loan forgiveness

Out of the approximately 30,000 people who applied for the Department of Education’s public service student loan forgiveness program, only 96 had their loans forgiven.

The program, which former President George W. Bush created in 2007, allows for graduates to apply to have their federal student loan debt forgiven if they opt to work in a “public service” industry, rather than pursue a more lucrative career in the private sector. Approved employers usually consist of local, state, and federal government agencies and certain non-profit organizations.

Recent graduates can be enticed with the offer of having tens of thousands of dollars in federal direct loans forgiven after ten years of public service (assuming they make all their monthly payments on time, typically 10 percent of a borrower’s monthly income) while allowing the public sector to have access to a younger, highly educated workforce.

More than half a million graduates have applied for the program since its inception, according to the New York Times. However, CNBC reported Tuesday that of the 30,000 borrowers who applied to have their loans forgiven, the Department of Education only approved 96 requests. Oklahoma teacher Debbie Baker told CNBC that Navient — the private company servicing her federal loans — led her on for years only to deny her request when she was finally eligible for student loan forgiveness:

“Year after year I would tell them, ‘Now I’m going after public service loan forgiveness,’ and they’d say, ‘Okay. Well you can’t apply until 2017,'” Baker said, about her conversations with Navient, one of the country’s largest student loan servicers.

In July, after she had made 10 years of payments, she tried to certify her forgiveness, but was told that she didn’t qualify because she had the wrong type of federal student loan.

“I almost threw up,” Baker said. “I’ve been teaching 18 years and I still don’t make $40,000 — and now I have to start all over.”

Changes to the Public Service Student Loan Forgiveness program started once Betsy DeVos took over the Department of Education. In March of 2017, the New York Times reported that the Department had started telling applicants for the program that any approval letters they received from FedLoan Servicing telling them they would be eligible for loan forgiveness were non-binding and could be rescinded at any time.

The American Bar Association (ABA) sued the Department of Education in December of 2016 over the agency’s decision to retroactively exclude certain employers from the loan forgiveness program. One of the plaintiffs, Jamie Rudert, was hoping to have $135,000 in law school debt forgiven in exchange for working for a nonprofit aimed at helping Vietnam veterans. The ABA is arguing for the employers rescinded from the program to be reinstated and for the Department of Education to fulfill its promise to borrowers. Federal court records show the case is still ongoing.

 

Nick Jewell is a freelance political writer, and a proud resident of Bed-Stuy, Brooklyn. Email him at nickjewell@yahoo.com. 

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