Monday, July 20, 2009

Lifelines in the Student Loan Sea

I guess I have student loans on the brain lately. Check out this recent article from the Washington Post:

Dundas, 23, is a new graduate entering a stricken job market with a master's degree, $30,000 in debt and far less earning potential than she expected when she borrowed the money. She works part time for the State Department.

"When I get paid, I think, 'All right, I have $500,' " she said.
"But then I remember I have huge loans, and it's really just, 'All right, I have negative $29,500.' And then I go eat ramen for dinner."

This summer brings a measure of relief. Starting July 1, student borrowers can cap their monthly payments at a modest sum determined by income and family size. A second initiative, the Public Service Loan Forgiveness Program, will erase student debt entirely after 10 years for graduates who work for government or various nonprofit organizations.

Together, the programs amount to "the broadest and most expansive set of provisions we've ever had" to ease student debt, said Terry Hartle, senior vice president of the American Council on Education, an association of college administrators based in the District.

"It's huge for students," said Carmen Berkley, president of the
United States Student Association, an advocacy group in the District. "You put somebody in a situation where they're not making too much money, and they're making $200 to $300 in monthly payments, and you're setting them up for failure."

It is daunting for recent grads to have such large amounts of debt when they are just starting their career along with a soft job market. I don't remember being warned of graduating into a tough job market and its implications when I signed my loan promissory notes...I doubt many others will either. Even in areas like DC, where the job market has not suffered as badly as in other areas, people are having a hard time with job hunting and fear of layoffs. For those who are already interested in public service jobs, this opportunity will probably want to take advantage of loan forgiveness programs like the ones mentioned in the article.


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