Congress Promised Student Borrowers A Break. Education Dept. Rejected 99% Of Them

A new report from a government watchdog, says an expanded effort by Congress to forgive the student loans of public servants is remarkably unforgiving. Congress created the expansion program last year in response to a growing outcry. Thousands of borrowers — nurses, teachers, and other public servants — complained that the requirements for the original program were so rigid and poorly communicated that lawmakers needed to step in. But, documents show, even this expansion of the Public Service Loan Forgiveness (PSLF) program isn’t working.

Ninety-nine percent of loan-forgiveness requests under that new Temporary Expanded Public Service Loan Forgiveness (TEPSLF) were rejected during the program’s first year, from May 2018 to May 2019. According to the review out Thursday, conducted by the Government Accountability Office, the U.S. Department of Education processed roughly 54,000 requests and approved just 661. It spent only $27 million of the $700 million Congress set aside for the expansion.

“We were disheartened,” says Melissa Emrey-Arras, who led the GAO’s review. “I think we were discouraged. I mean, the hope is that you have this temporary expanded process, and you want it to help a lot of people. 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.”

In a statement to NPR, Education Department press secretary Angela Morabito says, “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. The Department agrees with the GAO’s recommendations about how to improve the programs; a number of our efforts are already underway.”

“Stumbling in the darkness”

“What sort of Kafkaesque thing are we in here?” asks Matthew Austin, exasperated by his recent experience with the PSLF expansion. “It’s like we’re just stumbling in the darkness.”

Every Monday night, Matthew sits down at his desk in the Connecticut home he shares with his wife, Heather, to pay the family’s bills. He clearly remembers opening a letter in the summer of 2018 from the company that manages Heather’s federal student loans. She had spent more than a decade in public service as a teacher. The couple was looking forward to the day when, under the original PSLF program, the Education Department would forgive her student loans. But the letter did not say “congratulations.”

“My jaw just dropped,” Matthew says. (Heather did not want to talk about what has been a long, painful odyssey for them both.) The letter instead informed the Austins that, much to their surprise, none of the loan payments they had made over the previous decade had counted toward the 120 monthly payments required to receive loan forgiveness. Not one.

“I saw zero,” Matthew says. “And I started seeing red.”

Many borrowers have had similar experiences with PSLF, believing for years that they were working toward loan forgiveness only to realize later that they had been in the wrong repayment plan or held the wrong type of loan. The Austins have spent more than a decade planning for the day when Heather would be free from those loans. The promise of PSLF has been in their family longer than their three children.

“It just infuriates me,” Matthew says. “I remember sitting there when we found out that Heather was pregnant with our first child. And looking at the spreadsheet that we had made up for our long-term plan of the budget. And saying, ‘OK, well, when he’s 10, we can take a vacation.”

Then came the good news: A few months before Matthew Austin opened that letter, Congress created the emergency expansion of the PSLF program in response to an outcry from borrowers like the Austins. Lawmakers set aside $700 million to help people who, like Heather, had fulfilled their public service but were, unbeknownst to them, in the wrong repayment plan. Naturally, the Austins applied. But the nightmare continued. Matthew says their request for TEPSLF was denied, this time on a technicality — “because we had not been denied for PSLF.” According to the GAO report, this is a common complaint. In its rush to implement this expansion of Public Service Loan Forgiveness, the Education Department decided to require borrowers who believe they qualify for TEPSLF to first apply for and be denied, PSLF.

It’s a hurdle Congress did not ask for. In fact, knowing that borrowers were already feeling frustrated and disillusioned with PSLF, lawmakers directed the Department of Education to do the opposite, to make this expansion easy to access: “The Secretary shall develop and make available a simple method for borrowers to apply for loan cancellation.” According to the GAO’s yearlong review of the program, 71% of all TEPSLF denials were rejected because of this one hurdle — asking borrowers to first apply for a program they know they do not qualify for. That’s 38,068 requests denied. It is unclear how many of those borrowers, once they are denied PSLF, would technically qualify for TEPSLF. “This can be confusing to borrowers,” the GAO’s Emrey-Arras says. “It doesn’t make a lot of sense, from a borrower perspective, as to why you would need to apply for a program that you know you’re ineligible for. Yet that’s the way the process works.”

“How callous can anyone be concerning our kids’ education but it seems the Department of Education run by corporate greed clone Betsy DeVos is her usual self, robbing our young folk while enriching her friends pockets Part II continues.”

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