Loan Forgiveness: Funding Needed

The Kennedy School established its public service loan forgiveness program last spring to encourage its graduates to enter low-paying jobs in the public sector.

But the program, which currently has 15 to 20 eligible students, was announced last March by Kennedy School Dean Graham T. Allison '62 before any outside funding for it had been secured.

Assistant Dean Calvin N. Mosley, the program's coordinator, said yesterday that the Kennedy School has been actively soliciting donations to fund the program. The proposed donation of $500,000 by Charles C. Dickinson III and Joanne W. Eaton Dickinson would be the first and only outside gift, Mosley said.

Because they have been so unsuccessful in raising money, Allison has made the loan program his top fundraising priority this year, according to several Kennedy School officials.

The loan forgiveness program, which was announced by Allison as part of a broader series of public service initiatives, is designed to insure that Kennedy School alumni with incomes less than $30,000 a year will not have to spend more than 10 percent of their income to repay educational debts.

The program will forgive the entire loan payments owed by graduates who earn under $15,000 annually. In addition, the program stipulates that alumni with salaries between $15,000 and $30,000 a year will be permitted to defer loan payments in excess of 10 percent of their gross income. The income ceiling will rise with the rate of inflation.

The pilot program will apply to Kennedy School classes graduating between 1987 and 1990. At the end of that period, a committee of faculty and students will review the program and decide whether to accord it permanent status.

Mosley said that the proposed $500,000 endowment was far more than he expected for the program. "This sends goosebumps up my spine," he said. "We don't have at this point any other funds that are earmarked for the program."

He said that $50,000 had been allocated out of Kennedy School operating funds for this year's needs. But he added that "the cost already exceeds what was planned."

Mosley said that 15 to 20 students are eligible this year for either loan forgiveness or loan deferment. "We had set aside approximately $50,000 and we're over that. That's where the Dickinson family is terribly important to us." He said the committee will meet on November 17 to reach a decision on this year's applicants.

When the program was announced last spring, Mosley said that up to one-half of the graduates of the Kennedy School's two-year Master's in Public Administration (MPA) and Master's in Public Policy (MPP) programs might be eligible for some form of loan forgiveness.

"The drive and focus of the public service initiatives is to better account for the gap between what we stand for on the one hand, and the pressures on society on the other," Allison said in an interview last May. "These bigger loan burdens are precluding them [Kennedy School graduates] from making the biggest contribution to society they can."

The public service loan forgiveness program was not a Kennedy School innovation. Two weeks before the Kennedy School program was announced last March, the Law School established an expanded Low Income Protection Plan designed to encourage graduates to enter lower-salaried jobs in government and public interest law.