In another turn along the bumpy, mostly impassable road to student loan forgiveness through the Public Service Loan Forgiveness (PSLF) program, a teachers union is suing the nation’s largest student loan servicer for steering them in the wrong direction.
The union filed the lawsuit, which seeks class action certification, soon after a government report detailed problems. The Department of Education (DOE) reported that, of 28,000 who applied, only 96 received debt forgiveness. The reason the suit might become a class action is that the 99.7% denial rate is really just the tip of the iceberg.
Begun in 2007, PSLF forgives the debt of eligible borrowers who make 120 qualifying payments. Eligible workers include teachers, firefighters, social workers, police officers, and many others. Determination of “qualified payments” can be complex and difficult to determine. Navient, and other servicers, are supposed to help their clients through the hoops.
The American Federation of Teachers (AFT) alleges that Navient purposefully steered borrowers away from repayment programs qualifying for PSLF. According to the suit, Navient gave inaccurate information to those wanting to join the program and discouraged them from taking the necessary step to qualify.
This might be because DOE pays federal loan servicers per loan. It only allows one loan servicing entity, FedLoan, to handle PSLF loans. The lawsuit accuses Navient of purposefully steering customers away from PSLF to avoid losing accounts to FedLoan.
Researchers estimate that as many as 32 million Americans might qualify for PSLF. Some of these careers, especially those in education and social work, provide public good without being financially rewarding. Especially for these Americans, relief from student loan debt is highly impactful.
It is easy to see why Navient would be less than enthusiastic about ushering borrowers into programs that would cause them to lose revenue. One possible, seemingly simple fix would be to allow all servicers to administer the PSLF program. Another, more radical approach would be to take the servicing of loans away from for-profit companies so that the borrowers can become customers instead of products.
There are other fixes out there. But, no matter what, lawmakers must do something. A recent New York Times article on the story above outlined just a few of the harrowing individual stories in which the failure of servicers severely impacted individual lives. These included tremendous shifts in quality of life and retirement age due to failure to qualify for PSLF.
Has your life been impacted by this failure? We would love to hear from you. Comment below and tell us your story!
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