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Consumer bureau: Too few use loan forgiveness

WASHINGTON — More than 33 million workers qualify to have their student loans forgiven because they work in schools, hospitals or city halls, but too few take advantage of the options because the programs are overly complicated and often confusing, the government's consumer advocate said Wednesday.

Roughly a quarter of the U.S. workforce could take advantage of federal rules that give favorable loan repayment options to those in public service fields, including the military, according to the Consumer Financial Protection Bureau. The agency recommended Congress review the loan forgiveness programs and encouraged employers to make sure their workers know they are available.

Student loan debt has topped $1 trillion, the consumer advocate estimates, and has been a drag on the economy as recent graduates are forced to choose between paying down their loans and buying a house or a car. That sends millions of dollars to lenders instead of keeping that cash in the local communities.

The largest group of beneficiaries would be those in education — more than 6.8 million people.

"You'll run into some people who think starting their career in a public sector job is a luxury they cannot afford because of their student loan debt," said Peter Buttigieg, the mayor of South Bend, Ind., who has pledged to help his city's employees navigate the programs. "The reality is that crushing student loan debt is making it more difficult for our employees to stay in public service."

Consumer bureau: Too few use loan forgiveness 08/28/13 [Last modified: Wednesday, August 28, 2013 9:55pm]
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