AFT and SBPC Launch Joint Investigation into Mismanagement and Industry Abuses in Federal Public Service Loan Forgiveness Program

New Report Outlines Comprehensive Effort to Expose Breakdowns that Costs Teachers and Other Public Service Workers Millions of Dollars

DECEMBER 20, 2018 | WASHINGTON, D.C. – The American Federation of Teachers and the Student Borrower Protection Center launched a joint investigation into allegations of rampant mismanagement and industry abuses undermining the federal Public Service Loan Forgiveness (PSLF) program. Today’s initiative is the first comprehensive effort to obtain documents, communications, data, and records from the government agencies and student loan companies responsible.

Through two dozen individual information requests made by the AFT and SBPC under federal and state “sunshine” and FOIA laws to more than a half-dozen different organizations, the probe will attempt to expose the role that private-sector student loan companies and the U.S. Department of Education may have in perpetuating the student debt crisis in America.

It will seek to uncover key documents, communications, and other financial, contractual, or regulatory relationships that have caused the breakdown in the student debt system, which has cost teachers, nurses, first responders and other public service workers the loan forgiveness earned through their service. Its goal is to enable law enforcement officials, lawmakers, and litigants to seek justice for student loan borrowers sentenced to a lifetime of debt at the hands of a mismanaged program.

 “Sunlight is the best disinfectant but Betsy DeVos and the Department of Education are refusing to open the blinds,” said AFT President Randi Weingarten. “We launched this investigation because the public has a right to know the details of how loan forgiveness, to which borrowers are entitled under the law, is systemically attacked and undermined. The Secretary should be on the side of teachers, nurses, and public employees who’ve dedicated their lives to helping others—instead she’s doing the bidding of loan servicers like Navient who fleece borrowers to line their own pockets. Hundreds of thousands of our members are being harmed by the current, broken system and that’s why we have joined with the SBPC to probe what ED knew and when they knew it. And it’s why we’re holding the industry to account by supporting our members, who are suing Navient and filing briefs in court to help borrowers sue Great Lakes.”

“Across the country, student loan borrowers serving in our communities have been denied their rights,” said Seth Frotman, Executive Director of the Student Borrower Protection Center. “These borrowers deserve to know what went wrong and who is responsible. Our investigation will get answers for borrowers, demand accountability from the student loan industry, and protect a generation of public service workers with student debt.”

PSLF was created by Congress in 2007 to provide public service workers with student loan debt relief in exchange for a decade of service in their communities. Despite the promises of this program, student loan borrowers, government watchdogs, Members of Congress, and law enforcement officials have alleged wholesale mismanagement of this program by officials at the U.S. Department of Education and widespread abuses by the student loan industry.

A joint report from AFT and SBPC outlining this investigation, Keeping the Promise of Public Service Loan Forgiveness, is available at: www.protectborrowers.org/pslf-investigation.

A compendium of these individual open records requests is available at: www.protectborrowers.org/pslf-foia-package.

Background

America is in the midst of a $1.5 trillion student debt crisis. PSLF, passed in 2007, enables qualifying public servants to discharge their loans after 10 years, a potential savings of tens of thousands of dollars. But since its inception, the program has been mishandled and undermined by the Department of Education’s contracted servicers.

Earlier this year the department admitted that less than one percent of borrowers who submitted PSLF applications after the first cohort of candidates became eligible last year—96 out of 28,913—were granted loan forgiveness under the program. And of the 33 million student loan borrowers who may qualify for PSLF, to date, only 900,000 borrowers had successfully certified that they work for a public service organization.

The American Federation of Teachers continues to fight on behalf of its members struggling under the weight of student debt. In October, the AFT announced a new class action lawsuit brought by AFT members alleging student loan giant Navient misled borrowers about PSLF.

In a recent AFT member survey, 97 percent said student debt increased stress in their lives. The vast majority—80 percent—said they’ve lost sleep over it. Nearly three-quarters—72 percent—said it strained family and household relationships. A third said they had gone into default.

The Student Borrower Protection Center is a nonprofit organization solely focused on alleviating the burden of student debt for millions of Americans. Last week, SBPC released a report documenting widespread abuses across the student loan industry, as described by more than 13,000 student loan borrowers who submitted complaints to the federal Consumer Financial Protection Bureau (CFPB) last year. Borrowers across the country describe being squeezed between mounting debt and predatory companies. Complaints highlighted in this report include problems for teachers stymied when seeking benefits intended to reward their public service. The SBPC was founded by former CFPB officials, whose reports, issued each year since the office was created, helped lead to $750 million for students.

This investigation builds on the work of regulators, law enforcement officials, government watchdogs, and private litigants. Their efforts were critical to building the current understanding of what went wrong and who is responsible. In the months ahead, AFT and SBPC will uncover detailed new evidence of the breakdowns across the government and the student loan industry that have harmed millions of teachers, nurses, first responders, and other dedicated public service workers who simply sought to invoke their right to loan forgiveness guaranteed under federal law.

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The AFT represents 1.7 million pre-K through 12th-grade teachers; paraprofessionals and other school-related personnel; higher education faculty and professional staff; federal, state and local government employees; nurses and healthcare workers; and early childhood educators.

The Student Borrower Protection Center is a nonprofit organization solely focused on alleviating the burden of student debt for millions of Americans. SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students. Led by the team of former federal regulators that directed oversight of the student loan market at the Consumer Financial Protection Bureau, SBPC exposes harmful and illegal practices in the student loan industry, drives impact litigation, advocates on behalf of student loan borrowers in Washington and in state capitals, and promotes progressive policy change. SBPC accomplishes these goals by partnering with leaders at all levels of government and throughout the nonprofit sector.