The Department of Education (ED) should create and publish in a timely manner a comprehensive Public Service Loan Forgiveness (PSLF) manual for staff and servicers, provide a definitive source for servicers to determine if a borrower’s employment is eligible for PSLF, and standardize the process of eligible loan payment counting to allow borrowers to track their progress more easily, according to a new report from the Government Accountability Office (GAO).
Addressed to Rep. Bobby Scott (D-VA), ranking member of the Committee on Education and Workforce, and Rep. Susan Davis (D-CA), ranking member of the Subcommittee on Higher Education and Workforce Development, GAO released a report last week that tracked how ED has run the PSLF program since its creation in 2007.
Though the program has been around since 2007, GAO has uncovered that there is little clarity on the program and its processes for both servicers and borrowers. This report examined the number of borrowers pursuing PSLF and the degree to which ED provided outreach to increase borrower awareness of the program requirements, as well as the amount of information ED provides to servicers of the PSLF program.
Of the nearly 1.2 million borrowers who as of April 2018 had requested to be reviewed for eligibility for PSLF, about 44 percent were deemed eligible, submitted at least one voluntary PSLF certification form, and made at least one qualifying payment toward their 120 required payments. Of those 520,627 borrowers, just over 19,300 had submitted applications for forgiveness between September 2017 and April 2018. Of those applicants, only 184 had made the 120 qualifying payments and had an eligible employer, 55 of which have been granted full forgiveness as of April 2018. As of June 30, 2018, according to data released by Federal Student Aid, an additional 41 borrowers have been approved.
GAO wrote that it presumed the reason for the large drop off from applicants who initially appeared interested in the program to applicants with approved initial certification forms is the lack of communication provided to possible participants about the requirements for the PSLF program. GAO cited that “over 150,000 borrowers who requested to have their employment and loans certified” did not even have federal Direct student loans, a requirement for eligibility, “which suggests these borrowers either did not know which types of loans they had or which types qualified for the program.”
A similar trend appeared with borrowers applying for the program who were making payments yet were unaware of the requirement to be enrolled in a qualifying repayment plan, and therefore any payments they were making weren’t counting toward the required 120 payments. In response, Temporary Expanded PSLF (TEPSLF), made possible through the 2018 spending bill, allowed ED to receive additional funds to help borrowers who would otherwise be eligible for PSLF to receive the full benefits of the program toward their previous payments under some ineligible repayment plans. The additional funds were also mandated to be used by ED to provide more communication to all Direct Loan borrowers about the requirements of the PSLF program.
In addition to the program causing confusion for borrowers, GAO also found that the program has caused some confusion among the servicer officials in charge of administering the program, as changes or updates to the program processes have been supplied piecemeal. Currently, ED does not publish or maintain a comprehensive document containing the processes of administering the PSLF program. While ED has stated it plans on creating one, it has not provided a date on which it expects to produce a manual of sorts for its own staff and servicers. ED has taken steps to improve communication with the PSLF servicer by holding biweekly meetings, but GAO wrote that “the lack of a definitive and comprehensive source of guidance and instructions for PSLF servicers creates the risk of inconsistent interpretation that could potentially result in borrowers being improperly denied loan forgiveness since ED does not review denied applications.”
GAO also recommended in the report that ED create a system that better allows borrowers in the PSLF program to track their qualifying payments, and receive explanations as to why payments did not count toward their required 120 payments. Especially in cases of borrowers whose loans are transferred from other loan servicers when enrolling in PSLF, there is a lack of transparency on how the number of eligible payments were counted, which doesn’t give borrowers a good way to check for possible miscalculations, GAO wrote. According to a PSLF servicer official, this is how they catch errors, as they “rely on borrowers to catch any payment counting errors resulting from issues with information provided by other loan servicers”.
A large component of the eligibility requirements for PSLF is based on borrowers’ employers. Currently, the process for determining if an employer qualifies falls on the servicer to review each employer by either accessing the Internal Revenue Service’s (IRS) public list of 501(c)(3) organizations, which is not always a complete list, or by assessing state government or federal websites to research organization’s statuses. As this process can be unreliable, GAO recommended that ED develop an “official, comprehensive list of qualifying employers, which would help the PSLF servicers assess employers and help borrowers determine whether they are eligible for PSLF."
GAO concluded that for a program like PSLF that has very specific eligibility requirements, there is a lack of information being provided to potential and current borrowers and servicers. GAO offered ED a handful of recommendations for improvement, all of which ED has concurred with and has pledged to take steps to implement.
PSLF has been a topic of interest to NASFAA as well over the past years. Along with the important topics that GAO noted in its report, NASFAA’s PSLF task force issued recommendations about the servicing of the PSLF program, such as strongly encouraging annual submission of employment certification forms, and improving communication to borrowers.
In addition, NASFAA penned letters to ED asking for the release of more data points in relation to PSLF, as well as to adopt NASFAA’s recommendations for the format of the PSLF application and Employer Certification Form (ECF).
Publication Date: 10/1/2018