June 21, 2018

Kaine, Whitehouse, Duckworth, Hassan Press DeVos On Failure To Implement Public Service Loan Forgiveness

WASHINGTON, D.C. – This week, U.S. Senators Tim Kaine (D-VA), Sheldon Whitehouse (D-RI), Tammy Duckworth (D-IL), and Maggie Hassan (D-NH) wrote to Secretary of Education Betsy DeVos about the Trump Administration’s failure to provide public servants with the student loan debt relief they have earned. Kaine and Whitehouse successfully secured funding in March to fix a glitch that had left many teachers, military personnel, social workers, and other public servants with student loan debt that was supposed to be forgiven after a decade of service. The Department of Education is responsible for putting this debt relief into action, but thus far its implementation of the program has caused confusion and created unnecessary hurdles for borrowers. In the letter, the Senators expressed concern with misleading information the Department shared on its website and through email communications to applicants that has left many of them unsure about their eligibility for loan forgiveness and prevented others from receiving the loan cancellation that they deserve.

“We are deeply concerned by unnecessary hurdles that have been put in place for borrowers. Many of our constituents have expressed frustration and confusion with the Department’s unnecessarily restrictive approach to determining borrowers’ eligibility for TEPSLF,” the Senators wrote. “We request improvements to the policies, changes to the website and communications, and the release of data regarding implementation of this program.”

Last fall, Kaine and Whitehouse introduced a bill to fix the glitch in PSLF program that has left public servants with massive loan balances they thought would be forgiven. A version of their legislation passed Congress in March, which included $350 million in funding to provide debt relief for eligible public servants and $2.3 million to improve outreach to help borrowers make use of the PSLF program. Kaine, Whitehouse, Duckworth, and Hassan urged DeVos to set up a simple process as described in the legislation for people who apply for this loan relief program. While the Department of Education launched the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) Program in a timely manner, the Senators are concerned that the Administration has failed to create a simple and fair process for applicants, and has not taken steps to improve communication to all borrowers on the benefits and requirements of the PSLF program.

The full text of the letter is here and below: 

June 19, 2018

The Honorable Betsy DeVos

Secretary of Education

U.S. Department of Education

400 Maryland Ave, SW

Washington, DC 20202

Dear Secretary DeVos:

 

While we appreciate that the U.S. Department of Education (“the Department”) has implemented Sections 315 and 316 of the Consolidated Appropriations Act of 2018 (P.L. 115-141) pertaining to the Public Service Loan Forgiveness (PSLF) program, we write to share our concerns about the application process for borrowers to receive student loan relief through the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) and to urge the Department to properly implement the law. Furthermore, we request improvements to the policies, changes to the website and communications, and the release of data regarding implementation of this program.

Our country’s public servants work tirelessly and, far too often, for much less pay than they deserve. Congress recognized this in 2007 when it established the PSLF program to help eliminate the additional burden of student loan debt and to encourage graduates to pursue careers in public service. PSLF allows eligible Direct Loan borrowers to eliminate their student debt after making 120 qualifying monthly payments, or the equivalent of 10 years of payments, while working full-time for a federal, state, local, or tribal government organization or eligible nonprofit organizations. Once a borrower completes these payments, they are eligible to apply for Direct Loan cancellation.

Due to inconsistent, unclear, and sometimes incorrect guidance from loan servicers many borrowers have enrolled in the incorrect repayment plan and therefore do not qualify for loan forgiveness through the PSLF program.[1] The Department itself has been aware of these issues for some time, as it granted a waiver in 2010 for a servicer to adjust qualifying payments for borrowers with Direct Consolidation Loans who were incorrectly advised by their previous servicer to enroll in graduated repayment plans, rather than income-driven repayment plans.

In response to constituent concerns about misinformation and confusion around the complex PSLF requirements, we introduced S. 2136, the PSLF Technical Corrections Act, to allow loan cancellation for public service borrowers who were enrolled in the wrong repayment plan, often at no fault of their own. Section 315 of the Consolidated Appropriations Act of 2018 includes provisions modeled after our legislation and provides $350 million for debt cancellation to qualifying borrowers. Section 316 includes $2.3 million for the Department to conduct outreach to improve the knowledge of the benefits, and terms and conditions, of the PSLF program to help stop these problems from happening again. Unfortunately, your eligibility criteria for TEPSLF are significantly more restrictive than our legislation ever proposed.

On March 29, 2018, we wrote to you requesting a briefing about the Department’s plans for implementation including information about how the Department expects to indicate to borrowers that they are eligible for loan cancellation under the parameters in Section 315; what application procedures will look like for borrowers and how this process will ensure they are receiving the appropriate direction to the correct source of funding for cancellation; how the Department plans to work with student loan servicers to publicize the availability of and issue forgiveness; how the Department plans to publicize information to borrowers; and the Department’s plans to comprehensively improve outreach for PSLF under Section 316 by directly contacting federal student loan borrowers. Unfortunately, we have yet to receive a response to our request.

