A new report from a government watchdog, obtained by NPR, says an expanded effort by Congress to forgive the student loans of public servants is remarkably unforgiving.
Congress created the expansion program last year, in response to a growing outcry. Thousands of borrowers — nurses, teachers and other public servants — complained that the requirements for the original program were so rigid and poorly communicated that lawmakers needed to step in. But, documents show, even this expansion of the Public Service Loan Forgiveness (PSLF) program isn't working.
Ninety-nine percent of loan-forgiveness requests under that new Temporary Expanded Public Service Loan Forgiveness (TEPSLF) were rejected during the program's first year, from May 2018 to May 2019. According to the review, conducted by the Government Accountability Office (GAO), the U.S. Department of Education processed roughly 54,000 requests and approved just 661. It spent only $27 million of the $700 million Congress set aside for the expansion.
"We were disheartened," says Melissa Emrey-Arras, who led the GAO's review. "I think we were discouraged. I mean, the hope is that you have this temporary expanded process, and you want it to help a lot of people. And you don't want borrowers to be confused about the eligibility criteria and to face a high denial rate. And yet, that's what we found."
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As of March, 2019, 99% of Public Service Loan Forgiveness requests have been rejected, and applicants remain deeply confused about the program's rules.
"This wasn't a puzzle or a lottery," says Rep. Scott. "This is a program where, if you fulfill your responsibilities ... then your student loan would be forgiven. It's just incredible that we had to, last year, pass legislation ... to create an emergency program."
Now, Rep. Scott says, it is inexcusable that this emergency program is rejecting borrowers' requests for loan forgiveness at the same rate — 99% — as the troubled program it was meant to alleviate.
In its new review, GAO investigators also criticize the Education Department for not clearly explaining to borrowers how the program works or how they can contest a denial.
