CFPB

CFPB Highlights Complaints About The Public Service Loan Forgiveness Program

The Consumer Financial Protection Bureau (CFPB) has issued a new report that indicates consumers are displeased with how student loan servicers are handling (and mishandling) Public Service Loan Forgiveness.

Public Service Loan Forgiveness allows workers with certain public service jobs to have their debt forgiven after tens years. The first borrowers in the program to become eligible will become eligible as of October 2017.

But will they get their loans actually forgiven? Borrowers have their doubts — since they are noting loan servicers are often delaying or denying access to loan forgiveness. That is happening through wrong information about their loans, flawed payment processing and bungled job certifications.

“Borrowers have told us about student loan industry practices that delay or deny access to expected help such as the Public Service Loan Forgiveness program,” said CFPB Director Richard Cordray. “We want those in public service jobs who give back to our communities to be able to stay on track, and not worry about unnecessary debt due to servicer errors.”

CFPB Student Loan Ombudsman Seth Frotman noted that making sure this program is run right is the obligation of the government who extended the deal.

“We’ve promised our teachers, nurses, first responders, and other public servants that they have a path to a debt-free future if they make their payments on time while serving our communities for a decade,” said Frotman. “When the companies responsible for delivering on this promise aren’t up to the task, our dedicated public servants shouldn’t have to pay the price.”

To be eligible for the program, borrowers must have a qualifying loan; be enrolled in a qualifying repayment plan, such as an income-driven repayment plan; and make 120 on-time payments while working for a qualified public service employer.

So far, more than 500,000 people have signaled their intention to pursue debt relief under this program — though CFPB estimates indicate that as many 25 percent of the workforce could qualify for it.  According to the Department of Education, almost two-thirds of them earn less than $50,000 per year, and 86 percent earn less than $75,000 per year. In October 2017, the Department of Education will begin accepting applications from the first round of eligible borrowers seeking loan forgiveness under this program.

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