Keeping America’s Promise

By Seth Frotman | April 16, 2019

For years, advocates, law enforcement, and regulators have been sounding the alarm on the impending Public Service Loan Forgiveness crisis. Millions of dedicated public servants have devoted their careers to serving their communities, based on the promise of the PSLF program. But now, as the first cohort of eligible borrowers are applying to have their loans forgiven, data shows that for many, that promise has been broken. The parties responsible for the implementation of the PSLF program—the Department of Education and its contracted servicers—have failed borrowers at every stage of the program, from getting on track to finally earning forgiveness.

Despite repeatedly promising to do better, the Department of Education is still failing borrowers. In fact, recent public complaints from student loan borrowers continue to show that servicers are repeatedly preventing blocking access to PSLF by mismanaging payments and misinforming borrowers. For example, a borrower from Arkansas submitted a complaint in January of this year, stating:

I consolidated my loans . . . years ago. I filled out documentation to follow a IBR plan and the public service loan forgiveness plan. . . . I submitted the proper paperwork proving that I had approved work . . . [after submitting an Employer Certification Form] they told me that I could not get credit for over 6 years because my loans were not consolidated with them. THEY WERE. . . . [My servicer] was horrible and never informed me correctly of my loans and falsely informed me that I was getting credit before consolidating. . . . I am still getting interest added on loans that should have been dissolved and forgiven by the rules and now my loans have more than TRIPLED!! The balance on my loans is more than my current MORTGAGE debt!!!!! That is ridiculous and they are taking advantage of consumers. They are careless!!

That same month, another borrower from Virginia spent years making non-qualifying payments because her servicer gave her the wrong information about how to become eligible for PSLF:

Navient, which now services Sallie Mae’s old loans, has denied my requests for public service loan forgiveness. I have worked in [public service] for 13 years (over the 10 years required for forgiveness) and have made well over the qualifying 120 payments on my loan. My loans were consolidated by the lender which no longer make them a qualifying loan type under this program. Had I known this before I would have never allowed them to consolidate my loans. Part, or all, of my student loans should be eligible for forgiveness. The PSLF program is a complete scam. I worked to pay down my loan over the last 13 years only to find out when I applied for this program that I am not eligible. There was no guidance on the part of the lender and, conversely, they placed me into a consolidated product that rendered all of my loans ineligible for forgiveness.

Late last year, a servicemember from North Carolina complained:

Good Evening, I am currently working towards loan forgiveness via the PSLF program as an [redacted] service member. I recently learned that 99 % of applicants were denied forgiveness for a very similar issue I have experienced. The first two years of my military service there was little information regarding the means to ensure compliance with the complex rules congress established for forgiveness. Further, the loan service company could not answer questions nor provide guidance. Merely through the assistance of an acquaintance, I learned that I must consolidate my loans in order to qualify for PSLF. Nearly two years of payments towards my initial loan payments, paid in the honest and fair spirit of the law, will not count towards loan forgiveness. I believe this is truly an unfortunate and saddening realization that clearly thousands of other public servants are facing. The execution of this program ha[s] failed those faithfully serving this great nation.

Amid all of these breakdowns and failure, voices in Washington keep telling us to “sit tight” and “these problems will work themselves out.” They are wrong. These problems are just the tip of the iceberg.

Millions of borrowers have done exactly what we have asked of them: they took on the debt; they got the degree. And now, they are answering the call to give back to their country. They have made sacrifices that have impacted their financial futures, all based on the promise of financial relief through the Public Service Loan Forgiveness program. But as the servicemember from North Carolina explained, 99% denial rates and botched servicing can mean only one thing:

[T]his is truly an unfortunate and saddening realization that clearly thousands of other public servants are facing. The execution of this program has failed those faithfully serving this great nation.

That is why new legislation to protect borrowers working in public service is so important. Announced by Senators Gillibrand and Kaine last week and expected to be introduced in the House by Congressman Sarbanes, the author of the 2007 legislation that created the PSLF program, this bill would create a lifeline for borrowers who have fallen victim to a broken system—borrowers who did everything right, only to be knocked off track by servicing failures. It will ensure the government keep its promise to the millions of borrowers who serve their communities.   

For more than a decade, we have ignored the burden we placed onto an entire generation. And so, as Congress negotiates a new higher education policy in America, we must not forget the policy failures of the last decade, and our obligation to help fix them. We cannot continue to tout access while ignoring the aftermath. Borrowers who have been needlessly saddled with tens of thousands of dollars of debt don’t get a clean slate after graduation, and neither should Congress. Any reauthorization of the Higher Education Act must include these important reforms to the PSLF program, showing teachers, nurses and other public service workers that policymakers have learned the lessons from the past decade of PSLF mismanagement and abuse. A generation of borrowers relied on our promise, and it’s time we delivered.

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Seth Frotman is the Executive Director of the Student Borrower Protection Center. He previously served as Assistant Director and Student Loan Ombudsman at the Consumer Financial Protection Bureau, where he led a government-wide effort to crack down on abuses by the student loan industry and protect borrowers.