99% of Applications to Newly Expanded Student Loan Forgiveness Program Were Rejected: Federal Report
Congress tried to make it easier for borrowers to apply for federal student loan debt forgiveness, but almost everyone who’s applied has been rejected, according to a government report released Thursday.
The Education Department denied 99% of requests for relief processed under the newly expanded Public Service Loan Forgiveness program, according to a review by the Government Accountability Office released Thursday.
Only 661 applications were approved while 53,523 were denied during the first 12 months after the fix was put in place.
The program — which allows borrowers who work in the public sector, like teachers and social workers — to apply for debt cancellation after making 10 years’ worth of payments, was signed into law by President George W. Bush in 2007. But the first time anyone would have made enough payments to qualify was the fall of 2017, under the Trump administration.
Congress set aside $700 million to expand the program in 2018 to address the low number of people qualifying for forgiveness, but the new report shows that fix hasn’t had the desired results.
Democrats are pointing to the GAO report as further evidence that, under Secretary Betsy DeVos, the Education Department isn’t doing what it should be to help borrowers apply.
“The GAO’s report reveals that the Education Department is failing to competently implement the Temporarily Expanded Public Service Loan Forgiveness program,” said Virginia Democratic Rep. Bobby Scott, chair of the Committee on Education and Labor, in a statement.
Borrowers argued that the qualification requirements were complex and poorly communicated by loan servicers, and some have filed lawsuits against the companies. In July, the American Federation of Teachers sued the Department of Education over the issue, alleging that the agency has mismanaged the program.
Some borrowers, after making 10 years of payments, found out that they didn’t have the right kind of federal student loan, were in the wrong repayment plan, or worked for an employer that didn’t qualify for forgiveness.
The program has also been under attack from the Trump administration. DeVos has proposed suspending any new borrower applications three years in a row in her annual budget requests. Lawmakers have rejected her proposal each time.
The bipartisan fix put in place by Congress was meant to allow those borrowers who had been in the wrong repayment plan to still qualify for forgiveness. But it requires a borrower to have first applied and been rejected to the original program. About 71% of those who had been rejected by the fix had not done so, according to the new report.
This requirement “has created a confusing process for borrowers,” the report said.
The Government Accountability Office suggested that the Education Department integrate the request for relief under the temporary expansion program into the application for the original application process. It also recommended it provide more information to borrowers about how to contest a decision, as well as require the student loan servicers to provide information about how to apply on their websites.
The Education Department said it would implement those recommendations, according to the report. A spokeswoman did not immediately respond to a request for comment.
In April, New York Democratic Sen. Kirsten Gillibrand and Virginia Democratic Sen. Tim Kaine introduced legislation that would overhaul the process. The legislation has not progressed.
“The current Public Service Loan Forgiveness program is a bureaucratic nightmare, and the Department of Education is failing to meet its obligation to help ease the student debt burden for our nation’s public servants,” Gillibrand said in a statement at the time.