The student loan forgiveness program designed to help indebted college graduates working in public service jobs has problems with loan servicers that the Consumer Financial Protection Bureau is trying to correct.
According to a new CFPB report, "Staying on Track While Giving Back," borrowers complain that servicers fail to inform them about eligibility for the Public Service Loan Forgiveness program, deny their eligibility after they've started working in public service and erroneously process payments during annual recertifications so those payments don't qualify for loan forgiveness.
Under the program, borrowers with federal student loans who work as police officers, teachers, public defenders or in other public service jobs can have their loans forgiven, provided they are enrolled in a qualifying repayment plan such as an income-driven plan and make 120 loan payments. But problems with loan servicers often derail those plans.
"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."
