forgiveness for professionals in fields where there is human need but not necessarily the resources sufficient to address the human need.

    Again, investment in education and service seems like very good public policy if we do it carefully and in a thoughtful way. Those who resent sharing the burden will always be part of society, so those of us who are less resentful (as I said, I paid back my loans which were substantial relative to my income as an educator and family man) need to speak up in support of such efforts and make the case for why they deserve support.

    For my part, I continue to pay taxes, without a doubt in a greater amount because I earn more than I would otherwise have earned without my education, even though I earn substantially less than many of my classmates who went on to careers in law or business or even medicine. Given my three decades of experience as an eduator I believe the work I do in concert with other educators has social value that, while not easily measurable, is worthy of tax support. I believe the loan forgiveness provisions of the higher education bill represent sound public policy that will benefit the nation in the long run. I would be willing to change my mind if shown data that indicated that this public policy does not have its intended benefit (I recall that several years ago a study was published that indicated that a loan forgiveness program for physicians in underserved areas had its intended beneficial effect but I cannot put my hands on that report at this moment.) Absent that data, I will continue to voice support based on my experience and what I have seen in my work, as limited as that may be.

    — Rick    Aug 12, 11:01 AM    #

19. JFB: Define “inferior school’? I work for a community college; I don’t find the education to be inferior at all—just tailored to people with different goals. Not everyone WANTS to go Ivy League; not everyone defines success by the credentials on their education resume or by a six or seven figure salary. It’s a very elitist attitude to call non-prestigious institutions “inferior” and passing that attitude on to young people is what keeps the snobbery going.

    Gary: What you’re suggesting is an interference in free enterprise and an action tantamount to redistribution of the wealth. Last I checked we are not a socialist/communist society. It sounds to me like there’s some resentment for capitalism; capitalism is simply the result of a free society. Why should my money be taken and given to someone else who has not earned it? I pay my taxes (and my student loans; I will have my student loans paid off before I reach public sector employee forgiveness, by the way), and work hard for my salary. Stress, MY salary.

    — Sharon    Aug 12, 11:26 AM    #

20. Sharon (#19) – Good points. Though you took my meaning and stretched it far beyond what I intended. I have no resentment of capitalism as such. but do not confuse that economic system with the referenced “free market.” That free market gave us child labor and massive opression of the lower economic stata prior to the formation (& success) of labor unions. And it continues to exploit any situation when not restrained, regardless of the moral consequences. I certainly did not advocate a regression to a communist society, though you really should not lump socialist & communist econmic policies in the same camp as there is a massive difference between the two.

    I pay my taxes, have paid off my student loans and participate in capitalism through the stock market and have no desire to regress to a different economic system.

    However, my taxes go to build/maintain roads I will never use. My taxes go to provide living assistance to those not as fortunate as I. My taxes go to schools when I have no children in the school system. And I don’t begrudge ANY of that. I give money to charities I believe are doing good work too. No big deal. The crux of the matter is that I personally believe that as a rich country (& I’ve seen a fair share of contries far, far poorer than us), we should – AS A SOCIETY – assist those less fortunate than us. Unfortunately, I see far too many who are only interested in me, me me & mine, mine mine! Of course it’s YOUR salary and of course you should be allowed to spend it as YOU wish. But isn’t it a mark of civilization to offer our less fortunate brothers & sisters a hand so that they may improve their situation? Doing so enriches them and us and makes our society better. Contrast that with the “free market” advocates who are interested ONLY in wealth accumulation. A glaring example is all the corporations who are set up in Bermuda (& other off-shore countries) to totally avoid payment of taxes! That may be a legal situation, but considering their wealth generated in the U.S., it’s also an immoral situation.

    Now, a responsible government should (1) Allow & encourage wealth generation in whatever endeavors its citizens may undertake and (2) Redistribute some of that wealth to those who need some help in maximizing their potential.

    OK…off my soapbox :)

    — Gary    Aug 12, 01:44 PM    #

21. Hi again all. Since it is late August, perhaps a few folks are getting ready for a late summer vacation before the start of the academic year. For those who may be interested, may I suggest re-reading (or reading for the first time) the Social Contract theory which is often part of intro poli sci classes? Perhaps it would be good for us to remember just how much we depend on each other in order to earn “our” salaries. And with such a reminder, perhaps we can become a little less self-focused and a little more focused on the common good so that we improve our society for everyone. Gary, this is a soapbox that needs to be mounted on a much more regular basis lest we lose the opportunity to improve the United States of America, so I thank you for doing so (hmmm… “United”, now what does that imply in the name of our nation?)

    I simply cannot believe that we are arguing over a program whose cost relative to other tax incentives we use as a nation to encourage/discourage specific behaviors is small. Just how vigorous are we in monitoring and challenging Schedule A itemized deductions? Raise your hand if you take the mortgage deduction (even if it is for a sub-prime mortgage) or if you deduct unreimbursed medical expenses, or if you deduct for union dues or unreimbursed business expenses, or if you deduct for unreimbursed moving expenses to take a new job, or you deduct for individual charitable contributions (to your alma mater for example), or deduct for college tuition, or deduct for interest paid on college loans. We use tax policy all the time to encourage or discourage behaviors we value positively or negatively. How could it be wrong or inappropriate to use tax policy to support a positive social policy like loan forgiveness for those who serve in underserved communities and professions? I agree with Gary – it does require responsibility on our part, but it also requires some humility in recognizing that we depend on each other rather than to imagine that somehow we alone are responsible for our good fortunes. We need to remember that our good fortune represents the combination of our personal effort supported by policies our society established to promote educational opportunity on a broad scale. And those policies are established and implemented through our duly elected government. Gary, I will join you in getting off the soapbox, at least for the moment.

    — Rick    Aug 12, 09:32 PM    #

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