A Student Loan Benefit for Cities and Counties: At No Cost to Taxpayers

By Erik Caso, Co-CEO

If you run HR or budget for a city or county, you already know the math. Public-sector salaries trail the private sector, and the retention levers that close the gap (raises, signing bonuses, recruitment incentives) all come out of a budget that is public, politically watched, and chronically tight. The shortages are not abstract: they are the unfilled police officer, the engineer the city has been trying to hire for months, the finance director who could double her salary across the river. There is one significant retention lever for your workforce that does not come out of city money.

The workforce affected is large. A May 2025 MissionSquare Research Institute report found that 43 percent of public-sector employees carry student loan debt, against 36 percent in the private sector. A companion 2024 MissionSquare study found that 38 percent of state and local government employees say their student loan debt is a major factor in seeking other work. The relief available to that workforce is also large. A Brookings Institution analysis of federal data through January 2026 puts average PSLF forgiveness at nearly $75,000 per public-service worker who completes the program. More than 1.2 million workers have already had loans forgiven. Federal forgiveness is one of the rare retention levers in government that does not come out of the city’s budget. Every full-time qualifying employee is potentially PSLF-eligible; most are not enrolled.

The federal program has been on the books since 2007. What has been missing is the execution. Finnita is the execution. The cost to the city is zero. Not a single taxpayer dollar. The agreement runs a page and a half. You can cancel anytime.

The public-sector wage gap, and the lever that doesn’t come from the budget

The shortages are sector-wide and structural. The Bureau of Labor Statistics counted 20.7 million state and local government employees in March 2026, with state government rolls falling 35,000 over the prior twelve months and local rolls gaining only 82,000. The gap that drives turnover is also structural: state-and-local pays roughly 10 to 15 percent less than the private sector at equivalent roles, and student debt sharpens the gap further. An entry-level engineer with $120,000 in graduate-school debt earns less in city service than the private sector pays and spends a larger share of that smaller paycheck on debt service.

The vacancy data tracks the math. ICMA estimates roughly half a million open positions across state and local government. More than 70 percent of HR respondents cite engineering as hard to fill. Fewer than seven percent of full-time civil servants are under age thirty, and one-third of current employees are retirement-eligible. Average municipal hiring runs about 130 days, Route Fifty reported in March 2026; private-sector hiring is much faster.

What Finnita does for your workforce

Finnita is a student loan enrollment service. We get borrowers into the federal repayment and forgiveness programs that can dramatically reduce or eliminate their debt: Public Service Loan Forgiveness, the income-driven repayment plans, and the rest of the federal forgiveness landscape. For a public-service worker, that almost always means PSLF: 120 qualifying monthly payments at a qualifying employer, and the remaining federal Direct Loan balance can be forgiven, federally tax-free. The mechanics for government workers and first responders specifically are covered in our companion piece on PSLF for government workers and first responders.

Your employees run a 60-second assessment, see their projected savings, and decide whether to enroll. Finnita’s team handles the rest: loan-type review, plan selection, employer-certification paperwork, ongoing annual recertification. Finnita customers save an average of $468 a month, and the enrollment success rate is 98 percent, against the roughly 5 percent of public-service workers who reach PSLF on their own.

The $0 taxpayer cost

There is no per-employee fee. There is no flat enterprise license. There is no setup cost. Borrowers pay Finnita directly for their enrollment, with a 100 percent refund guarantee if we fail to enroll them. The city is not a counterparty to that. You are not buying a benefits product. You are agreeing to let your employees know the service exists.

That distinction is what changes the city budget conversation. There is no line item, because there is no purchase. There is no procurement track, because there is no contract subject to procurement code. There is no council vote on appropriations, because there is no taxpayer money flowing through the agreement. The relief comes from a federal program, paid by the U.S. Treasury, not from the city’s payroll. What the 1.5-page Finnita agreement does is close the execution gap between a federal program your employees already qualify for and the relief that program is designed to deliver.

It is, almost literally, like giving your public servants a raise — at no cost to taxpayers.

No procurement, 1.5-page agreement

The agreement is approximately 1.5 pages. Any city or county counsel can review it in an afternoon. It says, in plain English: Finnita offers its enrollment service to your employees at no charge to the city; the city informs employees the service exists; either side can end the agreement at any time, with no termination fee and no integration to unwind.

The end-at-any-time provision is the clause any city manager who has lived through a bad vendor contract should focus on. Cancel anytime is exactly that: no minimum term, no exit fee, no per-seat true-up, no data-portability fight. If a year in, the relationship is not producing what you wanted, you send an email. The employees who enrolled while the agreement was active keep their enrollments. That sits between Finnita and the borrower; the city is not in the middle.

