Loan Forgiveness Uncertainty

"Student loan borrowers who entered into lower-paying public service careers with the expectation that their debt would eventually be wiped out by the federal government shouldn't bank on assurances from government contractors that they qualify for loan forgiveness. That was how several observers read a new court filing by the U.S. Education Department in a lawsuit over the Public Service Loan Forgiveness program," Inside Higher Ed reports.
 
"The American Bar Association sued the Department of Education in December, along with four lawyers who said they were led to believe until recently that they qualified for the Public Service Loan Forgiveness program.
 
In a court filing this month, however, the government argues that borrowers shouldn't expect that answers from their loan servicers will reflect the department's final ruling on their eligibility for the program. That means the department is encouraging borrowers to take lower-paying public service jobs based on a promise -- of loan forgiveness -- by a contractor that the government is free not to honor, the association said. ...
 
Karen McCarthy, director of policy analysis at the National Association of Student Financial Aid Administrators, said the uncertainty apparently created by the department's arguments was unacceptable for borrowers.
 
The department, McCarthy said, 'hired PHEAA to do that task for them. To the borrower, it's all the same.'
 
NASFAA warned in a letter to the department last year that the government should be doing more to make sure borrowers who planned to apply for PSLF were with the right student loan servicer and that their current and former employers meet the requirements of the program. The legal fight over the program also followed a Government Accountability Office report in November that found the department was dramatically underestimating the cost of income-driven repayment plans and found that nearly a third of loan debt expected to be repaid through those plans would be forgiven via PSLF."
 
NASFAA's "Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

 

Publication Date: 4/5/2017

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