Data shows 99% of applicants for student loan forgiveness program turned down: NPR
The US Department of Education has released new data that shows the popular public service loan forgiveness program is out of reach for most applicants.
ARI SHAPIRO, HOST:
The government made a simple promise to student loan borrowers: work in the civil service for 10 years, make valid loan repayments for 10 years, and the Department of Education would write off the loan balance. The program is called Public Service Loan Forgiveness. But borrowers have complained for years that the process hasn’t worked as advertised, and now new numbers for the program tell a similar story. For more, NPR’s Cory Turner is here with us. And, Cory, what does this data show?
CORY TURNER, BYLINE: Yeah. Well, this is really important, Ari, because this is the first look we’ve had at who actually uses this program or who tries to use it, because in a nutshell, hardly anyone gets their loans canceled. Since this summer, nearly 29,000 public service loan forgiveness requests have been submitted and processed. But of those 29,000 requests, only 289 requests were approved. That’s a 99% refusal rate. Now, some experts say the acceptance rate will improve for sure. It’s early. But it’s also hard to see how it could get much worse either.
SHAPIRO: Early – so it’s a new program that’s only been in effect for a short time.
TURNER: So the program has been in effect since 2007. But since you’ve got to be in it for 10 years, people couldn’t really start qualifying until last October.
SHAPIRO: Can you understand why people were turned away?
TURNER: Yeah. So there is quite a bit of information in the data that requires unboxing. About a third of applications were rejected due to missing information, mostly paperwork issues. The other two-thirds are more obscure, turned down for what the ministry calls failing to meet program requirements. It’s so big. I could drive a truck through that. The problem here is that there are many people working in the public service – police officers, firefighters, public teachers. But they don’t meet the program’s requirements because the companies that the government pays to manage these student loans often provide them with insufficient or sometimes bad information.
SHAPIRO: What do you mean by insufficient or bad information?
TURNER: So last year the Consumer Financial Protection Bureau released a report from their student loan watchdog. And he studied these very problems. And he found that many students who actually told their loan manager, look; I think I am eligible for the public student loan forgiveness; what should i do, they weren’t told maybe they had the wrong kind of loan and they could come together and qualify. They just didn’t know.
Borrowers were often not told they were on the wrong repayment plan, which meant the payments they made wouldn’t count towards the utility loan forgiveness. So some borrowers would spend years making payments on time, but the payments wouldn’t count. In fact, some of these issues were so prevalent that recently Congress created a new pot of money for some of those people who made payments and just got confused.
SHAPIRO: How does the Department of Education explain that it has turned down virtually everyone who has participated in good faith in this program for 10 years?
TURNER: Well, so far they haven’t. I have submitted several requests. I did not hear anything. It’s also important to keep in mind, Ari, that really important context that I’ve been talking about for a while now. A lot of states right now are really pissed off about these loan managers and the way they have treated their student borrowers. In Massachusetts, the attorney general – her name is Maura Healey – is suing the company that runs the public service loan forgiveness program for deceptive borrowers, she says. And today she called the new data alarming and said it points to massive failure.
And to be fair, the Trump administration, through the Department of Education and the Department of Justice, has made it very clear – they’ve made a legal argument that these agents should be protected from prosecution by the State because they say they should only have to answer to the federal government.
SHAPIRO: It’s Cory Turner from NPR. Thanks, Cory.
TURNER: Thanks, Ari.
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