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You Could Get Your Student Debt Wiped Out

Critics say taxpayers are funding lawyers who will go on to make a mint.

How much are taxpayers willing to pay to encourage young people to take jobs that serve the public? Is it worth forgiving billions of dollars in student debt for social workers if doctors get the same break? And how many people buried in debt and eligible for the benefit aren't getting it? 

QuickTake Student Debt

Those questions are at the heart of an intense debate about the value of a federal government program aimed at removing some of the financial burden of taking low-paying public sector jobs. The Public Service Loan Forgiveness Program cancels student debt for loans extended by the government after the debtor has spent 10 years paying off the loan while working in a public service job.

Many people either don’t know about the program or can’t navigate the bureaucracy of signing up. Krista Eliot, who has $92,000 in debt, spent three years working as an adjunct instructor at several community colleges in San Diego. She tried to enroll in the program but didn't qualify because she was working several part-time jobs and no one college employer could attest to her working at least 30 hours a week, the threshold. Now she is trying to become a special education instructor in elementary and middle schools, which she thinks will make it easier to get in.

“Every step of the way, from learning about it to enrolling in it, there are just obstacles all along the way, and so many opportunities for people who might qualify to miss the boat,” Eliot said. 

The Department of Education said the number of people on track to have their debt relieved through the program increased by 468 percent since September 2013 and that it is planning an email campaign aimed at three million borrowers to inform them that they may be eligible for the benefit. 

The program, launched in 2007, has also come under fire for being too inclusive. Critics say it is far too generous with people who will make a lot of money in their lifetimes. Eligible applicants include firefighters and teachers but also doctors at nonprofit hospitals and lawyers working as public defenders. That has drawn scrutiny, as the Wall Street Journal recently reported.

In fact, most of the people who will benefit from the program are employed by the government, according to data obtained in a public records request by Jobs With Justice, a workers' rights organization. Sixty-two percent of the applications approved by the program came from people who work for the government, according to a study of 335,520 applications conducted by Jobs With Justice over three years.

“The purpose of this program is to ensure that young workers who are graduating more indebted than ever can actually go into things where pay is lower than in the private sector, like teaching at elementary school,” said Chris Hicks, an organizer with Jobs With Justice.

People who work for nonprofits, shown in the chart as 501(c)(3), are the second-biggest group in the program. And though the Department of Education says it doesn’t have data showing exactly what they do, a chunk of them are doctors working at nonprofit hospitals. 

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Jobs With Justice

The Education Department says that doctors, for example, will make larger payments on their loans as their salaries increase and may have already paid off most of the debt by the end of the 10 years.

Actually, the program is much less expensive for taxpayers than it could be, covering a fraction of the borrowers who are potentially eligible for relief, as Krista Eliot's experience suggests. The Government Accountability Office has said that as many as four million people may be eligible for the program. Around 308,000 people were approved to be in the program as of October – 8 percent of the total who are potentially eligible, according to the GAO. The GAO reported in August that the Education Department had failed to set clear expectations for how its loan servicers should proactively tell borrowers about the program. 

Even people who managed to get into the program are probably not going to get relief, the data show. About one in four people who believe they are working toward debt relief are not actually in repayment plans that allow them to cancel their debt, or will repay their loans before the government has the chance to forgive them.