Recently released Department of Education data shows that only 96 of tens of thousands of possible borrowers successfully navigated seemingly endless obstacles to receive forgiveness from the floundering Public Service Loan Forgiveness (PSLF) program.
Oddly, most news stories about the program say that about 99 percent of borrowers were denied forgiveness. Though this is an abysmal number, it actually overstates its effectiveness.
To start with, 28,000 borrowers applied after thinking they had made ten years of qualifying payments. That makes the denial rate much closer to 99.7 percent. This is much nearer 100 percent than 99 percent. Still, that doesn’t represent how terrible this problem is.
Remember, these are educators and public safety officers and social workers. There are literally millions of them. The program is for state, federal, local, or tribal government employees—public servants, who work in areas of greatest public need. The PSLF program was designed to reward those working for the public good and to make up for the fact that many of these workers could make more in the private sector. These workers can, and should, feel self-satisfaction with doing work that promotes public health, safety and education.
Does that satisfaction help these public servants with their student loans? Not so much.
That’s why the abysmal denial rate of 99.7 actually understates the program’s ineffectiveness. It is impossible to estimate how many borrowers never made it to the stage of submitting an application.
A recent Market Watch story chronicled how highly educated experts with student loan debt ran into numerous challenges and hurdles while dealing with their loan servicers.
Persis Yu, Director of the National Consumer Law Center’s Student Loan Borrower Assistance Project, works on behalf of low-income student loan borrowers. She feverishly switched her loans from one program to another, and reversed an errant delinquency status change. These steps should have been simple, yet nearly stumped her, despite her education and expertise.
A Boston attorney, Adam Minsky, struggled to get his loan servicers to stay current with auto-debit and recertification. “I know what I’m doing, I know what the steps are and I’m still encountering problems,” he said.
Perhaps just as damning as befuddled experts are the rare, and epic, stories of those who succeeded in getting their loans forgiven. The New York Times profiled a New York social worker, Michael Mitchell, who overcame countless obstacles to somehow manage 120 qualifying payments. His story is harrowing and ultimately triumphant. But should surviving the plot twists and turns of participating in a government program be deserving of a novel or screenplay?
So, of course, there were many more public servants with student loan debt that never even made it as far as submitting an application. These workers were so discouraged by the process they didn’t even bother applying.
How many more? We will never know. We only know that this program is not helping the people it is supposed to. Not even 0.3 percent of them.
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