Student Debt                   


Staying on track while giving back The cost of student loan servicing breakdowns for people serving their communities

Message from the CFPB Student Loan Ombudsman
In September 2013, the Consumer Financial Protection Bureau (the Bureau) released “Public
Service and Student Debt,” a report that examined how a range of existing protections and
benefits offered the promise of debt relief to an important segment of student loan borrowers—
those who pursue careers serving in their communities.1 At the time, the Bureau estimated that
1-in-4 U.S. workers were employed by a “public service organization,” as defined by the federal
Public Service Loan Forgiveness (PSLF) program.2 Evidence suggests that many professions in
this segment of the workforce typically require advanced levels of education,3 and that education
requirements in many of these fields have increased over time. These requirements are put in
place through federal or state law,
4 often as recommended by individual public service
organizations or by professional associations.
1 See Consumer Financial Protection Bureau (CFPB), Public Service & Student Debt (2013), Additionally, that same
year, the Bureau launched a workplace financial fitness initiative to empower public service employers to help their
employees reduce their student debt – the CFPB Public Service Pledge on Student Debt. See CFPB, Take the pledge
(accessed Feb. 3, 2017), For more than three years, the Bureau has
provided organizations that take the Public Service Pledge with resources and toolkits to help employees stay on
track as they manage their student loan debt.
2 See 34 C.F.R. § 685.219 (defining public service as work in the following fields: federal, state, local, or tribal
government; public child or family service agency; non-profit organization under 501(c)(3) of the Internal Revenue
Code; tribal college or university; or a non-profit private organization that provides certain public services,
including emergency management, military service, public safety, law enforcement, public interest law services,
early childhood education, public service for individuals with disabilities, public health, public education, public
library services, school library or other school-based services.); see also CFPB, Public Service & Student Debt,
supra note 1.
3 See, e.g., Keith A. Bender & John S. Heywood, Out of Balance? Comparing Public and Private Sector
Compensation over 20 Years, National Institute on Retirement Security (Apr. 2010),
(“Public and private workforces differ in
important ways. For instance, jobs in the public sector require much more education on average than those in the
private sector.”).
4 See, e.g., 10 U.S.C. § 12205(a) (requiring a bachelor’s degree for promotion beyond a first lieutenant for certain
branches of the military); 8 Va. Admin. Code § 20-22-40 (2017) (requiring prospective teachers to hold a bachelor’s
degree before applying for a teaching license in Virginia); see also U.S. Army Officer Program, Officer: Frequently
Communities across the country have continued to prioritize higher education for public service
professions by establishing new credential or degree requirements for a broad range of public
service workers, including classroom teachers,6 first responders,7 clinical social workers,8 and
early childhood education providers.9 In each instance, the public broadly shares the benefits of
a highly educated professional workforce serving in their communities. Yet, too often, the
financial costs of these new credentials fall on individuals in careers with limited opportunity for
wage growth to offset these costs. New credentialing initiatives continue to be enacted for those
entering public service professions amid growing concerns by researchers,10 regulators,11 and

