Congress promised teachers student loan cancellation – but hired loan companies who made it impossible
The Education Ministry acknowledged on Thursday it could have done a better job helping the tens of thousands of teachers and other public sector workers who had been promised loan forgiveness as part of the ‘a government-funded program that ended up rejecting 99% of applicants.
“For 10 years you think you’re on this path and then you find out it’s all a joke,” said Kelly Finlaw, a 36-year-old art teacher in New York City.
In 2007, Congress launched the Public Service Loan Forgiveness (PSLF) program to help ease the burden of student debt and encourage workers to enter the public service. The text of the law was clear: Employees of eligible public service employers who received direct federal loans and were in income-based repayment plans could, after 10 years of regular payments, have the remainder of their loans. canceled.
However, only 1% of those applicants were accepted, according to a recent Government Accountability Office report, even after Congress streamlined the process in 2018 for rejected applicants.
A major hurdle for borrowers has been the “confusing” process that requires them to first apply for a program they are not eligible for, and then apply for another, according to the GAO report.
In a Congressional hearing on the matter Thursday, the Education Department acknowledged the intricacies of the nomination process.
“We can better explain these complicated requirements to borrowers,” said Jeff Appel, director of policy liaison and implementation at the DOE’s federal student aid office.
This admission comes too late for the thousands of teachers, nurses, law enforcement officers and other public sector workers for whom 99% of loans have been refused.
For years, Finlaw has made regular payments, contributing $ 30,000 to his total balance of $ 120,000. Her loan officer confirmed that she was on track to secure a loan forgiveness.
After 10 years, she received a letter in the mail. She thought that would tell her that the rest of her loan was being paid off, according to the schedule. She dreamed of escaping the tenant trap and buying her own home near the school where she loved to work.
She sat down with her roommate to open it together. “I was like ‘This is it’,” she told NBC News. Then she read the letter. He told her that because one of his loans was not the right type of loan, she did not qualify.
To make matters worse, after adding interest, she has $ 120,000 left to pay off her loan.
“I’m not going to say what I said, because it wasn’t pleasant,” Finlaw said.
She is now one of many teachers to sue Department of Education secretary Betsy DeVos over her agency’s administration of the program.
Mike Giambona, a 42-year-old psychologist from California, told a similar story.
“I called the company that manages my loans and they told me my loans were eligible and I just had to continue working in the public service for 10 years,” he told NBC News.
Then one day he received a letter in the mail from his duty officer, informing him that his loan was not the right type of payment plan and that he did not qualify. He would be on the hook for the entire amount.
“It was almost like an out-of-body experience,” he said. “I have had so many conversations with so many people over the years. I did everything I was asked to do. If someone had told me I had to change, I would have.
Time and time again, rejected borrowers tell a side of the same story: Their loan manager, one of the many companies outsourced by the Department of Education, told them that everything they were doing was okay. , as long as they continued to make regular payments.
Critics of the program say it has labeled too many workers and could have had the unintended consequence of encouraging borrowers to take on more debt than they could afford.
“The high rejection rates of the PSLF are due to the design of Congress, not by accident or failure of the ministry to implement it,” said Angela Morabito, press secretary for the Department of Education, when she was contacted by NBC News.
NBC News has requested comments from several of the major lending services: PHEAA / FedLoan Servicing, Great Lakes, Navient and Nelnet.
“We provide full details on the various repayment options, deferral / forbearance options, and loan forgiveness programs, including teacher loan forgiveness and public service loan forgiveness, on our website.” Navient spokesperson Paul Hartwick told NBC News.
FedLoan, Nelnet and Great Lakes referred requests for comment to the Department of Education.
“It will cost the federal government billions of dollars,” said Richard Fossey, professor of law and educational policy at the University of Louisiana at Lafayette. “It’s the government equivalent of the Titanic hitting an iceberg.”
The DOE said Thursday it agrees with all of the recommendations for improvement made by the GOA watchdog, and has already started implementing other changes.