Ok, it's actually pretty odd for me to be thanking Congress...but if you are a U.S. PhD student with loans you might be joining me on this thanks...well maybe you will. Check out the Federal Stafford Loan Plain Language Disclosure statement, Sallie Mae sent me mine.

19. Loan Forgiveness for Public Service Employees Program - Effective July 1, 2008, you may consolidate your FFELP loans into the Direct Loan Program to take advantage of the public service loan forgiveness program. This program provides for the cancellation of the remaining balance due on eligible Direct Loan Program loans after you have made 120 payments (after October 1, 2007) on those Direct Loans under certain repayment plans while you are employed in certain public service jobs.

A little more digging brought me to a list of "Public Service Jobs" taken from Federal Student Aid Loan Forgiveness for Public Service Employees (pdf).

Public Service Jobs: Eligible public service jobs are full-time jobs in the following fields:

• Emergency management
• Government
• Military service
• Public safety
• Law enforcement
• Public health
• Public education (including early childhood education)
• Social work in a public child or family service agency
• Public child care
• Public service for individuals with disabilities
• Public interest law services (including prosecution or public defense or legal advocacy in low income communities at a nonprofit organization)
• Public service for the elderly
• Public library sciences
• School-based library sciences and other school-based services
• Certain tax-exempt organizations
• Faculty teaching in high-needs areas, as determined by the Secretary
• Full-time faculty member at a Tribal College or University

Now at the moment there is no list I can find that explicates "high-needs areas" for faculty teaching but one can hope that something tech related will be on the list...so that those of us will skills will stay in academia rather than grab those higher paid jobs in industry.

So, assuming that there is something on the list that I qualify for, it's possible that after consolidating school loans and religiously making minimum payments for 10-years, the remaining portion of the loans could be forgiven....i.e. wiped clean. There are lots of questions still floating on this...so if this might apply to you - now or in the future - check out the following resources and stay tuned for the actual implementation regulations that are due out before the end of the year.

Federal Student Aid Ombudsman, Cancel or Discharge a Loan
Loan Forgiveness for Public Service Employment Checklist (pdf) (don't be thrown by the discussion of lawyers the basic list still works)

Additional Guidance and Implementing Regulations: The Department of Education will publish regulations to implement the Loan Forgiveness for Public Service Employees Program after providing an opportunity for public comment in accordance with legal requirements. Those regulations will be issued by November 2008.

Also check out:

Schrag, Philip G (2007). Federal Student Loan Repayment Assistance for Public Interest Lawyers and Other Employees of Governments and Nonprofit Organizations. Hofstra Law Review, 36(27). Available at http://www.law.georgetown.edu/news/releases/documents/Forgiveness_000.pdf

Abstract: The problem of high monthly repayment obligations for educational debt has long plagued students, particularly graduate and professional students who desired lower-paying public interest careers. Congress has recently responded very positively. In the College Cost Reduction and Access Act (“CCRAA”),1 Congress has made it possible for high-debt, lower-income graduates to manage debt repayment through an “income-based repayment” plan.2 In addition, Congress has created a new program through which public servants—including all government workers and all employees of all nonprofit organizations that are tax exempt under §501(c)(3) of the Internal Revenue Code—are entitled to have a substantial portion of their educational debt forgiven after making modest repayments during ten years of full-time employment .3 Together, these two new programs will enable student borrowers to choose their careers without being unduly influenced by their debt burdens and will enable governments and nonprofit organizations to retain talented professionals who would otherwise be forced to resign after two or three years and seek higher-paying jobs so that they could repay their student loans. This Article describes how the new law will apply to graduates serving in public interest jobs (including those who have already graduated and those who will graduate before the law goes fully into effect). A major purpose of this Article is to help students and high-debt/low-income graduates understand how the new law may help them in their career and financial planning. This Article proposes changing current income tax rules to exempt the forgiveness that the new law provides for public servants.

Apparently, under current tax law, the year the debts are forgiven the amount forgiven would count as taxable income. So at minimum some serious planning is required prior to using this outlet...but hey I'm pretty good at planning.

Posted by prolurkr at July 8, 2008 06:58 PM

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