A job that makes student loan debt vanish

As student debt looms for some soon-to-be graduates, government agencies are stepping in to offer relief.

A number of federal employers have programs that relieve student debt up to $10,000 a year for six years, and the program has been steadily expanding over the past five years.

But at Penn, officials say that these programs are not very well-known, and that student loan debt is relatively manageable.

Federal agencies can elect to establish programs that relieve its employees' federal student loan debt; 34 such agencies currently participate in the program, according to a recently released report from the United States Office of Personnel Management.

The total amount of repayment benefits has increased to almost $36 million in fiscal year 2006 from about $28 million last year, and from about $3 million in 2002. The number of benefitting employees saw a similar increase of about 30 percent this year.

Participating agencies include the departments of Justice, Defense, State and the Securities and Exchange Commission.

But the program may not be marketed well enough.

"It's brilliant on their part to do it," Career Services Senior Associate Director Peggy Curchack said, but "no student has ever brought it up in a conversation with me."

Curchack noted that such programs have the potential for huge appeal to students.

The benefits represent "a huge amount of money," she said.

Career Services' survey of Class of 2006 graduates shows that 4 percent entered the public sector.

One reason that may prevent more students from signing up with the government may be the application process.

It's "arcane at best," Curchack said. "It's hard to figure out, how do I apply, where do I apply, when do I hear?"

And for some students, the issue of loan debt upon graduation may not be terribly pressing.

Penn recently revamped its financial-aid package to replace loans with grants for families whose annual income is under $60,000.

But Director of Financial Aid Bill Schilling says that doesn't mean those students graduate debt-free.

According to Schilling, two-thirds of graduates who receive no-loan packages leave Penn with loan debt, and he said that alleviating the family's expected contribution is one possible explanation.

"It's so easy to borrow Federal Stafford loan that, I think, in a lot of cases," students do so, Schilling said. It "doesn't necessarily mean the family couldn't make it without that loan - it just makes it easier," he said.

Schilling noted that federal repayment programs help alleviate unmanageable student loan debt - as would programs that base loan payments on a graduate's income - but that, although it's a concern, he doesn't see loan debt as a huge problem for Penn students.

"By and large I don't think the evidence we have" points to graduates having "major problems," he said.

Please note All comments are eligible for publication in The Daily Pennsylvanian.