Student Loan Deal May Have Unintended Consequences
Career College Central summary:
A government program designed to help students deal with crushing debt loads could have the unintended consequence of encouraging some students to borrow more – and some schools to charge more – than they would have otherwise.
Under the public service loan forgiveness program, if you make payments on your federal direct student loans under certain payment plans for 10 years while you are working for a government or nonprofit employer, after 10 years any debt remaining will be forgiven.
About one-quarter of U.S. workers are in public service jobs that might qualify, according to the Consumer Financial Protection Bureau. But if you are working at a government agency or nonprofit as a contractor through a private-sector company, you do not qualify, says Lauren Asher, president of the Institute for College Access & Success.
There is no limit on the amount of debt that can be forgiven. The biggest winners are those who attend expensive graduate and professional schools. That's because there is a limit on the amount of federal student loans undergrads can take out each year. Dependent undergraduates who take out the maximum allowable Stafford loans will leave school with about $32,000 in qualifying debt. (Their debt will be higher if they also took out Perkins loans, but most students don't qualify for them.)
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THE SAN FRANCISCO CHRONICLE