WASHINGTON — More than 33 million workers qualify to get their student loans forgiven because they work in schools, hospitals or city halls, but too few take advantage of the options because the programs are overly complicated and often confusing, the government’s consumer advocate said on Wednesday.
Roughly a quarter of the workforce could take advantage of federal rules that give favorable loan repayment options to those in public service fields, including the military, according to the Consumer Financial Protection Bureau. The agency recommended Congress review the loan forgiveness programs and encouraged employers to make sure their workers know they are available.
“Teachers, soldiers, firefighters, policemen — public sector careers invariably involve some effort, some inconvenience or some sacrifice. People give up higher incomes to serve their city, their state or their country,” said Richard Cordray, bureau director. “We believe that people who contribute part of their talents, part of the benefits of their education, to society as a whole should not be mired in debt because they stir themselves to the calling of public service.”
Student loan debt has topped $1 trillion, the consumer advocate estimates, and has been a drag on the economy as recent graduates are forced to choose between paying down their loans and buying a house or a car. That sends millions of dollars to lenders instead of keeping that cash in the local communities.
For many graduates, there are multiple programs in place to ease the financial burden of taking lower-paying jobs to help their communities. But the system is fraught with complications, and a firm number of how many graduates could benefit is hard to come by.
“The data is quite weak in this area. We don’t have a sense of how much money is left on the table,” said Rohit Chopra, the bureau’s student loan ombudsman. “But we suspect it’s a substantial sum.”