The Unmet Promise of Public Service Loan Forgiveness and How to Fix It

According to new data obtained by Jobs With Justice Education Fund, only 1 percent of potentially eligible borrowers are currently enrolled in the U.S. Department of Education’s Public Service Loan Forgiveness program. More than 33 million Americans, including teachers, emergency personnel, social workers, and those employed at nonprofit organizations stand to benefit from the program, but are missing out on tens of thousands of dollars in relief, simply because the Education Department and loan servicers have failed to promote the program at a basic level. This brief provides analysis of the enrollment data, as well as potential solutions to the under-enrollment and misinformation that has kept borrowers from realizing the benefits of Public Service Loan Forgiveness.

BRIEF: The Unmet Promise of Public Service Loan Forgiveness and How to Fix It

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CONTACT: Bailey Dick, bailey [at]
November 23, 2015

Washington, D.C. – New data obtained from the U.S. Department of Education show that nearly all of the borrowers eligible for one federal loan forgiveness program remain unenrolled. According to records obtained by Jobs With Justice Education Fund through a Freedom of Information Act request, only 1 percent of potentially eligible borrowers are currently enrolled in the department’s Public Service Loan Forgiveness Program. The findings can be read in the issue brief released today, “The Unmet Promise of Public Service Loan Forgiveness and How to Fix It.”

As of June 2015, only 335,520 borrowers were enrolled in the program out of the more than 33 million Americans employed in public service. The Department of Education data also includes a breakdown of the sectors in which enrolled borrowers are employed, which disproves claims that the program is predominately utilized by those employed by nonprofit organizations. Nearly two-thirds of those enrolled in the program are public sector employees like teachers, emergency personnel, social workers and civil servants.

Not only are 99 percent of potential enrollees currently unable to realize the benefits of total, tax-free federal student loan forgiveness, roughly one out of every four certified into the program are currently enrolled in repayment plans that undermine the benefits of the program or that do not qualify due to errors and misinformation provided by loan servicers.

“There has been a systematic failure by the Education Department, as the data we obtained confirms,” said Chris Hicks, Debt-Free Future organizer with Jobs With Justice. “Millions of people who stand to gain tens of thousands of dollars in relief are missing out on this benefit, simply because the Education Department and loan servicers have failed to promote the program at a basic level.”

Potential solutions based on analysis of the data are detailed in the brief, including robust, sustained and tailored outreach to borrowers; reforms to contracts of loan servicers who have failed to provide information about the program; and the creation of safe harbors for borrowers who have been misled by servicers about their eligibility.


It’s the time of the year when many similar stories surface announcing that this year’s class of graduating students will hold the most debt on record. Almost identical articles were written last year, and they will likely be written again next year.

Yes, the class of 2015 holds the unfortunate title of “most indebted class” and the numbers, as always, are frightening. More than 70 percent of students will graduate with debt, and those with debt will owe an average of more than $35,000.

This coverage brings attention to the challenges new graduates face in a post-collegiate life when saddled with so much debt. But by and large, these stories typically skim over, or fail to mention at all, who this debt is owed to and who has the power to address the student debt crisis. The answer might surprise you, as it’s the federal government – not Wall Street.

The U.S. Department of Education is responsible for roughly 85 percent of all student debt, issuing more than $100 billion in federal student loans every year, and owning about $1.1 trillion of the $1.3 trillion of outstanding student debt. The department currently holds enough assets to be one of the country’s 10 largest banks.

It’s a pretty lucrative business for them, as well. The Congressional Budget Office projects that the Department of Education will profit about $90 billion dollars off of student debt between 2016 and 2025.

Who else is profiting off of the most indebted class ever? The private contractors the Department of Education hires to service loans and collect on students’ debt. In 2014, Navient and NelNet reported earning $130 million and $124 million, respectively, off of these servicing contracts. In recent years, profiteering student loan servicers have come under greater public scrutiny for overcharging student debtors, failing to intervene in preventing student loan defaults, and discriminating against active duty servicemembers. Because of increasing criticism for failing to protect consumers from predatory servicers, the White House recently instructed the Department of Education to create solutions to these systemic problems.

