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Public Service Loan Forgiveness Program’s Replacement is Broken Too

Photo illustration by: Getty Images
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It’s a federal program designed to help public service workers pursue careers in public service, but because of mismanagement by the Department of Education, it has resulted in countless headaches and disappointment for those who hoped to use it.

When the Public Service Loan Forgiveness (PSLF) program started in 2007, its goal was simple: after 10 years of work in public service, the balance of borrowers’ student loans would be forgiven. Fall 2017 was when borrowers, including AFSCME members, first became eligible to apply to have their loans discharged.

However, 99% of processed applications were rejected a year later, due partly because the task of applying for forgiveness was onerous, confusing and misleading.

In response, Congress funded the Temporary Expanded Public Service Loan Forgiveness program (TEPSLF), which was meant to help borrowers who were having trouble applying for the original PSLF. The hope was the new program would decrease the original PSLF’s staggering rejection rates.

But that hasn’t happened. According to a new Government Accountability Office report, the new program is just as difficult to navigate and as confusing as its predecessor.

“The Department of Education’s process for obtaining [TEPSLF] is not clear to borrowers,” the report concludes. “As of May 2019, Education had processed about 54,000 requests for TEPSLF loan forgiveness since May 2018, and approved 1 percent of those requests.”

The Education Department has failed to use the funds given to it to fix the problem, marshalling “only …. $27 million out of the $700 million Congress gave them,” notes the Washington Post.

U.S. Sens. Kirsten Gillibrand (D-N.Y.) and Tim Kaine (D-Va.), and Reps. John Sarbanes (D-Md.) and Mark DeSaulnier (D-Calif.) have introduced identical versions of the “What You Can Do for Your Country Act” in the Senate (S. 1203) and the House (H.R. 2441).

The bills would require the Education Department to tell borrowers up front if they qualify for loan forgiveness, update borrowers on payments, resolve payment disputes and create an electronic system to process all forms. The House Education and Labor Committee plans to hold a hearing on student loan forgiveness policy this month.