TOPICS
TOPICS
Obama calls for loan forgiveness for public service, transparency
In a State of the Union address that ranged from job creation to education reform, President Obama also called for restoring trust in government, streamlining the federal budget, and extending debt forgiveness to students who spend 10 years in public service careers.
Saying "no one should go broke because they choose to go to college," Obama proposed a program that would limit student loan payments to 10 percent of an individual's income and forgive their entire debt after 10 years of public service.
The president acknowledged that challenges exist for those who pursue public service.
"We face a deficit of trust -- deep and corrosive doubts about how Washington works that have been growing for years," Obama said. "To close that credibility gap we must take action on both ends of Pennsylvania Avenue to end the outsized influence of lobbyists; to do our work openly; and to give our people the government they deserve."
Obama's student loan debt forgiveness proposal could be an extension of an existing program, the 2007 College Cost Reduction Act, which took effect in July 2009. That law allows students to pay off federal loans or loans backed by federal guarantees at rates tied to their income, and have those loans forgiven after 10 years of public service in all levels of government and 501(c)3, or nonprofit, organizations. The program does not apply to private loans.
Rep. John Sarbanes, D-Md., who wrote the public service provisions of the loan bill, said he was glad Obama had highlighted the loan forgiveness program.
"I am proud that this program will help students follow their dreams of public service without burdensome education debt."
In a conference call with reporters before the speech, administration advisers said the address also would include new government transparency initiatives. Obama called for new rules requiring lobbyists to disclose their contacts with executive branch officials and Congress, and for limits on their campaign contributions. He recommended that Congress create a central Web site to track earmark requests. But he did not address some of the transparency promises of his presidential campaign, including posting legislation online or his administration's efforts to use technology to clarify government processes for the public.
Obama made little mention of government management, though he did condemn delays in the Senate confirmation process, saying "the confirmation of well-qualified public servants should not be held hostage to the pet projects or grudges of a few individual senators." He alluded to reorganizations of the Justice Department's Civil Rights Division and modernization efforts at the Veterans Affairs Department.
The president also emphasized the need to cut government spending. In addition to the limited spending freeze his administration announced earlier in the week, Obama said his administration had already identified $20 billion in savings. "Like any cash-strapped family, we will work within a budget to invest in what we need and sacrifice what we don't. And if I have to enforce this discipline by veto, I will."
COMMENTS
- The Bush public service forgiveness program is very unfair. Let's take a hypothetical individual with a PhD, and about $80,000 in loans, who takes a position with the Government Accountability Office, which is defined as a public service because it is a government agency. GAO has big loan repayment benefits, and then at the end of the 120 months they're forgiven anyway, all while the person in question has been on a salary of around $70,000 to $110,000 a year. Now, let's take that same individual, same debt, going into a tenure track position at a private university. Salary is about $60,000 to start, rising to $80,000 over the period. Lower pay, smaller raises. No loan payment benefits. And no public service forgiveness, because the employer fails to meet the very arbitrary "public service" definition. Now, take the same scenario and apply it to other quirks and inconsistencies in the regulations, often leaving adrift people on much lower salaries even than the tenure track prof, while the GS-13 or 14 federal salaried person makes out like a bandit despite having taken the job at least in part to avoid direct service to members of the public. That's BS. It's a program to juice up federal and state employees and satisfy interest groups, not to reward public service in general. And while Obama modestly improves the program, he still doesn't address many of these Bush-era unfairnesses in it. The best thing coming out of the Obama administration is proposals that will dramatically lower the cost of student loans for everyone. But unfortunately the financial services industry -- which will lose commissions from the changes -- is close to successfully buying off Senators to vote against the proposals. Once again, special interests get rewarded, general interests get sunk. DBX Posted February 5, 2010 2:56 PM
- Unfortunately, this bill, like many of the others, doesn't benefit the people who didn't over indulge themselves with student loans. 10% of my income over 10 years against the total student loan debt I have incurred will pay off my loans without government help. Obama, you're making me want to re-enroll half-time just so I can rack up my debt and actually see a benefit. Student in Public Service Posted February 3, 2010 3:36 PM
- my student loans are around 200k. spent 7 years becoming a doctor. would love it if i could actually find a job. received student loans Posted February 3, 2010 2:16 AM
