Forgiving college loans for graduates who take “public service” jobs is a bonanza for borrowers and a rapidly growing cost for taxpayers, writes Jason Delisle on Brookings’ blog.
Thirty percent of those using the Public Service Loan Forgiveness (PSLF) program borrowed more than $100,000 to finance graduate degrees; the median debt is $60,000.
They’ll pay a small percentage of their income for 10 years. Then the principal and interest will be forgiven.
In addition to working for the government, public service includes employment at a “non-profit organization with a 501(c)(3) designation, or another non-profit organization that does not have 501(c)(3) status but provides emergency management, public safety, or law enforcement services; health services; education or library services; school-based services; public interest law services; early childhood education; or public services for individuals with disabilities and the elderly,” writes Delisle. That’s a quarter of the workforce.
Graduate schools will be able to hike tuition for degrees that have little market value, he writes. Students will have no incentive to limit debt that they’ll never have to repay.