With graduate school loans accounting for 40% of all student debt, a major
focus has been put on the existence of federal programs that allow students
to borrow large amounts and then to have a substantial amount of debt
eventually forgiven. Graduate students typically owe between $50,000 and
$60,000. Medical-school and law-school graduates are amongst the highest
borrowers in the United States, graduating with $161,772 and 140,616 in
student debt, respectively. As graduate-school enrollment has increased
over the past decade, the number of Americans that owe at least $100,000
in student debt has increased to 1.82 million.
Federal Forgiveness for Student Loan Debt
Federal forgiveness programs typically involve public service positions
that do not pay the type of salary required to pay off the massive amount
of student debt accrued for the degrees these positions require. However,
due to the benefit that these positions provide to society, borrowers
who work full time for a government agency or nonprofit employer can have
their remaining debt forgiven if they make 120 on time monthly payments.
A separate law also allows for private-sector workers to have their debt
forgiven after approximately 20 years. In addition to these federal forgiveness
programs, income based repayment plans are available.
These programs are the subject of major criticism, with some critics claiming
that offering “unlimited loans to students, with the prospect of
forgiveness, creates a moral hazard by allowing borrowers to amass debts.”
Income-based repayment plans have been criticized for requiring tax payers
to pick up the tab on school-related debts. Additionally, a number of
recent studies show that many people who receive the benefits of this
program may actually need them the least such as doctors and lawyers who
may end up making six-figure salaries. Despite such criticism, it cannot
be denied that these programs offer promise and financial security to
those graduate students who choose to pursue a career in the public sector
over a potentially higher paying one in the private sector.
For more information about handling student loan debt, visit the links below: