<h1>Blog & News</h1>
March 20, 2012

Special Program Forgives Student Loans

by Women's Fund

By Elaine E. Bedel, CFP®
President and Owner
Bedel Financial Consulting
Women's Fund Advisory Board Vice Chair

For women (and men) who serve as public service employees and may have a student loan balance, this blog is written with you in mind. You may be eligible to have a portion of your government student loan forgiven.

In 2007, Congress passed a loan forgiveness program called College Cost Reduction and Access Act. It provides an opportunity for those in public service to have a portion of their government school loans forgiven. Government workers, military personnel, public safety and law enforcement employees, nurses, teachers, childcare providers, social workers and others are eligible.

Student Loan Debt Forgiven After Ten Years

The College Cost Reduction and Access Act of 2007 allows for 100-percent forgiveness of the remaining student loan debt for graduates who make monthly student loan payments for ten years while working in the public service field. Student loan payments made on or after October 1, 2007 will count toward the required 120 monthly payments.

For example, if you are a teacher with $70,000 of student loan debt, the government will completely erase or forgive this debt as long as you work in the public service industry for ten years and meet your monthly minimum student loan requirement.

If you have amortized your school loan over a 30-year period, this benefit can reduce your original loan by as much as 75 percent. Even though ten years is two-thirds of the full loan term, given that the loan interest compounds during this period, depending on your interest rate, you may have as much as 75% of the original loan balance remaining to be forgiven.

Why did Congress pass this bill? This is an incentive to attract top talent to public service jobs, which typically pay less than private sector positions.

Maximize Your Benefit

Plus, if you know that public service work is your calling in life, there is a way to lower your monthly loan payment amount based on your monthly income. In return, this will decrease your minimum monthly payment, leaving a higher loan balance at the end of the ten-year period. This lower monthly student loan repayment is called the Income-Based Repayment option. You should only sign up for this provision if you are confident that you will be working in the public service industry for at least ten years.


This is a great opportunity for anyone with college loan obligations who is employed in a public service sector. Take advantage of this government provided benefit, if you qualify. For more details about the College Cost Reduction and Access Act of 2007 and the Income-Based Repayment option, go to www.studentaid.ed.gov and click on “Public Service Loan Forgiveness” or www.finaid.org/loans/publicservice.phtml.

Elaine E. Bedel, CFP®, is president of Bedel Financial Consulting, Inc., a wealth management firm providing fee-only financial planning and investment management services for individuals, consulting services for corporate retirement plans, and investment advisory for institutions and endowments. She is the author of “Advice You Never Asked For…But wished you had!” available on www.Amazon.com. For more information, visit their website at www.BedelFinancial.com or email to ebedel@bedelfinancial.com.

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