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Nearly All Teachers (and Other Public Servants) Who Applied for Loan Forgiveness Were Denied

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Last year, Congress expanded a program to forgive the student loans of more public servants, such as teachers. But a new government watchdog report found that 99 percent of people who applied were rejected by the U.S. Department of Education.

According to the report by the U.S. Government Accountability Office, the Education Department processed about 54,000 requests for loan forgiveness under the Temporary Expanded Public Service Loan Forgiveness program, and accepted just 661. It awarded about $27 million in loan forgiveness—but Congress appropriated $700 million. 

The Public Service Loan Forgiveness program, which was established in 2007 and began reviewing applications in 2017, has been criticized for its overly complicated and poorly communicated requirements. It is meant to erase the student debt for certain classes of public-service workers, including teachers, after borrowers make 120 monthly payments toward their loan over the course of a decade or longer.

But the department has approved so few applications that federal lawmakers stepped in to create the temporary expanded program, in hopes of breaking down barriers for borrowers who were on repayment plans that were ineligble for PSLF.

Yet it hasn't worked: Melissa Emrey-Arras, who led the GAO's review, told NPR that the findings were discouraging. (NPR first obtained a copy of the report.)

"I mean, the hope is that you have this temporary expanded process, and you want it to help a lot of people," she said. "And you don't want borrowers to be confused about the eligibility criteria and to face a high denial rate. And yet, that's what we found."

The Education Department required borrowers who were applying for loan forgiveness under the temporary expanded program to submit a separate PSLF application—even though they were ineligible for PSLF. This was confusing for borrowers, the GAO report says, and "as a result, some eligible borrowers may miss the opportunity to have their loans forgiven." 

Indeed, 71 percent of the denied requests were rejected because the borrower hadn't submitted a PSLF application. 

The GAO report also notes that some of the department's online resources for borrowers don't include information on the temporary expanded program. 

The report recommends that the department include a checkbox to apply for the temporary expanded program on the PSLF application, so borrowers have a seamless way to request loan forgiveness. It also suggests that loan servicers and the department include more information about the temporary expanded program online and in denial letters. The department has agreed with these recommendations, the report notes.

A spokeswoman for the Education Department told NPR that a number of these efforts are already underway. "The Department has taken steps to help borrowers better understand the complex eligibility requirements, application process, benefits, and other information related to the PSLF and TEPSLF programs," she said.

Teachers, nurses, and other public servants are meant to be eligible for federal loan forgiveness. This summer, the American Federation of Teachers sued U.S. Secretary of Education Betsy DeVos, arguing that she has "done nothing to remedy the gross mismanagement" of PSLF. The federal lawsuit represents eight AFT members who say they were unable to receive loan forgiveness due to administrative errors and inaccurate information provided by loan forgiveness.

"I was being held accountable, but there was no accountability elsewhere," said plaintiff Gloria Nolan, who works in an education-related nonprofit in Missouri.

She said she was a first-generation college student and thought she could achieve the American dream if she pulled herself up by her bootstraps: "This process," she said, "is setting those boots in cement." 

The department has also come under hot water for its handling of the Teacher Education Assistance for College and Higher Education, or TEACH grant, which is meant to give teachers in high-needs fields a $4,000 annual grant if they teach in a high-needs school for at least four years. NPR had found that due to paperwork errors, thousands of teachers had been unfairly forced to repay the grant money as loans.  

The department has since said it would cancel the debt for eligible teachers, and as of May, had forgiven the loans of about 2,300 teachers. (At least 6,000 teachers have applied for relief.) 

Image via Getty

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