March 30, 2018

Kaine, Whitehouse, Duckworth, Hassan Push DeVos to Put New Public Service Student Debt Relief into Action

Washington, DC – Senators Tim Kaine (D-VA), Sheldon Whitehouse (D-RI), Tammy Duckworth (D-IL), and Maggie Hassan (D-NH) are calling for swift action from Education Secretary Betsy DeVos to implement legislation to bring recently passed student debt relief to borrowers in public service.  The provisions, which passed as part of the omnibus spending bill last week, are based on a bill authored by Kaine and Whitehouse to fix a glitch in the Department of Education’s Public Service Loan Forgiveness Program that has left teachers, soldiers, social workers, and other public servants with massive loan balances they thought would be forgiven.  In their letter to DeVos, the Senators push the Education Department to swiftly implement the provisions and report on its progress within a month, including how the Department plans to alert borrowers that they are eligible for loan forgiveness.

“We look forward to your swift implementation of this newly available funding, as do many hard-working public servants in our states and across the country,” the Senators write. “Given the importance of this new funding to our constituents and all Direct Loan borrowers, we request that you brief our staff on your progress implementing these provisions within 30 days.”

Congress established the bipartisan loan forgiveness program in 2007 to help teachers, social workers, military personnel, and other critical public service workers pursue sometimes lower-paying careers serving their communities without facing decades of crippling loan payments.  The program allows borrowers to erase the balance of their student debt if they spend 10 years working for a nonprofit or government employer while making qualifying payments.  Due to a lack of consistent and clear guidance from loan servicers and complicated program requirements, some borrowers believe they are making qualifying payments under the program when they are not.

Kaine and Whitehouse's bill would allow loan forgiveness for public service borrowers who ended up in the wrong repayment plan.  If borrowers had been making payments that were as much as they would have paid on a qualifying repayment plan, they would receive full credit for those payments toward loan forgiveness.

The version of the legislation in the spending bill includes $350 million to help borrowers in this situation on a first-come, first-served basis.  It also requires the Education Department to develop and make available a simple method for borrowers to apply for loan cancellation, and conduct outreach to help borrowers make use of the program.

Full text of the Senators’ letter is below.  A PDF copy is available here.

 

March 29, 2018

 

The Honorable Betsy DeVos

Secretary of Education

U.S. Department of Education

400 Maryland Ave, SW

Washington, DC 20202

Dear Secretary DeVos:

We write to bring your attention to Sections 315 and 316 of the Consolidated Appropriations Act of 2018 (P.L. 115-141) pertaining to the Public Service Loan Forgiveness Program (PSLF).

Congress established the PSLF program in 2007 to encourage graduates to pursue public service careers that often pay less than jobs in the private sector. The program allows eligible Direct Loan borrowers to cancel their remaining balance after making 120 qualifying monthly payments (equal to 10 years) while working full-time for a federal, state, local, or tribal government organization or certain nonprofit organizations. PSLF is designed to help people doing important work for our communities, including teachers, social workers, members of the military, first responders, and other public service workers.

Under the PSLF program, borrowers are required to make 120 monthly payments in a qualifying repayment plan. After completing the 120 qualifying payments, borrowers can apply to have the remainder of their Direct Loans cancelled. Unfortunately, due to a lack of consistent and clear guidance from loan servicers and complicated program requirements, some borrowers who thought they had been making qualifying monthly payments were enrolled in the wrong repayment plans and therefore do not qualify for loan cancellation under the PSLF program. For example, a public school teacher enrolled in a graduated or extended repayment plan would be deemed ineligible for debt cancellation, even if they made 120 monthly payments at or above the levels required under a qualified income-driven repayment plan.

In response to constituent concerns, we introduced S. 2136, the PSLF Technical Corrections Act, which would allow loan cancellation for public service borrowers who were enrolled in the wrong repayment plan. The Consolidated Appropriations Act of 2018 includes a provision modeled after our legislation and provides $350 million to provide debt cancellation to qualifying borrowers.

Under Section 315, these funds are made available on a first-come, first-serve basis and the U.S. Department of Education (“the Department”) must make available “a simple method for borrowers to apply for loan cancellation under this section within 60 days of enactment of this Act.” In addition, 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.

Given the importance of this new funding to our constituents and all Direct Loan borrowers, we request that you brief our staff on your progress implementing these provisions within 30 days. This briefing should include how the Department expects to indicate to borrowers that they are eligible for loan forgiveness 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.

Thank you for your attention to these provisions. We look forward to your swift implementation of this newly available funding, as do many hard-working public servants in our states and across the country.

 

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