Student-loan companies gave public servants wrong information on debt forgiveness, watchdog says

The watchdog agency found that student-loan servicers, the companies the government contracted to manage the repayment process, left public servants with the impression their loans didn’t qualify for Public Service Loan Forgiveness, even though borrowers could take steps to become eligible.

Latest indication of challenges The report is the latest indication of the challenges plaguing PSLF, a program signed into law in 2007, which allows government workers and certain nonprofit employees to have their federal student loans discharged after 120 monthly payments. To be eligible for relief under PSLF, borrowers need to be working in the right type of job — government and nonprofit work qualify — have the right type of repayment plan; make at least 120 on-time, monthly payments and have the right type of federal student loan.

That could have delayed eligible public servants’ access to relief. Indeed, recent data on PSLF indicates that the consolidation issue may be holding borrowers back from having their loans discharged. “It’s very challenging when Congress intentionally creates these barriers,” Buchanan said. “This was not by accident, this was by Congressional design to reduce the cost of the program when they passed it into law.”

Despite this dynamic, a 2020 report from Frotman’s organization and the American Federation of Teachers found that the Department of Education hadn’t provided specific guidance to the organizations financially involved in the FFEL program about how to counsel public servants with FFEL loans who inquire about benefits.

JillianBerman I was told my loans did not apply to public forgiveness. I have been paying for 13+ years. It makes me sick to think I could be done paying if Nelnet did not lie to me in 20008.

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