Schumer hikes awareness of loan forgiveness programs
They may not know it, but more than 17,000 Chautauqua County public service employees may be eligible for student loan forgiveness.
In a Wednesday conference call, U.S. Sen. Charles Schumer called upon the Department of Education and the Department of Labor to raise awareness about loan forgiveness and repayment plans – of which he said the majority of the working population is unaware.
According to Schumer, approximately 25 percent of the American workforce is eligible to participate in the Public Service Loan Forgiveness plan, which entitles recent graduates performing entry level jobs in professions such as teachers, police, firefighters, nurses and soldiers to two-fold benefits. Firstly, qualified employees in the field can reduce their monthly student loan payment to 15 percent of their discretionary income. Secondly, after 10 years of payments, qualifying student loans will be completely forgiven.
Another option, Schumer said, is the “Pay As You Earn” program, which allows students who have graduated in or after 2011 to reduce their payments to 10 percent.
“The problem is, hardly anyone knows of this program,” Schumer said. “Of 1.6 million (American workers) who are eligible (for Pay As You Earn), only 40,000 are taking advantage. In New York, that would mean there are hundreds of thousands of people now who are eligible for these programs. Anyone who works in government or nonprofit organizations is eligible for these plans; with the only caveat being if you’re starting off getting paid a high income, like more than $100,000.”
According to data acquired by the state Department of Labor, Chautauqua County is home to 7,638 employees in the public health sector, 685 in public education and 8,834 in government positions who are eligible for these programs.
Schumer said the federal government must do more to require employers in the public service sector to notify employees of this benefit. He said this would help to reduce the ever-growing student loan debt in the U.S., as well as encourage graduates to seek work in these lower paying, but critical jobs.
“The bottom line is too many graduates don’t realize they’re entitled to federal loan repayment programs,” Schumer said. “We need to do all we can to ensure that today’s workforce, and those who join it, know about this program.”
In a letter to U.S. Secretary of Education Arne Duncan and Secretary of Labor Thomas Perez, Schumer made three recommendations to public service sector employers in order to educate employees on their prospective eligibility.
The first recommendation was that the written form to enroll employees into the student loan forgiveness program and income-based repayment program should be included in existing federal benefit packages provided to employees in public service jobs. Schumer also said employers should provide partially completed certification forms to existing employees annually and upon separation, and an employer’s payroll processing provider could generate these forms when sending IRS W-2s annually. The third suggestion was that employers in the public sector appoint a human resource team member in charge of helping employees, and certify employees so they can track their repayment process in tandem with their workplace. This process would be free to employers, and would begin the process of tackling their employees’ student loan debt issues.
Only federal direct loans, those originated by the Department of Education, qualify for forgiveness under the program. However, a borrower with other federal student loans – such as federally guaranteed student loans originated under Federal Family Educational Loan – can consolidate these federal loans into a new direct loan to qualify.
For more information and materials on determining eligibility for the loan forgiveness programs, visit Schumer’s website at www.schumer.senate.gov.