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Domino: A Blog About Student Debt Dignified in Work, Drowning in Debt

Dignified in Work, Drowning in Debt

By Amy Czulada and Chris Hicks | September 6, 2021

For too long, our student loan system has punished students and families for daring to chase the American dream. What was once a path to a better life for students and their families has been replaced by a higher education system that has saddled 45 million Americans with insurmountable debt levels, as income has remained stagnant for low-wage workers for decades. The outcome is a financial catastrophe for working class families, with student debt driving millions into delinquency and default, while millions more struggle to pay their monthly bill.

No corner of our economy has gone untouched by the student debt crisis, but far too often the faces of student debt tend to be those of doctors, lawyers, and white collar professionals with six figure salaries. But for the overwhelming majority of the workforce, this is not that case, especially for America’s public service workers who have planned their lives around the vital Public Service Loan Forgiveness (PSLF) program. PSLF was created to alleviate the burden of student debt for dedicated public service workers. The idea was simple: work in public service for ten years and have your remaining student debt forgiven.

In reality, the student debt crisis—and the failure of PSLF to provide meaningful relief to working families—has financially devastated tens of millions of low to middle-income households. Every month, in every community across the country, working families receive a student debt bill that forces them to put off saving for their kids’ education, delay making a downpayment on a house, or even hinder their own retirement savings. Student loans that promised to be a path to opportunity have instead become a barrier to the middle class life these borrowers sought.

It wasn’t supposed to be this way. As the new head of the Department of Education’s Office of Federal Student Aid, Richard Cordray, noted back in 2017  in recognition of those who serve our communities for little pay, “[m]any of these borrowers work for relatively modest wages in low-income areas where their help is desperately needed, as teachers, public defenders, social workers, and nurses. Some have moved to underserved communities or turned down private sector jobs that would have paid them more.”

Since the first public service workers became eligible for debt cancellation in 2017, 98 percent of those who applied have been rejected. Year after year we continue to see widespread denials without explanation and no serious effort to address the underlying problems driving this systemic failure. And that is just the tip of the iceberg — for every borrower who has served for a decade and been rejected for PSLF, tens of thousands of others have been knocked off track or never had the opportunity to apply for relief.

Fixing PSLF to Support Working Americans

The data is clear—delivering on the promise of PSLF is delivering for working families. According to estimates by the Department of Education, almost two-thirds of borrowers pursuing Public Service Loan Forgiveness earn less than $50,000 per year, and 86 percent earn less than $75,000 per year. And this is by design: Congress created the PSLF program because public service is vital to our communities, yet the pay for this work is not often commensurate with its value.

Worse yet, we know that PSLF failures are particularly acute for borrowers of color because of the racial wealth gap. Black and brown students borrow more, owe more, and pay for longer amounts of time, which in turn creates additional financial hardship for educators, health care professionals, and other public service workers. For example, just last month, the National Education Association released a study showing how young educators of color struggle the most with student debt, and as a result are the most impacted by the failures of PSLF.

In response to this crisis, the largest labor unions, representing more than 10 million workers, joined together and demanded that the Biden Administration fix the PSLF program and deliver on its promise to working families earlier this year. 

And the Biden administration has the tools to take action. While running for office, President Biden pledged to the existing Public Service Loan Forgiveness program. This was an important promise, and one that America’s public service workers hope he follows through on.

In recent good news, the Biden administration has further signaled it is looking to fix PSLF. For the first time ever, the Department of Education is asking those who depend on the program to share their stories to help decide what comes next. The following are just a handful of those stories from the workers who make a difference every day in their communities, yet have faced countless roadblocks and servicing breakdowns when trying to secure PSLF:

Matthew P., Educational Support Professional:

I am a proud 15 year educator working as an Education Support Professional. During this pandemic, I worked every day and ensured my students needs were met. … As a bus driver and custodial supervisor, I have the opportunity to determine how a student starts their day in the classroom. I have a partnership with fellow classroom teachers to ensure that all my students are successful. Although I have huge responsibilities when it comes to my students health and safety, I barely have much income at the end of the month after ensuring my students have what they need and paying rent for shelter over my head. … A living wage is something that Education Support Professionals deserve, but yet we are still not respected when it comes to our work to meet the needs of every student.