As the chief lender, the Education Department has the means to offer considerable relief to the graduating class of 2015 and other student borrowers. Here are a few options:

  1. Notify all qualifying government workers and employees of non-profit organizations about Public Service Loan Forgiveness. This program allows men and women employed in the public service to have all of their federal student debt canceled after 10 years of payments (assuming they meet all qualifications of type of loan, repayment plan, and hours worked). This notable program is meant to incentivize a career in the public service. But out of the 33 million people estimated to be eligible for enrollment, only 222,000 are currently enrolled as of March 2015.
  2. Cancel illegitimate debt, like the debt accrued by 500,000 former Corinthian College students. Last month, Corinthian Colleges, the for-profit chain that includes campuses such as Heald College, announced that it was immediately shutting down over the weekend, leaving 16,000 of then-current students with boarded up campuses on Monday morning and without a degree and with millions in outstanding debt. Under federal law, if a student’s school closes, all of their debt should be canceled. Though it is within the department’s legal authority to cancel the debt owed by Corinthian College students who were wronged by the now bankrupt for-profit chain, it has yet to do so.
  3. Promote income-driven repayment plans that minimize how much student debtors are required to pay every month, rather than letting them slip into default. Depending on one’s income, borrowers enrolled in income-driven repayment plans can pay as little as $0 a month. Too many borrowers are unaware and uninformed about this lifeline program, and the consequences of falling behind on loan payments are devastating. Entering into default allows an individual’s wages, tax returns and social security to be garnished, and in many states can cause individuals to lose their professional licenses.

Millions of graduates are grappling with major life decisions tied to their debt—whether they can relocate or must live with their relatives, afford to buy or lease a car, take a meaningful job or a higher paying one that will allow them to better repay their debt. Without needing to rewrite any rules, the Department of Education can rewrite this new normal. Through these simple actions, the department can provide millions of graduates of the “most indebted class” and their families a fresh financial start and a real chance at building a great life without their student debt holding them back.

For the more than 40 million student debtors who, on average, owe $30,000, keeping up with bills every month is next to impossible. In fact, new data released by the Department of Education shows that nearly a third of all student debtors with federal student debt are behind on their bills. As we’ve reported in the past, in at least 22 states, it can get even worse, because there are laws on the books to revoke professional and driver’s licenses for people who default on their student debt.

We helped expose these unjust and punitive laws earlier this year, inspiring a flood of media attention and a wave of efforts to repeal them across the country. In Montana, we partnered with the Montana Organizing Project to build momentum around a bill introduced by state representative Moffie Funk and co-sponsored by state representative Daniel Zolnikov that will repeal one of these laws. The bill was able to gain bipartisan support due to our efforts and recently passed both the State House and Senate, and has just been signed by Governor Steve Bullock.

Montana is the first state to officially reverse course and decriminalize student debt, but others have begun to follow its example. For the tens of thousands of student debtors that lose their ability to work and effectively repay their student debt, this is an immediate solution to a problem that never should have existed in the first place.

“You’re making criminals out of people who, for a multitude of reasons, have defaulted on their student loans,” Representative Moffie Funk told Bloomberg. “It’s so punitive and so demeaning.”

Repealing these state laws that criminalize student debt is crucial. Taking away someone’s ability to work or drive doesn’t make it easier to pay off their student debt, but it doesn’t just hurt the debtor. The workers that are being impacted by these laws are often integral members of our communities, keeping hospitals and elementary schools running.

Rather than punishing those struggling to pay off their debt, Jobs With Justice’s Debt-Free Future campaign aims at finding solutions for debtors and putting them on a path toward debt-relief through flexible repayment options and forgiveness programs like income-driven repayment and Public Service Loan Forgiveness. Of the projected 33 million workers eligible for Public Service Loan Forgiveness, only 133,000 workers are currently enrolled in it. Imagine if all of these nurses and teachers who had received letters in the mail saying they were losing their licenses had instead received notices that they could actually have their student debt forgiven. Imagine if the eight million student debtors currently in default and having their wages, social security and tax returns garnished had instead received information about tying their monthly payment to their incomes to make payments affordable.

