Spotlight on Student Loans:

A Reform of Public Service Loan Forgiveness?

Department of Education hearings on PSLF

At the end of June, Secretary of Education Miguel Cardona presided over three days of virtual hearings to examine issues related to various issues, including financial aid, borrower repayment, and Public Service Loan Forgiveness. Various stakeholders were invited to provide written and oral testimony surrounding these topics, and a coalition of PSLF advocates—including Navigate—participated to tout the program’s importance and push for changes to improve its success.

Repairing and Reinforcing PSLF

In our testimony to the Department of Education, we called on the Secretary to take steps to fix what we see as persistent issues with PSLF. As things currently stand, only 2% of applicants for forgiveness receive it. We believe PSLF should be more broadly available, rather than the narrow and sometimes opaque way in which it is currently administered. This results in applicants being rejected for either unknown or erroneous reasons without a fair process for appealing the decision.

Accountability for Student Loan Servicers

Much of the present dysfunction with PSLF has owed to problems borrowers have had with FedLoan, the loan servicer for PSLF applicants. We have seen a variety of situations in which clients have seen things like their qualifying payments (QPs) disappear or employer certifications rejected with little to no explanation or offer for assistance to correct. We’ve called on the Secretary to introduce measures to ensure that loan servicers not only implement the regulations more accurately and transparently, but also provide timely assistance to borrowers who need help getting back on track.

What comes next for PSLF?

After the Dept. of Education held these hearings and solicited comments, it’s hard to know what will come next for Public Service Loan Forgiveness. President Biden has long touted the importance of the program and committed, as a candidate, to reforming it. These hearings may have been the vanguard to that process, listening to experts’ concerns with the current administration of the program.

The wrench in the system, however, is the departure of FedLoan as the servicer for all PSLF applicants. Many of the current complaints with the system stemmed from servicer issues. It’s unclear what will happen in the vacuum left by FedLoan, but whichever servicer steps forward to take over their borrowers will likely have to address these very same concerns. Regardless, Navigate and the PSLF Coalition will continue to advocate for fair, transparent, and efficient administration of the program, and push for greater oversight and accountability for servicers.

What Can You Do to Improve PSLF?

You have a voice in the national discussion on Public Service Loan Forgiveness! Until September 24th, 2021, the Dept. of Education is collecting public comments “to identify operational improvements to the PSLF program and…other factors that should be considered to improve access to PSLF.” These comments can cover a host of different topics, including 16 areas outlined by the Dept., such as: “What are the direct and indirect effects of student debt on America’s public service workforce?” or “What features of PSLF are most difficult for borrowers to navigate?”

Make your voice heard and add to the conversation around loan forgiveness and higher education!

For those pursuing PSLF, they’ve had the added benefit that these months of forbearance have counted toward their 120 qualifying payments required for forgiveness. The economy, however, remains fragile, and many are wondering what will happen as student payments resume in the coming monthsnot to mention the end of expanded unemployment benefits for millions of Americans.