The Consumer Financial Protection Bureau launched an initiative Wednesday to help school districts and other government organizations help employees wipe out their student debt.
The CFPB has estimated that roughly 25% of the U.S. workforce is in public service and the agency has created an online guide to help firefighters, police, military personnel, librarians, nurses and teachers qualify for debt forgiveness programs.
"Special programs exist to help our public servants pay back the college loans they needed to qualify for their jobs," said CFPB Director Richard Cordray in prepared remarks. "But not everyone knows about these options."
Specifically, Congress created the Public Service Loan Forgiveness program in 2007 to encourage public employees to pay their loans on time for 10 years and then qualify for forgiveness of the remaining debt.
The CFPB's 14-page online guide provides information on how to qualify for student-loan debt forgiveness benefits and how employers can certify their employees for certain programs. The online "toolkit" includes information on repayment plans that advise borrowers how to set monthly payments at a fixed percentage of their income.
The CFPB wants student loan forgiveness programs to be part of the benefits packages given to employees when they first start work, during open enrollment season, and when employers sending out IRS W-2 forms.
Cordray also is asking public employers to pledge to talk to their employees about student debt and to help them enroll in student loan repayment programs. So far, Richmond Public Schools in Virginia and the City of South Bend, Ind., have signed on.
About 6.5 million borrowers had defaulted on at least two student loans as of June 30. The CFPB supervises and enforces laws covering student loan servicers and debt collectors, including those related to federal student loans, which make up more than 83% of the roughly $1.2 trillion loan market.