Montana has taken a huge first step in the process of ending our criminalization and punishment of student debtors. Hopefully the remaining 21 other states with these laws will follow suit.

Fifteen former students have launched the first-ever student loan debt strike in U.S. history.

The strikers, dubbed the “Corinthian 15” after the now-bankrupt network of for-profit schools they attended, announced the strike with a simple message directed at the Department of Education:

“We owe you nothing.”

Last year, Corinthian Colleges, the for-profit chain that includes campuses such as Everest University, announced that it was facing bankruptcy and would shut down. Under federal law, if a student’s school closes, all of their debt is forgiven. But because of the Department of Education’s well-documented botched handling of Corinthian’s bankruptcy, tens of thousands of former students may be left with outstanding, illegitimate debt that they are required to pay off.

To avoid having 72,000 students suddenly without a college after Corinthian announced its plans to file for bankruptcy, the Department of Education brokered a deal that supplied Corinthian with enough federal funds to stay open until Corinthian sold 56 of its 107 campuses to ECMC, an agency that is contracted by the department to collect debt on defaulted federal student loans and has no experience running educational institutions.

While Corinthian was in the process of trying to find a buyer, the company continued to enroll new students – knowing full well that it was going out of business. Likewise, for four years after problems at the company surfaced, the Education Department continued to funnel federal student loans to these new students, and ultimately issued $1.4 billion dollars each year, fully aware the school would be shutting down and that these student debtors would struggle to ever repay the loans. In order to avoid scrutiny and risk losing access to federal student aid, Corinthian had openly manipulated the default rates on federal student loans and misled tens of thousands of students into taking on student debt that it knew many were unable to repay.

The Consumer Financial Protection Bureau, after years of investigating the company, ultimately sued Corinthian Colleges for the company’s predatory lending practices, evidenced through a variety of schemes to falsify job placement rates, including defining “career” as a job that lasted at least one day, paying employers to hire their graduates, and providing “career counseling” that amounted to forwarding job postings from websites like Craigslist. In addition to the lawsuit, the Consumer Financial Protection Bureau ordered that for a sale of the Corinthian-owned colleges to be completed, ECMC would have to forgive $480 million of private student loan debt issued to students, reducing each debtors’ private student debt by about 40 percent. While the Consumer Financial Protection Bureau took measures to ensure a substantial debt relief was provided, the Department of Education has failed to do the same.

And that’s where another federal law comes in. Not only is the department required to cancel the federal student debt of those who have their schools close, but the Higher Education Act requires them to implement plans to cancel student debt when colleges commit fraud against students and former students – fraud that would include promoting misleading job placement rates, for example.

By propping up Corinthian Colleges until it could secure a buyer, the federal government has effectively ensured that tens of thousands of students won’t be able to access the loan forgiveness guaranteed by federal law. Strike Debt (the organizers behind the Corinthian 15) has received reports that even the students that attended schools that were shut down are being bullied into signing away their right to a refund.

By launching this student debt strike, the Corinthian 15 have put the department on notice that it will not get away with charging tens of thousands of student debtors for illegitimate debt.

The department has failed to publicly put together any plan to notify debtors about their right to drop their debt. Without this historic student debt strike, it’s likely the federal government ever would. And since announcing the debt strike, hundreds of former Corinthian students have reached out to the strikers and the Debt Collective hoping to join the strike and have their illegitimate debt canceled.

This strike isn’t just about Corinthian Colleges and isn’t just about for-profit colleges and universities; this strike is about the Department of Education, along with its contracted student loan servicers and debt collectors, that rake in billions of dollars in profits every year at the expense of 40 million student debtors.

