Ed. Dept. to Simplify Paperwork for Loan Forgiveness Program That's Plagued Many Teachers
In the wake of damning government reports and media investigations, the U.S. Department of Education has announced it will streamline the process for teachers and other public servants to apply for student loan forgiveness.
Last year, a government watchdog report found that 99 percent of people who applied for loan forgiveness under the Temporary Expanded Public Service Loan Forgiveness were rejected by the department. The majority of the denied requests were due to paperwork errors.
The department's fix, announced today and first reported by NPR, will simplify the amount of paperwork needed to go through the forgiveness process and "reduce confusion."
The Public Service Loan Forgiveness program, which was established in 2007 and began reviewing applications in 2017, is meant to erase the student debt for certain public-service workers, including teachers, after borrowers make 120 monthly payments toward their loan over the course of a decade or longer. However, the department was initially approving so few applications that federal lawmakers stepped in to create a temporary expanded program in hopes of giving some workers a second chance at applying for loan forgiveness. Congress allocated $700 million to the expanded program.
But that expansion hasn't worked: 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, and the U.S. Government Accountability Office found that 71 percent of denied requests—from more than 38,000 applicants—were rejected because the borrower hadn't submitted a PSLF application.
Now, borrowers applying for the expanded program will no longer have to first file a separate application for PSLF. Instead, a single form will work for both programs.
"While we cannot change the fundamental problem of having to administer a program designed to serve only a small fraction of the borrowers, we are doing our best to at least remove unnecessary administrative burden," the department told NPR.
As NPR has previously reported, the Public Service Loan Forgiveness program has complex requirements and the rules have been poorly communicated to borrowers. The department has outsourced the paperwork and call centers to loan servicers, who have been criticized for providing inadequate information to borrowers. Many borrowers would make it years into the repayment process before being told they didn't qualify for loan forgiveness.
Last summer, the American Federation of Teachers sued Secretary of Education Betsy DeVos over what the lawsuit alleges is "gross mismanagement" of the federal loan forgiveness program. In a statement, AFT President Randi Weingarten said the fix announced today doesn't go far enough.
"Frankly, this move shows just how easy it would be for the department to strengthen the program if it wanted to protect people instead of student loan servicing companies that make money off their debt," she said. "But this 'fix' is a Band-Aid that does little to heal a gaping wound; it's a paperwork solution to a monumental problem."
In 2018, AFT also brought forth a separate class-action lawsuit against Navient, one of the largest federal student loan servicers, from nine teachers who alleged that the provider gave borrowers "inaccurate and misleading information" about their eligibility for Public Service Loan Forgiveness for financial gain. If a borrower is accepted to the federal forgiveness program, the loan is transferred and Navient no longer receives servicing fees.
"Just like every other teacher, I struggle to make my mortgage payments, to pay for day care, to keep food on my table—I struggle every day," said Megan Nocerino, one of the teacher plaintiffs in the lawsuit, told Education Week in 2018. "When you trust someone with a loan, or with your credit, or with anything—they should have your back."
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