Student Loan Forgiveness Programs Hurt by Recession

Due to the financial crisis, the government has cut spending to a number of programs.  One of these recent cuts has decreased the amount of money the government provides to state-run agencies that provide student loan relief to students graduating with degrees associated with careers that don’t pay particularly well, but add great benefit to society.  Various jobs in the nursing and educational fields match these particular attributes.  Cuts in funding have occurred in a handful of states including Iowa, Kentucky and California.

Traditionally, these programs entice students into lower paying, but very valuable professions by promising to pay back the loans student’s acquire in gaining the appropriate level of education.  Usually, graduates have to work a set amount of time, five years for most, in a specific area or profession in order to be fully reimbursed for their loan expenses.  The idea being, people would be more likely to become a teacher if they knew they would be debt free in five years, as opposed to finding a higher paying job outside of teaching, and paying back student loan debt for twenty years.

At least two repercussions can be expected from the cuts.  One, attracting students to low-paying, high-value jobs may become more difficult.  This is definitely a problem as we face nursing and teacher shortages all over the country.  Two, and more importantly for those involved, these cuts will not only affect funding for future students, but these cuts will also affect funding for students that have already graduated and are depending on loan forgiveness.  Recent graduates that were promised forgiveness on their loans are now finding out that there is no money for them, forcing them to have to pay back the loans themselves.  For some, this won’t be a problem, but for others, this unexpected additional financial burden may be too much.

In the face of these troubling times it makes sense for the government to cut funds to programs, but in this instance, it seems especially unfair to withdraw the funding that may have made pursuing a particular degree manageable in the first place.  On the other hand, one should always expect the unexpected.  These students will still graduate with a college degree that puts them in the 75th percentile as far as education goes.   Not receiving loan forgiveness does not doom anyone to a life of poverty by any means. 

Have these students received a raw deal from which you expect them to have trouble rebounding from, or is this just a bump in the road that anyone with any grit can handle?  Would you expect the number of individuals interested in getting degrees in nursing or education to decrease?

[Photo by Omar Omar via Flickr and Creative Commons 2.0]