September 10, 2007
Congress Passes Bill to Forgive Student-Loan Debt for Some Charity Workers
By Suzanne Perry
Washington
Some charity workers would be able to get their student-loan debt forgiven under legislation that was adopted by both houses of Congress on Friday.
The provision — part of a package of measures to cut subsidies to student lenders and shift the money into student-aid programs — would allow borrowers to erase their loan balances after 10 years of payments if they have worked during that time in a “public service” job.
“Public service” is defined to include employees of nonprofit legal-advocacy groups and organizations recognized by the Internal Revenue Service as tax-exempt charities. It also covers government employees, public-school teachers, law-enforcement officials, and public-health workers.
The bill (H.R. 2669), a compromise between the House and Senate versions, is a victory for nonprofit groups and associations that were lobbying Congress to include nonprofit workers in the loan-forgiveness program. The original House version of the bill included them, but the Senate version did not.
The Nonprofit Sector Workforce Coalition — composed of more than 50 nonprofit groups, foundations, associations, and academic centers — argued that the provision would help attract workers to relatively low-paid nonprofit careers.
The loan-forgiveness program would be available to former students who participate in specific repayment plans outlined in the bill that take income into account. It would apply only to loans made directly by the federal government, although borrowers could reconsolidate other loans into federal direct loans to qualify for the benefit. The plan would apply only to loan payments made after October 1, 2007.
The bill now goes to President Bush, who has said he will sign it.
(For more on the effect of student-loan debt on charity workers, see this Chronicle article.)
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where do I get more information about who qualifies for this? Am I out of luck if I’ve been paying loans for the last 10 years while working in a public service job?
— candice becker Sep 10, 08:18 PM #
I am working as a missionary in the Philippines Will I be included? I work for a non-profit org and receive very little in compensation.
— Jack Wilson Sep 11, 02:43 AM #
I don’t understand the article: ‘in the House version of the bill non profit workers would qualify for debt forgiveness but ‘the Senate’s version’ “did not” (last sentence in the fourth paragraph). Yet, the article indicates that non profit workers will receive debt forgiveness. I don’t understand. Please clarify. Thank you.
— Arlene Spencer Sep 11, 12:23 PM #
Based on the sentence which says “The plan would apply only to loan payments made after October 1, 2007”, unless you’re currently a student receiving loan payments, you are out of luck, unfortunately. I wish they had this when I was still in school!
Arlene: before something becomes law, it is first introduced as two separate bills, one in the House and one in the Senate. The sentence you mentioned was referring to the original versions of these bills, which were then revised as legislators reached a compromise. This final version, which included debt forgiveness, was then passed. Hope that helps!
— Katie Sep 11, 01:04 PM #
I’ve reconsidered the first part of my comment, because I’m not sure if “loan payments” refers to “payments made to the lender by the borrower” or to “payments by the lender to the borrower.”
— Katie Sep 11, 01:17 PM #
You can read the legislation if you go to thomas.loc.gov (look under current legislation & search for H.R. 2669 (Part C Sec 428K)
— Jean Willaert Sep 11, 01:41 PM #
Fortunately, and unfortunatly, this bill is only for specific job titles such as early childhood teachers, foreign language specialists, librarians and nurses and covers up to $5,000. Please look a the bill H.R. 2669.
— Aishah Sep 11, 03:13 PM #
They should have at least went back for loans taken ten years ago, as I have been working in public service (gov’t employee and now as a non-profit employee) for over 15 years. I even considered teaching to get out of loan debt, but this require more education and in turn more loans.
— gartrell Sep 11, 04:30 PM #
Merci beaucoup! I am tres excited parce que I am an Education major at a state college, with a specialization in French.
— Christi Sep 11, 04:52 PM #
The current, federal Income Contingent Repayment plan for student loans, which does not require specific nonprofit or public service employment (so you could work for minimum wage anywhere and live with your parents, for example), scales according to income level and also has loan forgiveness at some point.
— Lori Sep 12, 07:17 AM #
The article seems misleading. Upon reading the text of the bill, it does seem rather narrowly defined by field of work. Moreover, it looks like it only applies to “new borrowers” after the law is adopted. So those of us who already have debt and work in “public service” are left out.
Also, it seems to cap out at a $5,000 of “forgiveness.” Anyone else catch that? A woefully small number considering the amount of graduate school debt many incur.
Lastly, the “finanical hardship” calculation appears to include your spouse’s income. So an MSW married to an MBA may be SOL. Is this correct?
— anne Sep 12, 03:05 PM #
Where can I get more information on this topic.
— Audrey Fontenot Sep 13, 08:12 PM #
I am in college now and i plan on opening up a non-profit when i graduate. Will i qualify for this loan forgivness program.
— joanna Sep 14, 12:54 PM #
I think some people are looking at the original version of the bill. The final version reflects the terms described in the article above and can be found at: http://www.govtrack.us/congress/bill.xpd?bill=h110-2669
— Seth Sep 14, 12:58 PM #
According to the Sept. 20 issue of “The Chronicle of Philanthropy” the provising allows “borrowers to erase their loan balances after 10 years of payments if they have worked during that time in a “public service” job defined to include employees of legal nonprofit legal advocacy groups and organizations recognized by the IRS as a tax-exempt charity.” It also includes government employees, public school teachers, law-enforcement officials and public health workers.” Also, nonprofit workers will have loan balances excused only if they partcipated in specific repayment plans outlines int he legislation and the benefit only applies to loans made directly by the federal government after October 1, 2007. YOU CAN RECONSOLIDATE other loans into federal direct loans to qualify. Thanks for posting the link to the final version, Seth. All should read it to stay current. There have been many versions of HR2669 floating around the Internet since its introduction in June.
— maria nicole Sep 20, 12:55 PM #
How can I found more information regarding this?
— Laura Sep 20, 03:42 PM #
The final version that was approved by both house and senate does not seem to have the $5,000 cap on forgiveness. Also, it does NOT state that the money must be borrowed after October 2007, only that the PAYMENTS will not apply towards 10 years of payments while working in a non-profit (defined closely, but opens up with the inclusion of 501©3. The question I have is: Will part-time staff working for a 501©3 in a minimal pay and minimal time commitment qualify for this forgiveness? We may end up with a flux of people clamoring for low paying positions very part time positions simply so they can claim they have worked for a non-profit during the ten years they were repaying their loan… unlikely, but possible… And is that a good thing, or a bad thing?
— George Sep 21, 09:59 AM #