Here's how you get your student debt erased

Is college worth the cost?
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Story highlights

  • Alexander Holt: The Public Service Loan Forgiveness program allows those involved in public service to eventually erase their loans
  • Holt: An argument can be made for almost any job qualifying as a public service

Alexander Holt is a policy analyst at New America, a Washington-based think tank. The opinions expressed in this commentary are his.

(CNN)At the Republican debate Wednesday, John Kasich proved himself to be the true Jon Huntsman of this cycle when he brought up federal student loan debt and said, "For those that have these big high costs, I think we can seriously look at an idea of where you can do ... legitimate public service and begin to pay off some of that debt through the public service that you do."

Actually, that idea is already law, it's called the Public Service Loan Forgiveness program, or PSLF, in which borrowers pay an affordable percentage of their income every month, and after 10 years any remaining debt is forgiven.
    Alexander Holt
    It's a flawed program. Defining "legitimate public service" turns out to be difficult. Right now, anyone working for any level of government or a 501(c)(3) nonprofit qualifies. That means many lawyers and doctors, even those earning high incomes in their 10th year of repayment (say, over $100,000) still potentially have the ability to receive hundreds of thousands of dollars forgiven from the expensive degrees they received from elite institutions.
    And lately, people who think they are doing a public service, but don't work for a nonprofit, think they ought to qualify as well.
    The most recent group who deem themselves worthy of qualification are farmers. Take Emily Best, a 32-year-old Pennsylvania farmer with debt from graduate school, as reported by MartketWatch. She's doing the public a tremendous service by growing the food we eat, so why shouldn't she get PSLF? The difficulty of answering the question demonstrates why it's so tricky trying to define whatever Kasich, or anyone else, means by "legitimate public service."
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    Best is actually already eligible for and using a generous provision that anyone with a federal student loan can benefit from called Income-Based Repayment, in which she pays a percentage of her income. In fact, for people who make less than $17,655 a year, the monthly payment is zero. That would include Best, who makes $1,600 a month (though her room and board is covered by her employer), and if she fails to pay off her loan it will be forgiven after 20 or 25 years (there are a number of variations).
    So Best's payment is already zero, but she's arguing for PSLF, a separate program (that can be used in conjunction with Income-Based Repayment,) that forgives all debt after 10 years of working for the government or a nonprofit. According to the U.S. Government Accountability Office, about 25% of all workers in the economy work for a government entity or a nonprofit. But not Best, because her farm is for-profit.
    Why does Best need PSLF if her monthly payment is zero? Because PSLF has never been about what someone needs, but rather what someone deserves. The question is whether farmers deserve PSLF because they are uniquely serving the public.
    Indeed, by many measures, a farmer helping to feed the American public almost certainly is providing a more important service than a worker at a nonprofit think tank who writes op-eds (such as this author). It's not fair that I qualify and she does not.
    The reality is that, speaking broadly, nearly anyone can claim they are performing a public service. And that makes the law's definition limiting public service to government and nonprofits so arbitrary.
    Consider two hospitals, one nonprofit, the other for-profit, and they sit across the street from one another. Nurses and doctors at both hospitals get paid similar rates and perform similar services. As of now, only those at the nonprofit qualify for PSLF. That's not fair. Anyone performing functions like helping people in a hospital should clearly qualify for PSLF regardless of the tax status of the institution they work for.
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    Accountants at the nonprofit also get PSLF, but that makes sense, because they are helping run the hospital. But that means that since the mission of the accountant at the for-profit hospital is the same (to keep the money in order to pay the people helping the sick), the accountant at the for-profit hospital should also get forgiveness. Fine, so anyone working for a hospital should qualify for PSLF. That seems fair and reasonable.
    But whoever helped build the new pediatric center at the nonprofit hospital surely also performed a great public service. That would certainly include all the construction workers, but also that Goldman Sachs analyst who arranged for the sale of municipal bonds to raise money for the hospital.
    In fact, that same analyst only helps raise cash on the municipal bond market, meaning she only raises money for government and nonprofits. She even raised money to improve the road to the hospital! She did a great public service by making sure the hospital and municipality didn't overprice their bonds and helped raise the capital.
    Don't forget the truck drivers who deliver the medical equipment to the hospital. And don't forget the parent who stays at home to raise the next generation of citizens.
    All these people are providing a public service, including Emily Best. But if everyone if providing a public service, then a carve-out to a very specific set of people for loan forgiveness is unfair. We either all deserve a special 10-year loan forgiveness program, or none of us do.