The Magazine

Need a Student Loan?

Boy, does Uncle Sam have a deal for you.

Aug 3, 2009, Vol. 14, No. 43 • By ANDREW FERGUSON
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We already have a foreshadowing of the possibilities. Congressmen are tinkerers, and they have been tinkering with federally backed student loans for years, hoping to push borrowers into doing things that congressmen find pleasing. The most interesting of their ideas was signed into law by President Bush. This shouldn't be a surprise, since by his second term Bush had proved a pretty ambitious tinkerer himself. The Public Service Loan Forgiveness Program of the College Cost Reduction and Access Act of 2007--such big titles you have, grandma!--was designed to let college students know what they should do once they got out of school.

Student borrowers can have their federal loans forgiven after 25 years, on the condition that they make a single minimum payment every 360 days. This is already a significant inducement to acquire a federal rather than a private loan. But the Public Service Loan Forgiveness Program goes a step further: You can have your loan forgiven after only 10 years, vastly reducing the total amount of money you pay for your college education--to below $5,000 in some cases--on three conditions. Your loan has to be handled directly by the government, with no contamination from private lenders; you have to meet a schedule of monthly minimum payments; and upon graduation you have to get the right kind of job.

The right kind of job turns out to be what's loosely called "public service." In common discourse public service is already an elastic term, used mostly as a form of self-flattery, but seldom has the euphemism been stretched quite so far as it was in Bush's bill. Work for the government, any government--whether as an actuary, a diplomat, or a teacher; a social worker, a fighter pilot, or a forklift driver--and you qualify for the loan forgiveness. You qualify, too, if you take a job with any 501(c)(3) nonprofit organization: the Wilderness Society, U.S. Public Interest Research Group, the Rainbow Coalition, the Transgender Law and Policy Institute, even, theoretically, the Heritage Foundation. It doesn't matter if you're an agitator, lawyer, lobbyist, congressional aide, or a pavement-pounder hectoring passersby into signing petitions for Greenpeace. The important thing is, you can't be helping anyone turn a profit.

The first loans won't be forgiven till 2017, so there's no telling yet how many people are taking advantage of the program or how much it will cost. But it's clearly designed to cast a very wide net. Indeed, its definition of public service is so broad that only a certain kind of graduate would be denied this splendid perk of an almost-free education: the idiot who went to work in the world of buying, selling, inventing, making, and producing.

Though Bush couldn't have known it, his program anticipated the age that dawned this January. It fits the ambitions and tastes of the Obama era, especially as summarized on several occasions by the first lady. She and her husband are perhaps the most famous student-loan borrowers in history. She speaks often of the torment of living under the debt load they had accumulated in college (Princeton, Columbia) and law school (Harvard). In remarks first reported by Byron York in National Review, in February 2008, she was particularly graphic. Thanks to their student loans, the Obamas found themselves "struggling to figure out how we would save for our kids."

What placed them in this position, Mrs. Obama said, was their decision to "move out of the money-making industry"--both had worked in corporate law--"into the helping industry." Again, the term "helping" is loosely defined: After leaving their law firms, he went to work for the Illinois state senate, she to Chicago city government and then a nonprofit hospital. "We left corporate America, which is a lot of what we're asking young people to do," she said.

Recently she expanded on the theme. "I went from college to law school to a big old fancy law firm," she told a group of Americorps workers, "where I was making more money than both of my parents combined." But then came a revelation. "I had to ask myself whether, if I died tomorrow, would I want this to be my legacy, working in a corporate firm, working for big companies? And when I asked myself the question, the resounding answer was, absolutely not."