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Loan Forgiveness Snags Worry College Students
Jonathan D. Glater & Ron Lieber | June 02, 2009

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New York. If you want to become a public defender, Georgetown University can be a great place to get your legal education. So Heather Gatnarek expects to take on well over $100,000 of debt to get her law degree there and hopes to graduate in three years.

Here’s the problem, though. She’s relying on a new federal program that forgives a portion of the student loan debt for graduates who enter public service. And she was scared when she read a New York Times article on Wednesday on problems in Kentucky, where significant cuts in one of its loan forgiveness programs put thousands of indebted public school teachers and nurses in a painful financial squeeze.

“I would be completely up a creek” without a loan forgiveness program, Gatnarek said. “I don’t know what I would do. Marry someone rich, I guess. People say that I could just do corporate law for a few years, but I wouldn’t last two days.”

The problem in Kentucky — and another that emerged in Connecticut on Thursday — raise a frightening question for millions of young Americans considering jobs like teaching or nursing: Are the state or federal programs that promise to forgive student loan debt for people in those or other public service professions backed by ironclad guarantees?

And if the forgiveness isn’t guaranteed, how on earth can anyone expect 18 or 22-year-olds to take on tens of thousands of dollars in debt? Without such a promise, how can they know that they won’t one day find themselves in a police uniform or in a rural doctor’s office suddenly facing personal bankruptcy?

The good news here is that the federal Department of Education says that almost all its loan forgiveness programs are safe. “It doesn’t depend on some future Congress for us to come through on most of these,” said Robert Shireman, deputy undersecretary of education. “The majority of them get appropriations for the life of the programs.” But given declining tax revenues, that might not inspire much confidence.

The New York Times