Asked Questions (accessed May 30, 2017),
(stating that individuals are required to have a bachelor’s degree before being commissioned as
an officer).
5 See, e.g., Assoc. of State and Provincial Psychology Boards, ASPPB Model Act for Licensure and Registration of
Psychologists (Oct. 2010),;
Nat. Assoc. of Social Workers, Social Work Credentials (accessed May 30, 2017),
6 See, e.g., 16 Ky. Admin. Regs. 2:101 (2017) (Requiring individuals hold a bachelor’s degree with a minimum grade
point average to be eligible for a teaching certificate).
7 See, e.g., Cal. Code Regs. tit. 19, § 2530 (2017) (requiring state certified hazardous materials technicians to have at
least a bachelor of science). The Bureau of Labor Statistics (BLS) notes that first responders with college degrees,
including firefighters and police officers, have the best job prospects and opportunities for promotion. See, e.g.,
BLS, Firefighters: Job Outlook (Dec. 17, 2015),; BLS, Police
and Detectives: Job Outlook (Dec. 17, 2015),
8 See, e.g., 172 Neb. Admin. Code 94 § 005 (2017) (Requiring certified social workers to “have a master's or doctorate
degree in social work from an approved education program approved by the Council on Social Work Education
(CSWE) showing receipt of either the master's or doctorate degree in social work.”).
9 See, e.g., Minn. R. 8710.3000 (2017) (“A candidate for licensure in early childhood education for teaching young
children . . . shall . . . hold a baccalaureate degree from a college or university . . .).
10 See, e.g., Robert Hiltonsmith, At what cost? How student debt reduces lifetime wealth, Demos (Aug. 2013),; Mathieu R. Despard, et al., Student Debt
and Hardship: Evidence from a Large Sample of Low- and Moderate-Income Households, Children and Youth
Services Review, Vol. 70 Issue C; Fed. Res. Bank of Bos. Student Loan Debt and Economic Outcomes (2014),
11 See Conn. Dept. of Banking, Public Comment on Request for Information on Student Loan Servicing (Jul. 13, 2015), (“Student loan servicing, a largely unregulated
financial market and opaque industry, cries out for transparency and consumer-focused regulation. . . estimates
show alarmingly high and consistently rising default rates. Delinquencies are a harrowing bellwether: as the Bureau
notes, the Department of Education estimates that 3 million borrowers are at least 30 days or more past due,
policymakers12 about the potential spillover effects of mounting student indebtedness,
particularly where student loan borrowers do not realize robust economic benefits from a higher
This raises serious questions about whether individual public service workers are caught
between two economic cross currents – a growing need for higher education to pursue careers in
this segment of the workforce, and the rising costs, and debt, associated with this education.
These concerns may be even greater in fields where wage growth has been more limited over
time, such as public education.13 Furthermore, when these borrowers struggle to access critical
protections designed to mitigate the burden of student debt, it raises significant concerns about
the economic effects of this debt on a large segment of the workforce, including potential
declines in homeownership,14 retirement security,15 asset formation,16 and access to a strong

comprising over $58 billion in balances. This is not deja vu. We have been here before.”); Washington State, Office
of the Attorney General, AG Ferguson files suit against Sallie Mae offshoot Navient Corp., announces student loan
bill of rights legislation (Jan 18, 2017),;
see also CFPB, Student Loan Affordability: Analysis of Public Input on
Impact and Solutions (May 8, 2013),
12 See, e.g., Financial Stability Oversight Council, 2013 Annual Report (2013),;
U.S. Dept. of the Treasury, Remarks by Deputy Secretary Sarah Bloom
Raskin at the Rappaport Center for Law and Public Policy Conference on the Student Debt Crisis (Mar. 18, 2016),
13 See, e.g., Ed Hurley, Teacher Pay 1940 – 2000: Losing Group, Losing Status (Dec. 12, 2013), (“An analysis of decennial Census data clearly shows that over the past 60
years the annual pay teachers receive has fallen sharply in relation to the annual pay of other workers with college
degrees. . . Throughout the nation the average earnings of workers with at least four years of college are now over
50 percent higher than the average earnings of a teacher. At no other time since a college degree was required to
teach has this wage gap been so wide.”). Furthermore, research shows that real wage growth for individuals aged
25-34 with bachelor’s degrees has been stagnant over the last decade. Over the same period, the cost of healthcare,
housing, and childcare has outpaced inflation. See U.S. Census Bureau, Current Population Survey Annual Social
and Economic Supplement (2005 - 2015),;
Fed. Res. Bank of NY, The Labor Market for Recent College Graduates (Jan.
11, 2017),; U.S.
BLS, Consumer Price Index (2005 – 2015),
14 See, e.g., Alvaro Mezza et al., On the Effect of Student Loans on Access to Home Ownership, Fed. Res. Board (Nov.
2015), (finding that an increase in student
loan debt causes a drop in homeownership rates for student loan borrowers during the first five years out of school).
financial future.17
The current federal programs described in our 2013 report were designed to protect borrowers
from the long-term economic consequences of the rising student indebtedness shouldered by
many who pursue careers in public service. In effect, these protections were intended to ensure
that nurses, teachers, first responders, and other public servants can serve their communities
without it being to their long-term financial detriment, particularly as college costs continue to
rise and advanced education requirements expand.
Unfortunately, too often this is not the case. As described in detail in the following report, many
borrowers attempting to invoke their rights under federal law to these protections point to a
range of student loan industry practices that delay, defer, or deny access to critical consumer
protections. The Bureau is committed to monitoring the industry for key issues and illegal
practices affecting borrowers who are trying to access key consumer protections so they can
continue to give back to their communities.
Seth Frotman
Assistant Director and Student Loan Ombudsman
Consumer Financial Protection Bureau