Worried about how to pay off that student debt? Head on over to the closest government agency, and you too can score loan forgiveness after ten years of “public service.” Does that sound too good to be true? Well, Paul Winfree tells us that politicians voted to make these dreams (or nightmares) a reality:
… While hashing out the bill that reconciled differences between the House and Senate versions of health reform, lawmakers tossed in another overhaul as well. They completely remade the student loan industry.
As a result, college students will pay more for their school loans … unless they go to work for the government.
How will they pay more? The legislation allows graduates whose monthly loan payments exceed 10 percent of their monthly income to extend their repayment period by 10 years or more beyond the norm. Sure, you can stretch out your payments across 20 years, but the cost will increase because of interest.
But that’s only if you’re a sap who insists on working for the private sector. If you go to the public sector, you can say that you’re just going to pay off your obligation over 20 years, and after 10 years, have the debt “forgiven.” (Why the scare quotes? Because when you don’t have someone paying back their taxpayer-funded debt, it means — SURPRISE! — that taxpayers hold the bag, in addition to the massive, unsustainable defined-benefit pension plans we highlight all the time.)
It’s highly unlikely that private employers will be able to pony up a compensation package more attractive than what the public service wife has even without this incredible student loan premium. Recent studies show that government compensation levels are 12- to 40 percent than those of the private sector.
Worse, it spreads a contagion called governmentitis — the desire to remain in a government job rather than contribute to the actual economy simply because the taxpayer-funded benefits are too sweet to pass up.