September 10, 2007

Congress Passes Bill to Forgive Student-Loan Debt for Some Charity Workers

By Suzanne Perry

Washington

Some charity workers would be able to get their student-loan debt forgiven under legislation that was adopted by both houses of Congress on Friday.

The provision - part of a package of measures to cut subsidies to student lenders and shift the money into student-aid programs - would allow borrowers to erase their loan balances after 10 years of payments if they have worked during that time in a "public service" job.

"Public service" is defined to include employees of nonprofit legal-advocacy groups and organizations recognized by the Internal Revenue Service as tax-exempt charities. It also covers government employees, public-school teachers, law-enforcement officials, and public-health workers.

The bill (H.R. 2669), a compromise between the House and Senate versions, is a victory for nonprofit groups and associations that were lobbying Congress to include nonprofit workers in the loan-forgiveness program. The original

House version of the bill included them, but the Senate version did not.

The Nonprofit Sector Workforce Coalition - composed of more than 50 nonprofit groups, foundations, associations, and academic centers - argued that the provision would help attract workers to relatively low-paid nonprofit careers.

The loan-forgiveness program would be available to former students who participate in specific repayment plans outlined in the bill that take income into account. It would apply only to loans made directly by the federal government, although borrowers could reconsolidate other loans into federal direct loans to qualify for the benefit. The plan would apply only to loan payments made after October 1, 2007.

The bill now goes to President Bush, who has said he will sign it.