Although this is my 15th year working in public schools, much of my time for the PSLF doesn’t count because I was not enrolled in the type of required plan although I was still scrounging up every fund I had to pay the student loan.

Autumn V., Nurse’s Aide:

I borrowed to finance my 2 degrees while raising 3 small children. On 10/15/2007 I began working full time for a non profit 501c3 hospital. I made $11.50 to start as a nurses aide. Since my income was quite low and I was a single mom I was given a hardship deferral. I had NO idea that I could have been on an income dependent payment and still paid zero dollars while having those payments count toward forgiveness. Finally in early 2013 I heard about PSLF and signed up for the program. In order to do so I had to consolidate my loans since they were FFELP and those loans, even though federal, did not qualify. I sent in the paperwork and continued making my zero dollar payments except now they were counting toward the 120 months. I had already worked in public service for over 5 years and should have been half way there!!! Fast forward to 2019 and I am still making payments (now more than zero) and I can see the progress on my FedLoan account but wait…. I have 2 different servicers that I make payments too and I never hear from the other about how far I’ve come. I call only to find out that 4 of my loans were not included in the consolidation. What? I can consolidate them know but I would lose out on the over 6 years of payments I have already made. This is so incredibly frustrating and exhausting! I have been a full time public servant for nearly 14 years and I still have 2 years to go on some loans and the rest I haven’t even started on since they are FFELP and weren’t included in the consolidation even though FEDLOAN said at the time they would take charge of all of my loans and track them for me. The borrowers in this program are smart, college educated people! The system is set up for you to fail! Why wasn’t I told about this program? Why doesn’t the time before consolidation count? Why didn’t the consolidation include ALL of my student loans?

Elisabeth S., Special Education Assistant:

I have been a Special Ed Assistant for Minneapolis Public Schools for 9 years this October. I didn’t know about the Public Service Loan Forgiveness program or how to qualify for it until 2016. By then, I had already worked for the district for four years and I had the wrong type of loan for the qualifying payments. Furthermore, people who work in some positions only work 30 hours a week even if they work the full school year for the whole school day. There are a lot of positions like that. The only reason that most years I work full time is that I also have a position as a bus aide. I’ve struggled to make a dent in my payments of my loans since I finished college 14 years ago.

These are the borrowers who depended on the promise of PSLF to be fulfilled the most, and those most acutely impacted by its failure.

We also know that the COVID-19 pandemic exacerbated the financial stresses of workers across the country.  Workers like those highlighted above continued to go to work each day under life-threatening and frustrating conditions. Others saw their hours cut, experienced furloughs, or were simply laid off and had to figure out how to survive week-by-week. While the payment pause alleviated some of the immediate stress for workers trapped in these scenarios, it did not address the underlying failed promise of the PSLF program for workers who have dedicated their lives to their communities.

We are urging public service workers: it’s time to raise your voices, share your stories, and call for President Biden and Secretary Cardona to deliver promised debt relief to student loan borrowers who have committed their careers to the public service. Ten years working in public service is ten years and public servants’ loans should be forgiven. Together, borrower stories can help make this a reality.

  • Do you have an older federal loan that is not eligible for PSLF and did you get bad or no information from your student loan company about how to become eligible for PSLF?
  • Did you spend months or years in the wrong repayment plan while never being told that you needed to be in an IDR plan to qualify for PSLF?
  • Did you have problems certifying that your employer was “qualified” even though you worked in public service?
  • Are you one of tens of thousands of borrowers whose pursuit of PSLF was derailed by poor servicing, unfair technicalities, or for any other reason?

Share your story here.

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Amy Czulada is the Outreach & Advocacy Coordinator at the Student Borrower Protection Center. Previously, Amy was a Research Analyst at 32BJ SEIU in New York City.

Chris Hicks is a Student Loan Justice Fellow at the Student Borrower Protection Center. Previously, Chris was a Senior Associate at the American Federation of Teachers and prior to that led the Debt-Free Future campaign at National Jobs With Justice.

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