We are proud to stand in solidarity with the Corinthian 15 as they display steadfast bravery and leadership in taking on the Department of Education. These debtors have continued to stand up and strike despite facing serious consequences, including have their wages, tax returns, social security and disability payments garnished. To stand up to the department means to stand against the entire student debt system, and it’s important that the Corinthian 15 don’t stand alone.

Last Friday, the Department of Education made a huge announcement that it’s cutting contracts with five private companies it had hired as debt collectors on defaulted student loans.

For years, Jobs With Justice has worked closely with our allies, including the Student Labor Action Project, US Student Association, and the American Federation of Teachers, to call for the termination of these contracts. We’ve held meetings with Secretary Arne Duncan, organized a massive petition drive to demand the agency cease to contract with lawbreakers, and even commissioned a research report suggesting alternative solutions to the government’s outsourcing of student loan management to private companies. Why? Because we hear from countless student debtors year after year whose ability to manage their debt is left in the hands of the greedy financial companies that manage their federal student loans. What’s worse is that despite repeated pleas from elected officials and even their own Inspector General, the Department of Education continues to shirk its responsibility in overseeing its contractors and protecting debtors who struggle to get accurate information about their loans. While the department still holds loan servicing contracts with many of these questionable companies, Friday’s announcement to cut the debt collection contract with Pioneer Credit Recovery (which is owned by Navient, formerly a division of Sallie Mae) is a tremendous first step by the government toward reining in its contractors – especially given that the department had previously laughed off complaints about these debt collection contracts.

We’ve often heard of the terrible treatment debtors receive at the hands of these debt collectors, ranging from garnishing Social Security payments to categorizing and punishing debtors as being in default even when they were making payments. Thankfully, thousands of debtors will now have their accounts handled by the U.S. Treasury Department, not another for-profit debt collector looking to make a profit off of their loans. Because the Treasury Department won’t be working for commissions like federally contracted student debt collectors still are, debtors will be able to expect fairer treatment and not have to worry about the department violating federal laws.

The Department of Education announced the termination by citing that, “the companies made materially inaccurate representations to borrowers about the loan rehabilitation program, which is an option that can create benefits to defaulted borrowers after they have made nine on-time payments in a period of 10 months. The five private collection agencies… were found to have given inaccurate information at unacceptably high rates about these benefits. In particular, these agencies gave borrowers misleading information about the benefits to the borrowers’ credit report and about the waiver of certain collection fees.”

This is critical victory in our campaign to hold the Education Department and these large financial institutions accountable for their role in the student debt crisis, and of course, for student debtors nationwide. As we’ve reported, defaulting on a student loan can have serious repercussions for a borrower, so cutting the contract with these debt collectors helps ensure that struggling debtors will actually receive the assistance and counseling they need to rehabilitate and eventually pay off their loans without any additional barriers to worry about.

Department of Education Undersecretary Ted Mitchell agreed:

“Every company that works for the Department must keep consumers’ best interests at the heart of their business practices by giving borrowers clear and accurate guidance. It is our responsibility – and our commitment – to uphold the highest standards of service for America’s student borrowers and consumers.”

We hope that Undersecretary Mitchell stands by what he says. If it is the department’s commitment to uphold the highest standards of service, then a hard, critical look at the companies holding student loan servicing contracts should absolutely be next.

Jobs With Justice thanks all of the student debtors, legislators, community members, workers, activists and other allies who made this happen. The long road to government and corporate accountability still stretches far ahead of us, but we’re thrilled to have this victory along the way.

Ori Korin 202-393-1044 x126 or

Washington, D.C. — Following years of pressure from borrowers, legislators and activists and growing outrage over mishandling of information, the U.S. Department of Education announced late yesterday that it would be terminating its debt collection contracts with five private collection agencies, including Pioneer Credit Recovery, owned by former Sallie Mae subsidiary Navient. Jobs With Justice’s Debt-Free Future organizer Chris Hicks called the decision a huge victory for the campaign, and for struggling borrowers:

“We are relieved to hear that the Department of Education has taken the first step to protect borrowers struggling to pay off their debt, and toward holding their contractors accountable. Pioneer, which is owned by giant student loan servicer Navient, is being paid millions of dollars by the Department to collect on student debt, yet borrowers are facing inaccurate records, misleading information and terrible customer service. Finally, the government is looking out for taxpayers’ interests, not Navient’s.

