Helping Those Who Serve

Renzi Pushes Loan Program for Public Workers

Posted July 15, 2005 at 4:49pm

Shrinking the public sector has long been a GOP staple. But a rock-ribbed Republican from a rural Arizona district is bucking the trend and encouraging his GOP colleagues to support legislation making it more affordable for young professionals to enter public service.

Rep. Rick Renzi (R-Ariz.), an insurance executive who has been a reliable GOP vote since plunging about half a million dollars into a 2002 run for Congress, might seem like an unlikely champion of an idea originally popularized by a Democratic president. But Renzi’s former law school professor is not at all surprised that her former student would take on this issue.

Mindful that fast-growing Arizona was likely to see the creation of additional House seats after the 2000 reapportionment, Renzi entered The Catholic University of America’s Columbus School of Law in 1998 to prepare himself to run for office. Renzi, the son of a father who was a two-star general and a mother who was a social worker, said that he always intended to serve his country once he was done building insurance and real-estate businesses.

While in the school’s law and public policy program, Renzi selected courses, Capitol Hill internships and directed research opportunities to prepare himself for federal work.

Although Renzi was able to pay for law school in cash, he encountered many colleagues in law school who wanted to pursue careers in public service who were unable to contemplate the option because of their debt burdens.

“A lot of other people weren’t going into it that wanted to because there was no reality for how they could pay back their loans,” Renzi said. “None of them could get their teeth into the $120,000 or $140,000 in debt.”

Catholic University students are not alone. Tuition at graduate and professional schools has skyrocketed since the Higher Education Act was last reauthorized in 1992. While starting salaries for professionals at private employers have largely kept pace with increases in tuition, professional salaries in the public and nonprofit sectors have lagged behind.

“When students graduate from law schools,” said Georgetown Law Professor Philip Schrag, “they have huge debts and enormous pressure to go into private corporations, law firms, things like that, because the burden on them would be terrible — 40-plus percent of their income towards their student loans.”

Bill Clinton tried to make public service careers more feasible when he ran for president in 1992. Along with the proposal that eventually led to the creation of AmeriCorps, letting young people pay back the cost of their higher education as a percentage of their future income was a core component of his efforts to create more opportunity for people who were taking responsibility for their communities.

“It was a way of saying, ‘Yeah, you can go work in a child care center or helping elderly people or as an elementary school teacher. You don’t have to go to Wall Street to pay off your student loans,’” said Dee Dee Myers, Clinton’s former spokeswoman.

Following Clinton’s election, Congress authorized a loan repayment option in 1993. The Education Department estimated in 1994 that between 15 percent to 30 percent of higher education borrowers would elect the income contingent repayment option. But as of 2000 only 1 percent of unsubsidized, unconsolidated Stafford loan borrowers had chosen the ICR option.

The problem, according to Schrag, who has written a book on the program’s shortcomings titled “Repay As You Earn: The Flawed Government Program to Help Students Have Public Service Careers,” is that graduates are unable to contemplate a 25-year repayment period before their educational debts are forgiven. Following Renzi’s election, Catholic University Law Professor Lisa Lerman, the director of the school’s law and public policy program, connected Renzi, her former student, with Schrag, her husband.

Even though income-contingent repayment has traditionally been a Democratic issue, Lerman suspected Renzi would be receptive to it because he had already been “nose to nose” with the issue.

Additionally, Renzi worries that the Navajo Nation situated in his district may descend into lawlessness if Congress does not reform the income-contingent repayment plan enacted by a Democratic Congress in 1993.

“The largest land mass of poverty in the country is in my district,” Renzi said. “We are on the verge of losing the rule of law up there if young people don’t engage.”

Renzi’s bill, H.R. 1859, the Education for Public Service Act of 2005, would make several significant changes to current law that its backers hope will make it more broadly used, public service-oriented and family-friendly.

Renzi’s proposal would provide partial loan forgiveness for professionals with advanced or graduate education who spend eight of 15 years in a public service career. While shortening the repayment period, Renzi would keep aggregate costs down by directing its benefits solely to professionals who work for government or for a 501(c)(3) nonprofit organization. The current 25-year ICR plan applies to any graduate — even ones who work in the private sector.

Renzi would also eliminate a significant marriage penalty contained in current law. At present, a graduate’s obligation is roughly 20 percent of after-tax income. If the borrower gets married, however, the obligation becomes 20 percent of the borrower’s after-tax income as well as 20 percent of the after-tax income of the borrower’s spouse.

By requiring public service for only eight years, Renzi hopes that women will be encouraged to pursue careers in public service — even if their service is interrupted by a decision to be at home temporarily with their young children.

Two Democrats — Rep. Robert Andrews (N.J.) and Sen. Edward Kennedy (Mass.) — are also sponsoring versions of loan forgiveness as parts of larger, more contentious, education bills. Their support is key because they, unlike Renzi, serve on the House and Senate committees with jurisdiction over this issue. But the American Bar Association sees special value in having a Republican champion this cause.

While addressing an ABA conference on April 26, former ABA President Robert Hirshon, who put loan forgiveness at the top of the group’s agenda during his tenure as president, heralded Renzi’s sponsorship as a sign that loan forgiveness was not just a Democratic issue.

“I’m going to assume he’s not a left-wing individual,” Hirshon said in a tongue-in-cheek reference to the father of 12 who is widely known for his staunch opposition to abortion rights and federal funding of embryonic stem-cell research.

While addressing the same group, Renzi acknowledged that loan forgiveness might be a hard pill for some of his GOP colleagues to swallow.

“There are a lot of people in my party — the Republican Party — who see this as maybe a little bit of a giveaway,” Renzi said. “And with the budget being as tight as it is, they are not certain that this will score that well.”

But Renzi said in an interview that the program’s cost, which is expected to be around $30 million per year, pales in comparison to the cost of doing nothing.

“The federal government has a trust obligation to the Navajo and to the Apache and in other poor regions of the country,” Renzi said. “It’s not just about spending federal dollars. Essentially what we are trying to do is build the work force of the caregivers that will help lift these people out of this desperation that they are in.”