Following President Barack Obama's call to make college more affordable and ease the burden of student loan debt for graduates, the Consumer Financial Protection Bureau launched an initiative Wednesday to urge public service organizations to better inform their employees about loan repayment and forgiveness options.
In a report issued in tandem with the initiative, the CFPB reports that one in four American workers may be eligible for student loan debt forgiveness programs open to public service employees, such as teachers, health workers, police officers, firefighters and social workers.
"People give up higher incomes to serve their city, their state, or their country," said CFPB Director Richard Cordray in a call with reporters Wednesday. "We believe that people who contribute part of their talents, part of the benefits of their education, to society as a whole should not be mired in debt because they stir themselves to the calling of public service."
Cordray and other state and local officials stressed the need to recruit and retain well-educated public service employees, as many professions are expected to face a shortage in the coming years.
"With high expectations and increasing budget pressures on cities, it has become more important than ever for a city like us to attract, retain and reward outstanding individuals to work in public service here," said Peter Buttigieg, Mayor of South Bend, Ind. "The reality is that crushing student loan debt is making it harder for our employees to stay in public service, and it can even hold them back from getting the very kind of further education that we're trying to promote in our workforce."
The National Center for Education Statistics projects that the United States will need 425,000 more teachers by the end of the decade to replace the wave of retiring baby boomer teachers. And the nation's shortage of advanced practice nurses and nurse practitioners is expected to grow to more than one million by 2020, according to the Health Resources and Services Administration.
But public service jobs typically have much lower salaries than many other jobs, and it's possible that the amount of student loans a person can accumulate in college could be equal to or more than a year's pay.
The starting salary for a social worker, according to the U.S. Census Bureau, is around $32,000, but after completing the master's work necessary to become a social worker, most students have incurred $36,000 in student loan debt and would end up paying $415 each month under a standard, 10-year repayment plan.
"A social worker would be ... living hand-to-mouth after rent and other living expenses are paid," Cordray said. Even if that person enrolled in an income-based repayment plan, he or she could still be looking at 20 years of monthly payments, "perhaps lasting until the time comes to consider how to pay for sending the next generation to college."
Federal loan repayment programs, such as the Public Service Loan Forgiveness program, wipe away remaining debt for public service employees after 10 years of on-time payments. But many public service workers are not aware of these options and may feel pressure to find higher paying jobs to keep up with loan payments.
"The bottom line is that nobody I know in public service is in it for the money. The people in the public sector know that they're getting a rewarding career, while passing up more lucrative alternatives," Buttigieg said. "But we have to make it easier for them to make that choice, to stick with it and to continue their education."