Undermining a New Effort to Promote Public Service

Is the U.S. Department of Education deliberately trying to undermine a new program created by Congress to encourage students to pursue careers in the public service?

That question came to mind as we reviewed the Education Department's proposed regulations for enacting the Public Service Loan Forgiveness program that Congress created in September as part of the College Cost Reduction and Access Act (CCRA).

Under the program, the federal government will forgive the remaining debt of Direct Student Loan borrowers if they make 120 payments on their loans while holding a low-paying, full-time public service-oriented job. Borrowers with loans through the competing Federal Family Education Loan program can take advantage of this benefit by consolidating their debt into Direct Lending.

The program is a reaction to reports that student loan borrowers are increasingly shying away from pursuing public-service careers, such as teaching and social work, and is designed to provide incentives to get college graduates to enter these fields and reward them for their service.

But don't take our word for it. Listen to what Rep. John Sarbanes (D-Md.), one of the authors of that provision, had to say about the program last fall. "With daunting student loan debt, there is not enough incentive for new graduates to choose a life of public service," he said in a news release touting the CCRA's passage. "This will make it easier for many graduates to pursue a career of service."

In the same news release, Rep. George Miller, the California Democrat who was the CCRA's primary author in the House of Representatives, echoed Sarbanes' remarks. "This bill rightfully encourages and rewards the vital public service members of our workplace," he stated.

Sounds pretty straightforward, right? So imagine our surprise when we learned that the Department doesn't intend to let people know whether they qualify for the loan forgiveness until after they have made the 120 required payments. In other words, borrowers working at low-paying jobs will have to wait at least 10 years to find out whether or not they are eligible for the new benefit. What kind of incentive is that? It's hard to imagine people rushing to change their career plans as a result of the law without having some guarantee that their remaining debt will be forgiven.

Our colleagues at the Project on Student Debt have expressed dismay over the Department's plan and offered a more promising alternative. In a letter to the Department, project officials recommended that it develop "a system that lets borrowers confirm and track their eligibility for this form of loan forgiveness." [Disclosure: The Pew Charitable Trusts finances Higher Ed Watch through a subgrant provided by the Institute for College Access and Success, which runs the Project on Student Debt.]

"Giving borrowers clear, periodic confirmation of how many more years of eligible work and payments are required before they qualify for forgiveness will provide an incentive to continue in public service and ultimately meet the forgiveness requirements," project officials wrote.

The Education Department doesn't appear to be interested in adopting such an approach. In the introduction to its proposed regulations, the Department wrote that "tracking and reviewing documents on an annual basis for potentially thousands of borrowers, many of whom might not remain in public service employment or who may never meet the eligibility requirements for final loan forgiveness, would be a complex and costly administrative process."

We don't have any reason to question the sincerity of the Department's stance. Keeping track of a borrower's career choice over a significant period of time would probably be a challenging undertaking for the agency. But does that added burden negate the Department's responsibility to carry out the will of Congress and abide by both the letter and spirit of the law?

While some will assume that this is a deliberate attempt by the Bush administration to sabotage a program that could be a boon to Direct Lending, we are not convinced. More likely it's a classic case of bureaucratic inertia -- resisting new solutions to longstanding and seemingly intractable problems, such as the growing indebtedness of students, because they require significant administrative changes.

Nevertheless, if the Department refuses to budge from its current position, it will be setting up this promising new program up for failure. And that would be unfortunate because we certainly could use more people looking out for the public good.