While the Department has met the 60-day timeline outlined in Section 315 for implementing TEPSLF, we are deeply concerned by unnecessary hurdles that have been put in place for borrowers. Many of our constituents have expressed frustration and confusion with the Department’s unnecessarily restrictive approach to determining borrowers’ eligibility for TEPSLF. Section 315 directed the Secretary to “make available a simple method for borrowers to apply for loan cancellation,” but the current process appears anything but simple.

First, the Department is significantly and needlessly restricting access to TEPSLF by requiring borrowers to either have been denied, or to have a full PSLF Application for Forgiveness in process, in order to be considered. Many borrowers in graduated or extended repayment have previously been told by their loan servicer that they are ineligible for PSLF because they were enrolled in a non-qualifying repayment plan, and therefore they never sought out forgiveness or took the steps to formally complete their full PSLF application. The Department’s communications should tell these borrowers they can proceed to complete a PSLF Application for Forgiveness despite confusing language on that form referring to “qualifying payments.”

We believe the process would be simpler and fairer for borrowers if they have the ability to apply for TEPSLF regardless if they had a PSLF application in process or denied and then are guided down the appropriate pathway to receive loan cancellation. If a borrower requests TEPSLF before a PSLF application has been submitted, then Federal Student Aid should communicate to the borrower that they must submit the PSLF application within a few weeks, prior to moving forward with the process to receive cancellation. We urge you to alter the application process in this manner so that our nation’s public servants can avoid unnecessary hurdles to accessing TEPSLF.

Our constituents have also raised concerns that the TEPSLF rejection email misleads borrowers to believe they are ineligible. When a borrower who has not yet applied for PSLF applies for TEPSLF, a portion of their rejection email reads: “To be considered for Temporary Expanded Public Service Loan Forgiveness opportunity, you must have submitted the Public Service Loan Forgiveness (PSLF) Application for Forgiveness and had that application denied. Our records, however, show that you have not applied for PSLF and had your application denied. We cannot consider you for the Temporary Expanded Public Service Loan Forgiveness opportunity at this time.”[2] We are concerned that this correspondence does not explicitly communicate to the borrower that they can submit a PSLF application and then get placed in line to be considered for TEPSLF. This rejection notice, especially the last sentence, is unnecessary and unclear for borrowers as to why they are not being considered for TEPSLF at the moment they submitted an email, and due only to a procedural barrier. No borrower should be denied relief simply due to the order in which they filed paperwork.

Additionally, the Department’s website is plainly incorrect. It repeatedly asserts that borrowers must have filled out a PSLF application and “had that PSLF application denied.”[3] However, the Department has indicated that it will process a PSLF Application for Forgiveness that is currently in process—but not yet denied. The Department’s website, and all communications with borrowers, must make clear that a borrower can submit such application today while they apply for TEPSLF, and does not need to wait for a denial notice which could take weeks or months to receive. We also request information about the Department’s plan to serve and communicate with borrowers who have made “some, or all of the 120 required payments under section 455(m)(1)(A).” Although these borrowers would not currently qualify for PSLF, the Department requires them to complete and submit a PSLF Application for Forgiveness in order to be eligible for TEPSLF. Few borrowers will understand that they should fill out a form that explicitly tells them they are not eligible. It is also unclear on the Department’s TEPSLF homepage and in the TEPSLF rejection email that borrowers can submit a PSLF application at any time, even if they have not yet made 120 payments that all qualify. We request the Department clearly communicate with borrowers with some non-qualifying payments, but 120 payments in total, that they may submit a PSLF Application for Forgiveness.

Additionally, the Department should provide additional clarity in how it plans to use the $2.3 million allocated to conduct outreach to improve the knowledge of the benefits, and terms and conditions, of the PSLF program for all borrowers. This provision was enacted in response to the persistent confusion PSLF has caused for borrowers with the intent to reduce problems with PSLF going forward. The funding directs outreach to all Direct Loan borrowers. We request information on how the Department is using the $2.3 million it was appropriated to improve communication on the PSLF program to all Direct Loan borrowers and to improve the filing of employment certification forms. Specifically, the Department should provide information on available outreach options that were considered, and how the Department intends to measure the success of its proactive communications with borrowers.

Finally, we ask the Department to provide no less than monthly data on the processing of TEPSLF applications, including total number of requests received, total number of requests denied, most common reasons for denials (including the number denied due to having no PSLF Application for Forgiveness in process or denied), number of borrowers approved, number of loans approved, and total dollar amount forgiven. Our public servants make our communities and our country stronger and better. We urge the Department to be thoughtful in the implementation of the TEPSLF and make it a simple and fair process for our honorable public service workers to receive the student loan debt relief that they have earned. Given the importance of this new funding to all Direct Loan borrowers and to our constituents and the confusion the TEPSLF application process has caused for many borrowers thus far, we request a response to our inquiries by July 3, 2018. We look forward to your prompt attention to the implementation of this funding and look forward to your response regarding our questions and concerns.

Sincerely, 

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