Applicants in Student Loan Forgiveness Program Face Broken Promises
It seemed like a noble endeavor to try to help those who help others. It was a promise that for those working in public service jobs, their student loan debt would be eliminated, no matter what the balance, after making 10 years of payments. The problem is that as many are now realizing, the program was riddled with misrepresentations and broken promises.
The Forgiveness Program
The promise of the program, called Public Service Loan Forgiveness, was simple. Applicants who have direct federal loans (private loans do not qualify) had to work in public service jobs, or for nonprofit organizations. Employers had to fill out a form at the start of employment, verifying they were qualifying organizations, and that the borrower was employed there.
If these requirements were met, borrowers (no matter what their income), who made 10 years of payments, would have any remaining balance that was not paid off at the end of that time period erased.
Yet, a recent article now points out that as more and more people are approaching the 10-year mark, 99% of applicants are being denied. As of March 2019, 86,000 had applied for the forgiveness.
Some are being told that they did not apply to the correct loan program. Others are being told that they did not work at a qualifying job. Some are being told that paperwork was incorrectly filled out. Others are having their payments miscalculated or miscounted. Some were falsely told that the loan forgiveness was automatic, so long as they were in a public service job.
In some cases, organizations such as the American Bar Association (a non-profit organization) was told that employees would qualify for forgiveness. Then, the government reversed itself, saying that employees were ineligible. That lead to a lawsuit where a federal judge said that the change in policy was arbitrary, and lacked proper notice to applicants.
Lawsuits Have Been Filed
A lawsuit has now been filed against the Department of Education, seeking enforcement of these broken promises. Congress even passed a temporary program, intended to offer relief to millions of people who were just in the wrong category or who applied to the wrong forgiveness plan. That also failed—just 3.6% of applicants have been approved.
Rather than fix their mistakes, the Department of Education has said the program is faulty, has tried to end the program, and has tried to block states from suing the government to enforce the promises made under the program.
Servicers who misrepresented the program, or allowed borrowers to fill out incorrect applications, have been sued. One teachers union has sued, alleging servicer Navient purposely steered eligible borrowers away from the program. Many of these servicers limit their agents to only minutes per call, resulting in calls that do not properly apprise callers of their rights.
The lawsuit against the government contends that it knew about, but did nothing to remedy, repeated misrepresentations by student loan servicers about the program.
Questions about your student loans? Contact the Miami consumer rights attorneys at Jacobs Legal to make sure that you understand the programs that are available to you.