Federal Programs Could Help Graduates Pay Off Staggering Student Loans

NEW YORK(CBSNewYork) -- Students and graduates in New York could be in for big money without even knowing it.

A quarter of the state's workforce is struggling to pay-off student loans and could be eligible for student loan forgiveness.

The college workload can be rough but some students have bigger burdens, CBS 2's Carolyn Gusoff reported.

"In how many years am I going to owe $40,000? And it's going to be pretty hard to pay back," sophomore Celie Werner said.

Total college loan debt nationwide is a staggering one-trillion dollars, and many students may not be aware of programs that could greatly ease that burden; loan forgiveness for graduates who take jobs in the public sector.

"The bottom line is there's a great federal program that could help millions of students who graduate from college reduce their loans, but no one knows about it," Senator Chuck Schumer announced.

Many graduates are not aware of federal loan forgiveness programs for workers in public sector and not-for-profit jobs.

Under the Public Service Loan Forgiveness Program monthly payments are capped at 15-percent of after tax income. After 10 years of payments the remainder of the loan can be forgiven for a savings of more than two-thirds of a loan.

"The word loan and forgiveness are usually not in the same sentence so that would be pretty good," William Meade said.

Meade will graduate with tens of thousands of dollars in debt. He said that public sector jobs suddenly seem more appealing.

"I think it could help because a lot of students would have the opportunity to have that loan forgiven after 120 payments and that certainly is an incentive," Dean at the Hofstra University College of Education Dr. Sean Fanelli explained.

Some 1.6-million Americans are eligible for a program called Pay As You Earn, but only 40,000 are enrolled nationwide.

Senator Schumer has asked the Department of Labor and Education to better inform students and workers about the program and to include enrollment forms for loan forgiveness when they enter the job market.

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