A reader wants to know if you need a real job to get real debt relief.
Question: I am a volunteer EMT at my local fire department. Am I eligible for loan forgiveness?
— Jong in Maryland
Howard Dvorkin CPA answers…
Sometimes the shortest questions produce the longest answers. In this case, the answer is short, but the explanation is quite long.
The answer: Sadly, no. You don’t qualify for student loan forgiveness. Here’s some background…
So, a program was rolled out in 2007 that made people that worked for public entities, such as police officers, firefighters, and in hospitals, their student loans are forgiven. However, it’s not as easy as it sounds.
You have to first sign up and enroll in the program, work 10 years for the public entity, and make your student loan payments along the way. And at the end of the 10-year-period, what is remaining in your balance on your student loans is forgiven.
It is a great program; however, it may be deemed a little too generous. And thus, the government may scale it back. But the best thing to do is enroll in the program now because obviously there may be some grandfather provisions before they do change the law.
In fact, you need to fill out a government document called the Employment Certification Form before you qualify for loan forgiveness.
Is your student loan debt getting you hot under the collar? There’s help available.
Why aren’t volunteer firefighters included? I have no first-hand knowledge of how the government came to that decision, but it’s easy to speculate three reasons why…
It would be difficult if not impossible to figure out how much “volunteering” would qualify for this very significant benefit. Government regulations are confusing enough, and even student loan forgiveness requires jumping through many hoops.
(For instance, once you fill out that form I mentioned, you must enroll in one of three “hardship-based federal repayment plans” with names like Income Based Repayment, Income Contingent Repayment, and Pay as You Earn. Then you need to wait 10 years for the “forgiveness” part to kick in.)
I can only imagine how many loopholes clever people would seek, and then how many more rules the government would have to devise to combat that.
2. Mission creep
If volunteer firefighters are allowed to seek student loan forgiveness, what about volunteer teachers? Candy Stripers in hospitals? Police Explorers?
Once the government bestows a benefit, those on the outside but directly adjacent want in. That’s understandable, but it can also be expensive and complicated.
The original idea behind student loan forgiveness was simple: Public servants often don’t earn as much as those in the private sector, so they’ll have even more trouble than their private peers paying off steep student loan balances.
At the same time, we need our public servants if we’re to maintain our status as the best country on the face of the planet.
There’s still good news, Jong: Those other federal programs I mentioned can still help you manage your student loan debt. I’ve seen these programs literally turn lives around — making home-buying possible where it wasn’t before, and even solving marital problems due to financial stress.
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Published by Debt.com, LLC