Empty Promises

Government shortchanges students, fails on loan forgiveness

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Illustration by Owen Thomas
Illustration by Owen Thomas

For millions of Americans drowning in student debt, relief seemed to be just around the corner. It was 2007 and Congress had just passed a bill to raise the maximum Pell Grant award and offer debt forgiveness to graduates who worked for at least 10 years in public service. The late Edward Kennedy exclaimed, “Today will help millions of students achieve the American dream.”

He was right to call it a dream.

Starting last December and in legal filings submitted last month, the Department of Education (DOE) abandoned its promise. Years after more than 500,000 enrollees reshaped their careers and began paying the Public Service Loan Forgiveness (PSLF) Program’s required 120 monthly payments, they are discovering that approval letters can be rescinded at any time.

Jamie Rudert, who worked as a lawyer for Vietnam Veterans of America, received his approval to switch his private loans to the government’s FedLoan servicer five years ago. But after submitting his most recent recertification request, he was dropped from the program — nothing guaranteed, retroactive immediately.

Now Rudert is one of four lawyers, in conjunction with the American Bar Association, who are suing the DOE after FedLoan rescinded their approvals, saying they would have sought other jobs, borrowed less or selected different repayment options had they known of the PSLF’s possible reversal.editorialeditorial

Rescindment comes without explanation or a formal appeals process, so you have to scramble for another lower-paying, “approved” public job or leave the public sector, facing thousands in educational debt without government aid. Of course, none of your previous payments, your years working, would apply toward the golden 120 payments —start from scratch, do not pass go, do not collect $200.

Law school graduates in PSLF are particularly affected because they average more than $140,000 in debt after completing their undergraduate degrees and law school. Many forgo more lucrative law firms for nonprofit or government work in anticipation of the promised loan forgiveness.

Encouraging public service is noble, but the PSLF and DOE — the very governmental bodies meant to uphold education — are luring overburdened students into the public sector under the fiscal illusion of “loan forgiveness,” only to revoke their approvals years after students enroll. Thousands have gone into debt, taking their current jobs with the expectation that after 10 years they would be rewarded. Instead, in many cases, they’re being punished by the very entity they work for — the government.

That’s not to say PSLF is all bad. In theory, a debt forgiveness program, albeit a small solution to the larger issue of rising costs in education, unburdens many college students while enriching nonprofits and government agencies. This is especially important, as students with debt often avoid low-paying public interest jobs.

But the education system is already crumbling. Congressional Republicans want to destroy the only independent agency watchdogging student loan companies. The DOE’s reversal and decision to mislead and punish graduates for working in the public interest is a step closer to crushing our flawed, exorbitant system.

If derailing students’ lives and careers isn’t enough, the DOE remains eerily quiet about the reversal. When The New York Times reached out for comment in its most recent story, both FedLoan and the DOE declined to comment. Because the 10-year mark since the program began isn’t until October, no one has received loan forgiveness yet, so even that is up in the air.

Keep in mind, this is the same DOE whose mission statement claims to champion “student achievement,” “educational excellence” and “equal access.”

With student loan companies that distribute high-risk, toxic loans that often default, graduates already have enough to worry about and pay for. The DOE needs to do its job of serving students and uphold the bill’s original intentions — to alleviate student debt and encourage public sector job growth.

That starts with transparency and upholding the deal. Otherwise, the DOE starts looking less like a government agency and more like a greedy
loan company.


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