A new program allows people who work in federal and other public service jobs to reduce their monthly federal student loan payments and have the balance of those loans forgiven after 10 years of service.

The Public Service Loan Forgiveness Option, announced July 1 by Rep. John Sarbanes, D-Md., and Office of Personnel Management Director John Berry, will cover full-time federal and other public service employees with federal student loans in the direct loan program, where the Education Department is the lender. Federal direct loans covered by the option include Stafford, Grad PLUS, or consolidation loans.

Public service employees with federal loans in the Guaranteed Federal Family Education Loan program, where lenders are private entities such as Sallie Mae or Citibank, will be able to consolidate their loans into the Direct Loan program to qualify for loan forgiveness. Information on how to consolidate loans can be found at http://loanconsolidation.ed.gov.

"College should be a realistic goal for every family," Sarbanes said. "This helps ensure stability for student borrowers, allowing them to embark on careers in public service, especially when our country needs public service employees the most."

Federal and other public service employees with both government-run direct loans and guaranteed loans also may be eligible to lower their payments under the new Income-Based Repayment (IBR) plan. Under this plan, a fed could reduce his loan payments to 15 percent of earnings that exceed 150 percent of the poverty level. The employee would make those reduced loan payments for a decade, after which the balance of the loan would be forgiven. A calculator at www.ibrinfo.org helps employees determine if they qualify for this plan and how much they might save.

Anyone who earns less than 150 percent of the poverty level for their family size would not have to make monthly loan repayments under the IBR plan until they started earning at least 150 percent of the poverty level.

Sarbanes' office said some feds and other public servants could save hundreds of dollars a month on the reduced payment plan, and could have tens of thousands of dollars of outstanding debts forgiven after 10 years of service. His office was unsure how many people would be eligible for this program.

The loan forgiveness program is retroactive to October 2007, which means the earliest that a federal employee can have his federal loan forgiven would be October 2017. The Education Department will decide whether someone is eligible to have a loan forgiven, but has not yet set up a formal application process. Sarbanes' office said that anyone interested should save all his loan repayment receipts and pay stubs to prove he has been repaying his loans while in an eligible career.

Sarbanes' office said the program could be a good tool for the government to recruit and retain skilled employees.

People who work for state, local or tribal governments, public schools or universities, nonprofit tax-exempt organizations, AmeriCorps, Peace Corps, or are enlisted in the military would also qualify for loan repayments.

Employees of labor unions, political organizations or religious organizations would not qualify.

There is no limit on how much can be forgiven. The 10-year service required to qualify for loan forgiveness does not have to be consecutive, meaning someone could take a break from public service and later return to complete his 10 years of qualifying service.

Tell us what you think. E-mail STEPHEN LOSEY.