Smart Borrower Blog

Student Loan Forgiveness on the Chopping Block

An article in the New York Times    today put fear into the hearts of many people trying to get their student loans forgiven.
Basically all across the nation, programs designed to entice people into low-paying but very important jobs like teaching and community health are being cut or reduced due to the current volatile economy and less government aid.

The Times quoted Tracey L. Bailey, director of eduction policy for the Association of American Educators:

"You're going to diminish the quality of the candidates who are thinking, ‘Do I take my skills in math and science into industry or do I take them into the classroom?'" she said.

Here’s who’s cutting back:

• The Kentucky Higher Education Student Loan Corp. has stopped making loan repayments for people who have already finished their eduction.
• The New Hampshire Higher Education Loan Corp. has stopped offering loan repayment aid for teachers.
• The Pennsylvania Higher Education Assistance Authority has suspended its loan help for nurses and active duty military.
• Iowa Student Loan capped amounts available to students becoming teachers and certain types of nurses.
• The Missouri Higher Education Loan Authority will no longer offer reduce interest rates for those going into teaching and firefighting.

There are still some agencies offering loan repayment assistance, including programs in the states of New Mexico, New Jersey, and New York.   Plus the federal Education Department offers a loan forgiveness amount of $17,500 for anyone going into math, science, or education teaching after they have work for five years in a low-income area.

But… for those who are unwilling to move to one of those states or follow the federal program guidelines, teaching, nursing, and certain other community service-based jobs may start to be even less attractive. Bottom line, we could be seeing shortages in these key professions in the coming years. Hopefully by that time, things will have picked up in the economy so that the government can once again offer incentives to get people back in these jobs.