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Reduce Student Debt In Public Service Job

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By Steve Rosen

Published: November 18, 2007

A new federal law that revamps college education financing contains two hidden gems for students interested in civic-minded jobs.

Buried deep in the College Cost Reduction and Access Act are incentives that essentially forgive thousands of dollars in federal student loan debt for graduates entering teaching, social work, public health, public interest law and other eligible public service areas.

The timing for many families couldn't be better.

The College Board recently released its annual report on college education affordability, and the results surely added to the stress levels of many parents faced with the daunting task of saving tens of thousands of dollars for tuition, room and board.

Specifically, the College Board reported that tuition at public and private colleges has risen at more than twice the rate of inflation, with public tuition up 6.6 percent to $6,185 and private tuition jumping 6.3 percent to $23,712. Keep in mind that these numbers reflect the sticker price for education and are starting points for negotiating a deal as you would haggle with a car salesman.

Although the new federal incentives won't offset all of a borrower's costs, they do provide some assurance that loan balances won't be crippling long after the diploma is on the wall.

Here are details:

Sweet forgiveness: Students with an altruistic bent have an added incentive to pursue their passion.

Under the Public Service Loan Forgiveness Program, borrowers who work for at least 10 years in a qualified full-time job will be eligible to have their remaining loan balance forgiven. In other words, the balance of a student loan - principal and interest - is forgiven after 120 monthly payments, or 10 years. The borrower must be current on payments.

Only students who borrow from the federal government qualify. Students who borrow from other lenders can become eligible by consolidating their loans through the federal loan program.

According to the Department of Education, eligible jobs include "emergency management, government, military service, public safety, law enforcement, public health, public education, social work, public interest law services, child care and public library sciences."

Many social organizations say the borrowing provision should heighten interest in public service work, where qualified employees often face low pay and high education debt burdens.

Teaching incentive: Students in education and teacher-preparation programs who commit to teaching for at least four years after graduation can apply for annual grants of $4,000 to defray college costs. Grant money generally must be used for tuition and fees and may not exceed $16,000 for undergraduates or $8,000 for graduates.

These teaching fields are eligible: math, science, foreign language, bilingual education, special education and reading specialists.

There's one catch: If a student ultimately decides not to teach, the grants must be repaid.

For information, go to www.nasfaa.org.

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