A new report from a government watchdog, first obtained obtained by NPR, says an expanded effort by Congress to VA installment loans forgive the student loans of public servants is remarkably unforgiving.
Congress created the expansion program last year in response to a growing outcry. Thousands of borrowers – nurses, teachers and other public servants – complained that the requirements for the original program were so rigid and poorly communicated that lawmakers needed to step in. But, documents show, even this expansion of the Public Service Loan Forgiveness (PSLF) program isn’t working.
The couple was looking forward to the day when, under the original PSLF program, the Education Department would forgive her student loans
According to the review out Thursday, conducted by the Government Accountability Office, the U.S. Department of Education processed roughly 54,000 requests and approved just 661. It spent only $27 million of the $700 million Congress set aside for the expansion.
“We were disheartened,” says Melissa Emrey-Arras, who led the GAO’s review. “I think we were discouraged. I mean, the hope is that you have this temporary expanded process, and you want it to help a lot of people. And you don’t want borrowers to be confused about the eligibility criteria and to face a high denial rate. And yet, that’s what we found.”
In a statement to NPR, Education Department press secretary Angela Morabito says, “The Department has taken steps to help borrowers better understand the complex eligibility requirements, application process, benefits, and other information related to the PSLF and TEPSLF programs. The Department agrees with the GAO’s recommendations about how to improve the programs; a number of our efforts are already underway.”
“What sort of Kafkaesque thing are we in here?” asks Matthew Austin, exasperated by his recent experience with the PSLF expansion. “It’s like we’re just stumbling in the darkness.”
Every Monday night, Matthew sits down at his desk in the Connecticut home he shares with his wife, Heather, to pay the family’s bills. He clearly remembers opening a letter in the summer of 2018 from the company that manages Heather’s federal student loans.
She had spent more than a decade in public service as a teacher. But the letter did not say “congratulations.”
Ninety-nine percent of loan-forgiveness requests under that new Temporary Expanded Public Service Loan Forgiveness (TEPSLF) were rejected during the program’s first year, from
“My jaw just kind of dropped,” Matthew says. (Heather did not want to talk about what has been a long, painful odyssey for them both.) The letter instead informed the Austins that, much to their surprise, none of the loan payments they had made over the previous decade had counted toward the 120 monthly payments required to receive loan forgiveness. Not one.
Many borrowers have had similar experiences with PSLF, believing for years that they were working toward loan forgiveness only to realize later that they had been in the wrong repayment plan or held the wrong type of loan. The Austins have spent more than a decade planning for the day when Heather would be free from those loans. The promise of PSLF has been in their family longer than their three children.
“It just infuriates me,” Matthew says. “I remember sitting there when we found out that Heather was pregnant with our first child. And looking at the spreadsheet that we had made up for our long-term plan of the budget. And saying, ‘OK, well, when he’s 10, we can take a vacation.”
Then came good news: A few months before Matthew Austin opened that letter, Congress created the emergency expansion of the PSLF program in response to an outcry from borrowers like the Austins. Lawmakers set aside $700 million to help people who, like Heather, had fulfilled their public service but were, unbeknownst to them, in the wrong repayment plan. Naturally, the Austins applied. But the nightmare continued.