Why Are Borrowers Receiving Public Service Loan Forgiveness Denials?

Posted on January 22, 2018 at 12:00pm by
Will PSLF survive?

More student loan borrowers are coming forward with stories of how they were denied student loan forgiveness under the Public Service Loan Forgiveness (PSLF) program. An article on CNN discussed the story of a woman with $100,000 in student loans who only recently found out that some of her education debt is not eligible for forgiveness under the program. Signed into law in 2007, the PSLF program allows eligible borrowers in certain types of public service jobs to make timely payments over ten years to receive tax-free loan forgiveness.

Some people are being denied because they have the wrong type of federal student loans. When PSLF was created in 2007, many borrowers were still receiving loans under the Federal Family Education Loan program (FFEL). FFEL loans are not eligible for forgiveness under PSLF. As of July 1, 2010, many new federal student loans were issued under the Direct Loan program. Direct Loans are eligible for forgiveness under PSLF. Borrowers with FFEL loans made payments for years without realizing they were never eligible to have their loans forgiven under the PSLF program.

Student loan servicers like Navient and Great Lakes are being sued by borrowers who claim they were given incorrect information about their eligibility. The woman interviewed by CNN said her servicer confirmed her eligibility for years. Only recently did someone in customer service tell her otherwise. Servicers are telling borrowers to seek a Direct Consolidation Loan if they are eligible. This would move their FFEL loans into the Direct Loan program. However, they would have to restart the clock on their ten years of payments.

Additional borrowers were told their jobs did not qualify for PSLF, despite receiving approval at an earlier date. The American Bar Association has sued the Department of Education on behalf of four student loan borrowers who claim their eligibility was revoked without warning.

Will PSLF Be Eliminated?

The future of the PSLF program is not certain. President Trump’s administration has signaled that they will try to eliminate the program. In fact, the 2018 White House budget calls for the elimination of PSLF. Federal lawmakers have also considered killing off this popular loan forgiveness option. The PROSPER Act would eliminate the program.

If you are one of many borrowers who only recently discovered that you are not eligible for PSLF forgiveness, then we encourage you to speak with one of our student loan attorneys. Follow The Sader Law Firm on Facebook and Twitter for future updates on PSLF and other loan forgiveness programs.

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