Education Department is failing to provide public service loan forgiveness, senators allege
- Four senators have written to Education Secretary Betsy DeVos, charging that the Department is "significantly and needlessly restricting access" to the temporary expanded public service loan forgiveness program.
- That measure was meant to be a fix to the popular, but challenged public service loan forgiveness program.
- They argue the remedy is too restrictive and complicated.
The Trump administration is denying student borrowers the debt relief they deserve, four senators are arguing.
In a letter delivered to Education Secretary Betsy DeVos, Sens. Tim Kaine, D-VA, Sheldon Whitehouse, D-RI, Tammy Duckworth, D-IL and Maggie Hassan, D-NH, charge that the Department is "significantly and needlessly restricting access" to the so-called "temporary expanded public service loan forgiveness" program.
That measure was meant to be a fix to the popular, but challenged public service loan forgiveness program, which allows certain members of the military, classroom teachers and social workers, as well as other not-for-profit and government employees to have their federal loans scrubbed after 10 years of on-time payments.
Many public servants believed they were paying their way to debt relief only to discover they didn't qualify for one technical reason or another — sometimes after they'd finished their decade of payments.
Outstanding student loan debt in the U.S. has tripled over the last decade, surpassing auto and credit card debt and only second to housing debt, and now has spilled over $1.5 trillion. In 2013, the Consumer Financial Protection Bureau estimated that 1 in 4 American workers could be eligible for public service loan forgiveness.
But last year, the agency reported that a range of student loan industry practices "delay, defer or deny access" to that consumer protection.
In response to these problems, Congress authorized a $350 million fund in March to expand the debt relief to student borrowers who had previously been rejected. Specifically, it offered borrowers who'd been enrolled in a non-qualifying repayment plan a second-chance at debt relief.
The senators now argue that the remedy is too restrictive and complicated.
For example, they criticize the rule that borrowers need to have been denied for the original public service loan forgiveness, or have a full application in process, in order to qualify for the fix.
Many people didn't bother applying for public service loan forgiveness, they argue, because they were specifically told by their servicer they wouldn't qualify.
The Department also needs to make clear to borrowers that they simply need to apply for the original public service loan forgiveness program before they seek out debt relief from the expanded program, the senators said. They said the Department's rejection emails mislead borrowers to believe they're inelgible.
"No borrower should be denied relief simply due to the order in which they filed paperwork," they write.
The senators also accuse the Department's website of containing "plainly incorrect" information.
"It repeatedly asserts that borrowers must have filled out a public service loan forgiveness application and 'had that public service application denied'," the senators write. "However, the Department has indicated that it will process a public service loan forgiveness application for forgiveness that is currently in process — but not yet denied."
In addition, the senators request that the Department provide clarity on how it plans to use the $2.3 million it was allocated to conduct outreach about public service loan forgiveness.
The senators said they wrote to the Department in March, requesting information about the legislation but never received an answer.
The Department of Education did not respond to a request for comment.
More from Personal Finance: