Student Loan Forgiveness Programs

Student loan forgiveness programs have been used since the 1940’s to encourage study in areas leading to employment in areas of critical need or underserved communities. The typical situation (in-school model) involves loan repayment or forgiveness in return for a commitment to work an agreed upon number of years in an occupation of critical need or underserved communities. The programs were generally directed towards teachers, health-care workers, public-service attorneys, and military personnel. Recently the in-school model has shifted to an on-the-job model. The on-the-job model does not pay for college while the student is enrolled. It allows the student to seek loan repayment (forgiveness) after obtaining employment. Interest has increased in these programs because of the growing concern about college affordability. This report presents a series of observations concerning these programs and concludes with a discussion future research that the organization feels is necessary to validate the effectiveness and efficiency of these programs.

Observations

• Many communities have struggled with workforce shortages in high-need occupations and the situation appears to be getting worse.
• Increased college costs, accompanied by increased student loan/burdens, have enhanced the profile and demand for loan forgiveness programs.
  The size and scope of loan forgiveness programs has increased at all levels; federal, state and local.
• Cutbacks in funding, subsidies and other issues have put some loan forgiveness programs in financial peril.
• Even as some programs are in financial peril lawmakers continue to add to the number of programs available.
• High administrative costs are resulting in a move away from in-school programs toward the on-the-job programs.
• Little information is available highlighting outcomes and effectiveness of these programs.

Conclusions

• Loan forgiveness should be only one component of the overall financial aid package available to students. Policymakers should examine alternative solutions to the affordability dilemma.
• When programs are implemented the problems that are being addressed, the goals and objectives, and the methods of assessment should be stated.
• Better quantitative data that can be used to analysis the effectiveness of these programs must be developed.

Reference

Harnisch, T. L. (2009). Student loan forgiveness programs: an evolving workforce development tool. American Association of State Colleges and Universities. Retrieved October 15, 2009, from http://www.aascu.org/policy/policy_matters/index.htm.