We hope this level of oversight will soon be extended to student loan servicing contractors as well. With record-high default rates and a growing number of borrowers not being informed about available flexible repayment options, it’s high time someone reign in these companies getting rich on the backs of people trying to achieve an education.”

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UPDATE 5: Since 2019, three additional bills have passed, including in Georgia (HB 42), Louisiana (HB 423), and Texas (SB 37). 

UPDATE 4: During the 2019 state legislative cycle, Kentucky (HB 118) passed a law to end the practice of revoking someone’s professional license if they defaulted on their student loans.

UPDATE 3: During the 2018 state legislative cycle, Alaska (SB 4), Illinois (IL SB 2439) and Washington (WA HB 1169) passed laws to end the practice of revoking someone’s professional license if they defaulted on their student loans.

UPDATE 2: During the 2017 state legislative cycle, OklahomaNew Jersey and North Dakota passed laws to end the practice of revoking someone’s professional license if they defaulted on their student loans. 

UPDATE: In April 2015, Montana Governor Steve Bullock signed HB 363 to decriminalize student debt and end the practice of revoking someone’s driver’s license if they went into default.

In at least 22 states, your student loan debt could wind up costing you more than your monthly bill – it could cost you your job.

Across the country, a growing number of jobs don’t just require a college degree, but also a professional license or certificate. These jobs come in all shapes and sizes, ranging from K–12 teachers and nurses to electricians and barbers. It’s now projected that nearly 30 percent of jobs legally require you to have a state-issued professional license in order to perform them.

Not surprisingly, jobs that require licenses or professional certificates often also require a college degree. But as affordable higher education has become less and less accessible, an increasing number of students are forced to take out loans to cover the cost of their education. Take the graduating class of 2014 as an example: more than 70 percent of students took out loans to cover the cost of their education, and on average, they owe $33,000 upon graduation. (Never mind the students who took on debt but didn’t end up graduating).

Meanwhile, instead of helping struggling borrowers, many states are making it even harder to get out of debt. In at least 22 states, the government will revoke your professional license if you are unable to pay off your student loan debt.

These state laws target a wide range of professions, including attorneys, physicians and therapists – even barbers make the list. But two professions show up over and over again: nurses and teachers.

Both professions serve a critical role in our communities and are often wildly underpaid. Are we really in a position to be punishing the people we need the most?

In Alaska, California, Florida, Georgia, Hawaii, Illinois, Iowa, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Montana, New Jersey, North Dakota, Oklahoma, Tennessee, Texas, Virginia and Washington, nurses and health-care professionals can all be locked out from their job if they fall into default on their student loans.

In Georgia, Hawaii, Iowa, Louisiana, Massachusetts, Montana, New Jersey, North Dakota, Oklahoma and Tennessee, laws prevent K–12 teachers from working until they begin to repay their student loans.

And while last month I reported that two states would suspend your driver licenses if you default on your student loans, I’ve since learned that Oklahoma will do the same as well.

In addition to these punitive measures, the fact is that our economic reality can’t keep up with the increasing levels of debt in this country. The amount of debt borrowers incur to get their degrees is skyrocketing, but the wages they’re earning once they graduate (if they’re lucky enough to find a job) aren’t keeping pace. Adjusting for inflation, the average student debtor with federal student loans owed 28 percent more in 2013 than in 2007, while the typical holder of a bachelor’s degree working full time experienced a 0.08 percent decrease in weekly earnings during that same period. So borrowers owe more and make less. It’s no surprise that federal student loan defaults remain at historically high levels of 13.7 percent for the class of 2011.

In President Obama’s 2015 budget, Department of Education data forecasts that the situation could get worse in coming years, with 25.3 percent of all undergraduate Stafford loans issued next year defaulting at some point during the borrower’s repayment term. The projected increase in defaults comes just two months after a December 2014 report by the Department of Education’s Office of the Inspector General indicating that the department lacks a comprehensive plan to curb student loan defaults.