What this avoids on the procurement side is the long version of the conversation. There is no RFP, because there is nothing to compete on price. There is no sole-source justification, because no source is being chosen. There is no council vote, because there is no appropriation. Most cities sign the same week it first surfaces internally.

Implementation: what city HR actually does

The deployment model is simple by design. After signing, Finnita supplies a short announcement package to share with staff: an email, a benefits-portal item, and a one-pager pointing public servants to a co-branded landing page where they run the 60-second assessment and decide whether to enroll. Some cities add a brief mention in fall benefits onboarding or the HR newsletter. The entire HR lift is communication. There is no HRIS integration, no payroll deduction setup unless the city specifically wants one, no training, no portal to administer.

Most cities are live within a week of signing.

Political and budget context

In most cities, the second question after cost is whether this becomes a political problem. The answer is that it does not, because there is no public expenditure to disclose, no contract requiring procurement clearance, and no taxpayer money flowing through the agreement. The benefit does not create a new city program; it gives existing employees structured access to a federal program they already qualify for. The clauses that matter most for board counsel make exactly that distinction: the city is not a counterparty to any payment.

On October 30, 2025, the Department of Education finalized a new PSLF rule that takes effect July 1, 2026 and grants the Secretary of Education authority to disqualify an employer prospectively for what the rule calls a "substantial illegal purpose." Three federal lawsuits filed in November 2025 seek to block it. Cities, counties, and other traditional government employers remain qualifying PSLF employers under the rule as written, and the National League of Cities has published a fact sheet for member cities. For employees currently in qualifying employment, the answer does not change with the litigation. File the Employment Certification Form annually. Save the accepted form. Years credited stay credited. Finnita-enrolled employees keep accruing PSLF credit while the policy fight plays out.

Why Finnita

Finnita is a specialist student loan enrollment service that focuses exclusively on federal repayment and forgiveness programs. Government and public-service work runs into PSLF problems that are more sector-specific than they look from the outside: federal-versus-contractor employer verification, municipal DBA versus legal-entity mismatches on the W-2, shift-differential and hazard pay miscategorized in income-driven recertification, and the July 2026 rule with its accompanying litigation. A specialist service handles the full chain. A generalist provider that bundles refinancing, tuition reimbursement, and 529 plans cannot reliably get the chain right because the chain is not what its product is about.

Finnita’s customers save an average of $468 per month, and the enrollment success rate is 98 percent across all customers and all programs, against roughly 5 percent for public-service workers attempting PSLF on their own. The service is free to the employer. No refinancing. No credit checks. No new debt. Finnita is a Delaware Public Benefit Corporation. We currently work with hundreds of employers, including cities and counties across the nation.

Cities and counties can see what a 1.5-page Finnita agreement looks like at finnita.com.

Frequently asked questions

What does Finnita cost the municipality?

Nothing. There is no per-employee-per-month fee, no enterprise license, no setup fee. Borrowers pay Finnita directly for their enrollment; the city is not a counterparty. Zero taxpayer dollars flow through the agreement.

How long does it take to launch?

The agreement is about a page and a half, with no minimum term. Either side can end it at any time with no penalty and no exit fee. Most cities go live with their staff within a week of signing; the holdup, when there is one, is usually the internal communications calendar.

What if a council member asks about taxpayer expense?

There is no taxpayer expense to disclose. The benefit involves no city appropriation, no contract subject to council approval, and no use of taxpayer funds. The relief comes from a federal program already in statute. The disclosure to council is simple: the city has agreed to inform employees about a benefit they already qualify for at no cost.

Does this displace our existing benefits broker or carrier?

No. Finnita is independent of any benefits broker or insurance carrier and does not displace anything in the existing benefits stack. It does not overlap with health, retirement, or financial wellness products. The existing broker relationship is untouched.

What happens to an employee’s enrollment if they leave for another government employer?

PSLF credits the months already earned, and those credits stay credited. The employee’s Finnita enrollment continues with them to any qualifying public-service employer — another city, a state or federal agency, or a 501(c)(3) nonprofit. If they take a private-sector role, accrual pauses; if they return to qualifying employment, it resumes from where it stopped.

About the author

Erik Caso is Co-CEO of Finnita, a student loan enrollment service that gets borrowers into the federal repayment and forgiveness programs that can dramatically reduce or eliminate their debt. He has spent over 2 decades building software that solves critical problems. He writes about federal student loan policy, the mechanics of enrollment, and the gap between the programs Congress passes and the outcomes borrowers actually receive. LinkedIn