The cost of a college education is rising for everyone in the U.S., even Uncle Sam. A government program forgives the federal loans of grads who take on public-service jobs and pay 10% of their discretionary income toward the loan balance for a decade. It’s poised to cause headaches for the government once borrowers begin to cash in next year.
Policy makers probably didn’t realize how costly Public Service Loan Forgiveness would be when they approved it in 2007. The program still isn’t widely used, but a quarter of the U.S. workforce has an eligible job—meaning a position with a federal, state, local, or tribal government (including schools and the military), child or family services agency, a 501(c)3 nonreligious nonprofit, or tribal college—and the folks taking advantage of the program tend to carry a lot of debt.
Although undergraduate debt averages $30,000, borrowers using PSLF have median debt of over $60,000, Education Department data show, and 30% of them have over $100,000. Since most undergrads can’t take out more than $31,000 in federal loans, this suggests that many using the program got costly graduate degrees.