But these states laws aren’t actually an incentive to get workers to pay back their student loans –- they’re just a punishment for workers that don’t prioritize paying back their student loans over things like groceries, rent, health care and school supplies for their children. Losing the ability to drive or work won’t help anyone pay back their student debt – it’s really just serves as a modern-day debtor’s prison.

Thankfully, we are seeing some states begin to move toward righting this wrong. Montana has now introduced legislation to repeal these laws in an effort to stop punishing student debtors whose professional and economic situation makes it increasingly difficult to repay their debt. The question is: will other states join them?

For the millions of Americans drowning in debt, non-payment is not an option, and student debt is the worst kind of debt to have. As Senator Elizabeth Warren once remarked, the powers of student-loan debt collectors “would make a mobster envious.” If you’re a company that holds student debt, on the other hand, not paying what you owe is apparently not a big deal.

One of the largest student loan servicing and debt collection companies is actually in debt too. Navient (formerly a division of Sallie Mae) – the same company that harasses borrowers when they default on their loans – owes the U.S. Department of Education, but it seems that no one is collecting. More than five years ago, the federal government discovered that Sallie Mae – a company it contracted with to service student loans and collect on students’ debts – owed taxpayers $22.3 million because of government overpayments. An audit by the Department of Education eventually determined that Sallie Mae had extracted the money by abusing a federal program intended to help smaller lenders and ordered that the debt be repaid immediately. After years of not repaying this debt, Navient spun off from Sallie Mae and agreed to be responsible and indemnify all claims, actions, damages, losses or expenses priorly held by Sallie Mae.

Navient – the same company that harasses borrowers when they default on their loans – owes the U.S. Department of Education, but it seems that no one is collecting.

But to date, the Department of Education has yet to collect on the $22.3 million Navient owes them, despite their impressive track record in recouping debt from the millions of Americans who borrowed money to afford college. In fact, they haven’t even tried to recover the money. That got us thinking: What if Navient’s $22.3 million bill was treated the same way as a student loan by the Department of Education?

The truth is, Navient would actually owe the federal government a lot more than $22.3 million. In 2009, the interest rate on student loans was 5.6 percent and 6.8 percent for subsidized loans and unsubsidized loans respectively, with a 1.5 percent origination fee. So taking interest into account, the Department of Education would rake in an extra $8,964,463.53 (calculated here), but that’s only if Navient made all of their payments on time over 10 years.

But Navient hasn’t made any payments. In other words, Navient is in default on their Department of Education loan. And if Navient were a normal borrower, that default would mean it would no longer be eligible for federal financial aid, and many states would cut off any aid until it started paying back this debt as well. This would have a big impact on Sallie Mae and Navient (a former division of Sallie Mae), which benefited from the $5.6 million in grant money it got last year to renovate their offices in Delaware and received $5.1 million for housing its offices in the state back in 2011. For many students trying to go back to college, losing grants would put their educational dreams on hold.

And of course, if the Department of Education were to hold Navient accountable like it does other student debtors, it would make sure that creditors knew Navient wasn’t paying back their loan. Right now, Moody’s credit rating for Navient is “Ba3” – which means that they already have significant credit risk. What would it be if they knew that Navient hadn’t paid back this debt, though? Navient could quickly find itself as a high credit risk (just one below their current rating), and it would suddenly become much harder for Navient to get others to issue them credit, which in turn would impact investors’ choices about their shares of the company, just like a low credit rating can hurt a debtors’ chance of getting access to other forms of credit.

The Department of Education could also use its power to garnish Navient’s income, for example the $154,416,751 the company was paid by the department in 2014 alone. The department can actually take up to 15 percent of a defaulted borrower’s disposable pay, which, in this case, would nearly cover the entirety of the debt Navient owes. Undoubtedly, this would rattle the company’s board of directors, which is tasked with guiding Navient toward financial success. They’d probably have some tough questions for management about why this was happening, questioning their fiscal responsibility, the same way many media pundits and politicians question student debtors’ fiscal responsibility when they default.

