Typically when we discuss a United States Senator making noise about student loans it is Senator Elizabeth Warren of Massachusetts. Yesterday we heard from someone new.
Senator Richard Blumenthal of Connecticut announced a plan to expand the Public Service Student Loan Forgiveness Program. Currently, people working in public interest jobs, such as non-profits and for the government, can have their student loan balances forgiven if they make timely payments on an eligible plan for ten years. Senator Blumenthal’s plan calls for portions of the loans to be forgiven along the way… instead of all of it at the end.
Under his proposal:
- 15% of your student loans would be forgiven after two years of public service
- An additional 15% would be forgiven after four years of public service
- An additional 20% would be forgiven after six years of public service
- An additional 20% would be forgiven after eight years of public service
- The remaining 30% would be forgiven after ten years of public service
In short, the plan is a perk for people to enter public service, even if they are not willing to commit to the ten years required under the current system.
Perhaps the best part about this bill is that a Senator is talking about expanding the public service program instituted by President George W. Bush. The Obama administration has sent signals out that it may be looking to reduce the program (we shared our thoughts with the President about that plan).
As usual, it is also nice to see any action on student loans at the federal level. Student loans seem to be low on the priority list for those in power, so it is always good news when some ideas are put out for public debate.
This proposed legislation seems more aspirational than anything. As nice as the program would be, there is no analysis on how much it would cost, nor is there any proposed funding mechanism. This bill looks like it is dead on arrival.
Another problem with the bill is that it addresses the one area of current student loan law that is already pretty good. Handling problems like bankruptcy, private loans, and for-profit scams should be an area of emphasis.
This looks like a non-event. The proposal is something that would be nice, but is more likely to be something long forgotten in just a few months.