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October 4, 2018

Miller urges Department of Education to address problems with Public Service Loan Forgiveness Program

Less than 1% of applicants have had loans forgiven

Des Moines – Iowa Attorney General Tom Miller urged U.S. Department of Education Secretary Betsy DeVos and Federal Student Aid Acting Chief Operating Officer Jim Manning to address the severe shortage of applicants to the Public Service Loan Forgiveness (PSLF) program who have had their federal student loans forgiven.

The PSLF program was created in 2007 to help student loan borrowers who aspire to give back to their country or community by working for qualifying government or non-profit organizations.  

In a letter to DeVos and Manning sent Thursday, Miller and 10 other attorneys general expressed their dismay at recent data released by the department indicating that less than 1 percent of PSLF applicants have had their loans forgiven – a mere 96 people out of more than 30,000 applicants.

Because employers in public service fields typically offer lower wages, the PSLF program intends to let workers in these fields make payments based on their income and, after 10 years, have the remainder of their loan balance forgiven. Borrowers across the country relied on this promise of loan forgiveness when they made the choice to work in public service.

"This exceedingly small percentage of discharged loans is alarming," Miller and the attorneys general said in the letter. "Thousands of consumers contact our offices every year with problems paying their student loans, including borrowers with issues regarding their PSLF applications."

Miller is calling for the department to make the following reforms to the program:

  • Provide accurate and comprehensive information to borrowers about the PSLF program.
  • Stop putting up roadblocks to requests for data. States, in their consumer protection role, must help the borrowers whom the department and its servicers have abandoned. The department needs to provide states with the data necessary to diagnose and fix the problems.
  • Call on Congress to expand the scope of the Temporary Expanded PSLF Program to include borrowers who made payments under the wrong loan program. The Temporary Expanded PSLF Program is a recent effort by Congress that provided $350 million in temporary relief for PSLF applicants who made payments on the wrong repayment plan.

In addition, Miller requests that student loan servicers counsel borrowers about the requirements of the PSLF program and how to fulfill them. Specifically, borrowers need to know whether they have a qualifying job, whether they are in a qualifying repayment plan, and whether they are in the right type of loan program. This need was highlighted by the American Federation of Teachers’ lawsuit filed Wednesday against Navient for failing to provide adequate information to borrowers seeking to qualify for PSLF.

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