Furthermore, when you default on your loan with the Department of Education, you end up owing a lot more above the original amount you borrowed. In fact, “loan debt will increase because of the late fees, additional interest, court costs, collection fees, attorney’s fees, and any other costs associated with the collection process.” Many debtors see their interest rate go above 25 percent once they’re in default, and up to 40 percent of the principle can be added in as a fee or penalty for default. This unpaid debt would quickly become very expensive for Navient, the same way it does for so many individual borrowers.

But of course, Navient doesn’t get the same default treatment from the Department of Education. This isn’t how the agency treats one of its largest debt servicers and collectors… just regular student debtors struggling to pay back their loans. This nightmare is a reality for the 7 million Americans who are in default on their federal student loans, and it’s why some of the best and brightest high school students aren’t going to college. It’s yet another example of the Department of Education’s complicit role in the student debt crisis and calls into question who the department is serving – “too-big-to-fail” financial institutions or those who are trying to get a college education.

Tonight, during his State of the State address in New York, Governor Andrew Cuomo will highlight his “Get on Your Feet Loan Forgiveness” proposal, a program that would mandate that the state of New York cover certain borrowers’ student loan payments the first two years out of college. Any New York resident that attends a New York college, earns less than $60,000 a year and is enrolled in the “Pay as You Earn” repayment plan would be eligible, regardless of employment. This is a groundbreaking program that could help tens of thousands of student debtors as they enter a still rebounding labor market, move to a new city or begin navigating the overly complicated labyrinth of repayment plans offered by the Department of Education.

Aimed at curbing financial hardship for workers with student debt, a program like this could have an immediate impact on thousands of student debtors. The income gap continues to grow, with student debt often cited as one of the leading causes, since borrowers are sacrificing huge chunks of their paychecks to pay back loans. It’s no surprise that those with student debt are more likely to also carry credit card and auto-loan debt than their debt-free counterparts, since they’re generally struggling to make ends meet. A program that helps to ensure workers just entering the labor market are able to hold onto their paychecks protects recent graduates from relying on the “Plastic Safety Net.”

As an added bonus, Governor Cuomo’s proposed program would also help boost enrollment in federal income-driven repayment plans, which are currently only being minimally utilized. “Get on Your Feet Loan Forgiveness” only works for those in “Pay as You Earn,” a federal repayment plan championed by President Obama. Unfortunately, the Department of Education, and its contracted servicers like Navient, have failed to promote and enroll eligible borrowers into this program. Similarly, New Yorkers benefiting from Governor Cuomo’s program might also discover that they’re eligible for “Public Service Loan Forgiveness,” which forgives your federal student loans after 10 years of on-time payments. This would provide many borrowers a great start toward reaching that 10-year mark, starting them off two years closer to being debt-free.

This proposal helps more than just workers and student debtors, too. Colleges and universities whose borrowers have consistently high default rates lose access to federal financial aid, a death sentence in terms of financing and enrollment. By covering certain borrowers’ student debt payments for the first two years out of college, New York is also protecting its colleges from this risk.

This isn’t the first program that would ensure that workers can pay off their student debt with as little hardship as possible. In Denver, Colorado, elementary, middle school and high school teachers that are members of the Denver Classroom Teachers Association bargained contracts with the Denver Public Schools to include student debt relief in their benefits package. In New York, Governor Cuomo’s proposal could provide other workers leverage to negotiate similar employment contracts, especially since the program itself only applies to a limited number of borrowers.

Student debt has become a macroeconomic issue, creating ripple effects throughout our entire economy. Millions that made the decision to go to college in order to find good jobs, give back to their communities and live the American Dream have found themselves living on the brink as their debt eats away at their paychecks. Many are unable to buy cars, secure housing, and in some instances, even find jobs. Hopefully, the New York proposal will prompt more states to consider offering sensible student-debt solutions.

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