The centerpiece of the College Cost Reduction and Access Act of 2007 is the Public Service Loan Forgiveness option that allows individuals employed in certain public service areas to have any remaining loan debt discharged after 10 years of repayment. It also allows participants to utilize the Income Based Repayment schedule during those 10 years to inspire people to go into under-served and low earning, not-for-profit or community sustaining fields. Farming, with it’s aging participants, low on-farm income earning capacity and importance to local communities, regions and the country at large, is a perfect employment area to be added to the list of professions eligible for forgiveness.
Income Based Repayment (IBR) prevents payments on federal student loans from exceeding 15% of a borrower’s disposable income above 150% of the poverty level. This plan also allows for the government to subsidize 3 years of interest payments and to have any remaining debt erased after 25 years. It is the combination of IBR with Public Service Loan forgiveness that might allow more young people to look at farming as a viable career.
For example, under the most common farm financial circumstances (based on USDA statistics):
A farm family of four, with on-farm income of $10,000 and student loans totaling $45,000 at an interest rate of 6.8%:
- under Standard 10-year repayment they would pay $517 a month, totaling $62,143.00
- under IBR they would pay $0 a month, leaving a debt that would accrue interest over 25 years to well over a $100,000.00, greatly impairing their ability to borrow money in the future
- under IBR, with Public Service Loan Forgiveness, they would pay $0 a month, but with the government subsidizing the first 3 years of interest, they would only accrue 7 years of interest before forgiveness – greatly reducing their debt load and allowing for borrowing that could help grow their business or help their own children go to college
Under IBR with Public Service Loan Forgiveness, the same family:
- with an income of $20,000, would pay $0 a month
- with an income of $40000.00, would pay $87 a month, with total repayment equaling $10,400.00
- with an income of $70000.00, would pay $460 a month, with total prepayment equaling $55,200.00
This repayment schedule, Income Based Repayment coupled with Public Service Loan Forgiveness, is the best option for young, beginning, and new entry farmers. We need to reach out to our elected officials and help them recognize how beneficial Student Loan Forgiveness could be to the profession of farming and the future of agriculture.
Unfortunately, changes like this will simply be "rearranging deck chairs on the Titanic" unless the fundamental threat posed by the proposed inappropriate, self-styled "food safety" federal regulation is stopped by substantially revising the legislation. S 510, and the even worse HR 2749, will not only cause those already becoming sustainable farmers to be unable to make a full-time living farming but also won't materially improve the overall safety of food in the US. In fact, because the regs will be more expensive and difficult for sustainable ag to implement than industrial ag, S 510/HR 2749 will further tighten industrial ag's control of our food system.
I know this to be true because after 14+ years working to revive local, healthy food her in western NC, I have had to spend the last 6 months endeavoring to understand this complex situation and legislation.
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