Clock is Ticking on Public Service Loan Forgiveness Program
Join us and tell your reps how you feel!
In late 2007 Congress passed a sweeping federal student loan program overhaul bill with strong bipartisan support. The bill established the Public Service Loan Forgiveness Program (PSLF). The PSLF was designed to encourage students to go into the public sector by offering them loan forgiveness on any remaining balances due on direct loans after 10 years (120 months) of qualifying loan payments.
The first applications are expected to be submitted for the final loan forgiveness starting in October of 2017 and some borrowers are worried that the Education Department will renege on the deal. Four borrowers, in concert with the American Bar Association, have filed a suit in U.S. District Court against the department to force them to follow through on the promises of the program.
The primary issue, according to the plaintiffs, is a lack of clarity on the part of the Education Department about qualification for the program. Participants are encouraged, though not required, to re-submit for certification of their qualification annually. The plaintiffs in the suit did that, got letters certifying their qualification from the Department’s designated loan servicer — FedLoan — and then later got letters saying they were no longer qualified and had been certified in error, making the decertification retroactive. They were given no information how to appeal the decision.
Last week the Department stated in court filings that FedLoan certifications cannot be relied upon to be accurate. The application for final loan forgiveness has yet to appear on the Education Department website, and there is no information about what borrowers can do if they feel they’ve been denied certification unfairly.
Nobody knows how the 550,000 people who are currently enrolled in the program are going to navigate the final loan forgiveness process. Those borrowers expecting to complete their 120 months of qualifying payments in October may sail right through or they may be looking at capitalization of tens of thousands of dollars of debt and no recourse.
Should Congress force the Education Department to honor FedLoan’s certifications and clarify the details of the loan program for the protection of borrowers? Tell your reps what you think!
— Asha Sanaker
(Photo Credit: Public Domain)
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