DOE Fix for Student Loan Forgiveness Program Is Massive Failure

While some investment firms and workplace retirement plans are adding programs to help student loan borrowers repay their debt, the federal Department of Education, which provides the bulk of those loans, is making repayment more difficult.

A new report from the Government Accountability Office found that a temporary fix to the public service loan forgiveness program, designed to address the 99.7% rejection rate from the year before, rejected 99% of applications.

Congress had appropriated $700 million last year for the Temporary Expanded Public Service Loan Forgiveness Program (TEPSLF), including $4.6 million for DOE outreach to help borrowers, particularly those who met all or most of the requirements except for being in an ineligible repayment plan. The DOE spent only $26.9 million of the $700 million, according to the GAO.

The public service loan forgiveness program allows borrowers who work in public service, such as in education or in certain nonprofits, to have their loans forgiven at the end of 10 years so long as they have made 120 on-time monthly payments.

The GAO found that of the 54,184 requests for loan forgiveness filed under the TEPSLF program between May 2018 and May 2019, the DOE approved just 661.

Most of those rejections (71%) were due to the "confusing process" that the DOE had implemented to qualify for the new program, according to the GAO. Borrowers were required to first submit a new PSLF application before applying to the TEPSLF program.

"The process can be confusing for borrowers who do not understand why they must apply separately for PSLF — a program they are ineligible for — to be eligible for TEPSLF," according to the GAO report. It recommends that that the DOE integrate both steps in one application form.

Rep. Robert C. "Bobby" Scott, D-Va., chairman of the House Committee on Education and Labor who had requested the GAO report along with Rep. Susan A. Davis, D-Calif., said in a statement that the DOE's "failure to implement" the TEPSLF program "is mystifying and unacceptable. Regardless of whether the administration supports the Public Service Loan Forgiveness program, the Constitution requires the executive branch to 'take Care that the Laws be faithfully executed.'"

In her statement, Davis said the GAO report "is yet another example of the Trump administration failing student borrowers… The Department of Education has an obligation to protect students, not lenders" and the DOE "needs to take immediate action to fix this problem."

The House Education and Labor Committee has scheduled a hearing for Sept. 19 to examine the findings of the GAO report. An official from the DOE will be invited but who will attend is not yet known, according to a committee aide.

In the meantime the GAO is recommending, in addition to an integrated application for TEPSLF, that the DOE require all loan servicers to include TEPSLF information on their websites and that it include TEPSLF information in its PSLF Online Help Tool.

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