Just came across this in my NPR app—sad that so many who had been counting on and expecting loan forgiveness have been denied. Hope they have a good plan B.
‘I Am Heartbroken’: Your Letters About Public Service Loan Forgiveness - https://www.npr.org/658447443
Democratic lawmakers are on this: https://democrats-edworkforce.house.gov/imo/media/doc/2018-10-16%20Bicameral%20Oversight%20Letter%20to%20Ed%20Dept%20on%20PSLF%20Implementation.pdf .
Also interesting is Frontman’s resignation letter: https://apps.npr.org/documents/document.html?id=4784891-Frotman-Letter .
I know from experience that loan servicing is sub-par. I also know how hard I had to work (and continue to work - I learn new things all the time) to get all the necessary information to properly counsel my students/graduates regarding PSLF. Servicers must properly train their customer service agents in rules and regulations, and they must also teach them how to probe callers to find out if there is more to the question than what it appears to be on the surface. Unfortunately, this would require money … and that would cut into the servicer’s profits. It was NOT better before the government became the lender. But it’s still not good, and now that the government is the lender, it is their job to make sure borrowers receive correct information.
DH had grad school loans. We diligently paid extra every month to pay them off early. We regularly got mailings saying, “your payment has been reduced!” Or our bill would say the next payment wasn’t due for three years. The services actively did everything possible to prevent us from paying them off early. I would not trust that the servicers are even trying to approve anyone for the forgiveness program. They’re actively maximizing the interest they collect from borrowers. It’s sad for the many people that took service jobs in good faith that this program would help them. It’s borrower beware for everyone else.
It might get better. If you’ve ever been in line at the DMV behind people who didn’t have their paperwork in order, you know that people often get it wrong the first time, even for simple transactions that they have to do every couple of years. For something this new and complicated, it might take a few tries both for the applicants and for the loan servicers. We are just getting to the point where 10 years of payments could have been made.
I have a HUGE issue with not counting every payment toward PSLF. If a borrower pays extra in any month, they get put in paid-ahead status, and any payments made while they are in paid-ahead status don’t count toward PSLF. I am a financial aid director & was not initially aware of this! I shout this from the mountain top when I talk to my students/grads. I tell every one of them to request that their files be noted that they NOT be put in paid-ahead status, and I tell them to call after they do that to make sure the person who answers can see that they are flagged to not be in paid-ahead status. Many new graduates will have a 0 payment in IDR their first year, if they weren’t working much in school. If they pay $50, they are in paid-ahead status the entire time they have a 0 payment … so none of those months in which 0 is their payment will count toward the 120 months for PSLF.
I always counsel my students/grads to pay whatever they can, whenever they can. I caution them that they might think they will get their loans forgiven in PSLF, but life might be such that things change … so paying down the loans whenever they can is wise. But the servicers’ messages undermine my message. “Why would you want to pay more when you are going to get your balance forgiven?” “Why would you not want to put your undergrad loans into forbearance during your grad loan grace period?” These messages make me mad.
This is horrible and sounds like just a scam. I would pay off my student loans ASAP and not hope for a lucky break that will allow you to make them disappear. I would not trust any of these servicers or any special program. You don’t know when these will be changed, and it sounds like people are just getting ripped off. If you can’t pay the loan off yourself with future income, don’t get the loan.
Not that it helps these people, but anyone considering it now.
sure, the number is shocking, but it is also wildly misleading (not that npr would care about the real story). Instead, its lies, damn lies, and statistics.
As noted in the Forbes article, some are applying early and before they have made 120 payments. (I guess instead of a rejection, the feds could have just said, we’ll hold your app until you are eligible). But more importantly, 28% of the apps are incomplete for some reason, including missing information. (If you don’t fill out the paperwork correctly, don’t expect to receive thousands of FREE dollars from the feds.) Note, as the article says, these denials are not final-final, in that the feds will reconsider when they receive a properly completed application. And finally, there are undoubtedly hundreds/thousands of apps that are just ineligible; in other words, their loans never qualified for forgiveness in the first place. Such forgiveness apps should not be counted in the numerator or denominator.
My son has law school loans outstanding, and the servicer just made that change available online last year. Before then, I wonder if was a reg that required any extra payments to go into paid-ahead status. I bet that in the (bad) old days, folks paid extra thinking that they were making next month’s payment but then got dinged by a late fee (which made more money for processors so it was in their interest to handle it this way) when the servicer put it to the principal and not next month’s payment. (Darned if you do, and darned if you don’t.)
They made the change available online because finaid professionals like me complained long & loud. It wasn’t a regulation that required it - it was an oversight that allowed it. But if the servicers (and FSA) knew that it would negatively affect PSLF, they should have provided an easy button for don’t-put-me-in-paid-ahead-status button next to an explanation of what that means.
Believe me, many mess ups are the fault of the student. I have worked in this business long enough to know that. Unfortunately, many loan servicer problems are the fault of the servicer. When a borrower calls and says they want to make sure they are set in the PSLF program & are told yes, he should be able to believe that. Unfortunately, people are told that when they are in graduated repayment plans … meaning that while they may technically be enrolled in the PSLF plan & even submitting documentation of employment, none of their payments count toward PSLF (because payments made in a graduated plan do not count toward PSLF). This is not okay in my book. Yes, some of the issues are the borrower’s fault - but many are not.
I should also add a softer comment. I think that it’s true that a lot of borrowers didn’t understand the rules. While I am hard on the servicers because they are paid to do the right thing & I don’t think they always do, I also recognize that many borrowers did not do the necessary research to make sure they were on the right track. There is a lot involved in qualifying for PSLF, and if someone really wants to do it, they need to be on top of it. I just think it’s incredibly important to make that information readily available, easy to understand … and for servicers to have excellent PSLF knowledge when they counsel borrowers. Yeah, a lot of issues are the fault of the borrower. But not all borrowers were are trying to score something good without putting any work into knowing how it all works.
Better servicing. Better information available to borrowers. More thought into what could go wrong & getting ahead of that through communication with borrowers. A lot more could be done to make this a more smoothly running program.
Perhaps not, but since they are really just processing contractors for the Dept of Ed, IMO the feds have the ultimate responsibility to tell them how to setup the accounts. And the feds need to audit them from time to time to ensure that they have setup their systems to enable federal law such as PSLF. If they do not have such systems, that’s on DoE. As you know, the law has been around for 10 years (and at least 2 Presidents)…