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Courtney Shares the Stories of Five Eastern Connecticut Residents Impacted by Problems with the PSLF Program

September 24, 2021
Press Release

WASHINGTON, DC – Today, Congressman Joe Courtney (CT-02) wrote to U.S. Department of Education (ED) Secretary Miguel Cardona to weigh in on behalf of eastern Connecticut residents who have encountered serious problems with the federal Public Service Loan Forgiveness (PSLF) program. The program was created with bipartisan support to reward Americans who dedicate their careers to public service, and to incentivize more people to enter public service careers. Courtney is a senior member of the House Education and Labor Committee, and earlier this month renewed his call for bipartisan action to fix PSLF after new data was released showing that only 20% of PSLF applicants are projected to receive relief by 2026. Courtney has led the call to right the ship at PSLF since a wave of complaints first began surfacing in 2018.

This year, Courtney has commended Secretary Cardona and the Biden Administration for taking steps to address the looming student loan crisis, and to fix problems hampering PSLF. In July, ED announced a new formal inquiry to identify and resolve challenges with the program, and asked working Americans with student loans to weigh in directly during a public comment period to share their experiences. Today, as the comment period comes to close, Courtney wrote to Secretary Cardona to share the stories of five eastern Connecticut residents who encountered problems with PSLF, and to encourage the Department to adhere to three guiding principles in correcting the program: SimplicityAccessibility, and Communication.

To read the full letter, click here.

Simplicity

Many Americans reported confusion with the PSLF application process. Rep. Courtney shared with Secretary Cardona that he has heard from constituents who thought they were entitled to relief after completing all 120 qualifying payments, only to be told ten years later that they did not qualify.

“For example,” Courtney wrote, “one constituent worked for 12 years at a social services organization focused on domestic violence issues in New London, CT. She thought she had been making the required 120 monthly payments but, when she submitted her paperwork to have her remaining $5,000 in student loans forgiven, she was told by FedLoan Servicing that she had not completed all of the necessary payments.”

 

In a different example, Courtney shared the story of a constituent who struggled to determine which payment plan she needed to enter to qualify:

“After failing to get clarification from FedLoan about which repayment plan to enter, she looked up the requirements for the PSLF program on the https://studentaid.gov/ and decided to enter an Income-Based repayment plan. Unfortunately, after six years of consistent payments, FedLoan told her that she needed to be on an Income-Contingent repayment plan to qualify for the PSLF program. My office was able to secure this constituent a refund of over $2,000 for this confusion, but she should have been able to trust the information she sought from ED when making plans to pursue forgiveness.”

Accessibility

In his letter, Courtney noted that the PSLF program was established to reward public servants for their dedication and service to the nation, and encouraged Secretary Cardona to prioritize accessibility when considering reforms to the program—particularly in regards to allowing PSLF to be applied retroactively.

“One of my constituents recently contacted me because she had already spent well over ten years in a public service job but had only recently learned about the PSLF program,” Courtney wrote. “Even though she had been paying her loans consistently and was engaged in public service, there was no way to get those periods to count for loan forgiveness. This is particularly important when considering the barriers and lack of advertising that took place under the Trump Administration.”

Courtney noted that enabling PSLF to be applied retroactively could require Congressional action, but went on to identify another way to increase program accessibility: a simple appeals process for public servants who are denied. According to a 2018 GAO report, many applicants are denied loan forgiveness due to mistakes on their application that occur simply because of confusion with the program.

“PSLF applicants should have an opportunity to correct [those mistakes] without having to start the application process over,” Rep. Courtney stated. “For example, one of my constituents is a 53-year-old Licensed Marriage and Family Therapist (LMFT) who has been working in the mental health field for the past 30 years. She applied for her first student loan in 1985 and had been on the standard monthly plan, paying on time for over 20 years at 6.125% interest. She consolidated her graduate and undergraduate loans 10 years ago to a government-approved loan servicing company (Mohela) so that she could qualify for the student loan forgiveness program. Unfortunately, she recently found out that the standard repayment plan is not included in loan forgiveness, and her 10 years of payments to a government-approved loan servicing company did not qualify her for forgiveness. She was not informed that she needed to be on a specific repayment plan and now needs to start her qualifying payments from the beginning, despite already putting in 30-years of public service.”

Communication

Rep. Courtney also stated that ED needs to make sure that there is frequent and clear communication between all parties involved in the PSLF program—the Department, loan servicers, and student loan borrowers engaged in public service. He noted that “Many of the problems that my constituents have faced could have been avoided with stronger and more frequent communication,” and that a 2018 GAO report found that under former Secretary Betsy DeVos, ED failed to provide key information to PSLF servicers and borrowers.

Courtney shared the story of one eastern Connecticut resident who had worked as a practicing attorney for eight years, and for the past seven years worked at the Legal Aid organization in hopes that he would one day have his loans forgiven:

“He tuned down more lucrative positions in order to serve the people of Connecticut,” Courtney wrote. “He recently requested an accounting of his student loan payments and was shocked to discover that only 5 years of his service had been accounted for. After investigating, we learned that this was due to inaccurate record-keeping on the part of FedLoan. During their investigation, GAO discovered that PSLF servicer officials have found that their staff is sometimes unaware of important policy clarifications and information because of the piecemeal guidance and instructions that [ED] currently sends to the PSLF servicer. GAO also determined that [ED] does not ensure the PSLF servicer receives consistent information on borrowers’ prior loan payments from the eight other federal loan servicers. These weaknesses in the chain of communication raise the risk that borrowers may be improperly denied loan forgiveness.”

Rep. Courtney noted that this constituent only realized that FedLoan had committed an accounting error because he proactively asked for an update, and that more frequent accounting updates between borrowers, servicers, and ED would ensure problems are identified early on and can be addressed.

Courtney also recommended that the Department conduct more proactive outreach, themselves, to qualifying employers, informing them that their employees might qualify for the PSLF program. In this way, Courtney wrote, “PSLF can be used as a recruiting tool for employers, and employers can help the Department distribute information about the program.”

Rep. Courtney’s Work to Correct the PSLF Program

Congressman Courtney is a senior member of the House Education and Labor Committee, and has worked for years on behalf of American student loan borrowers of all ages to lower the cost of higher education, and to hold unscrupulous loan servicers and for-profit colleges accountable.

Courtney has pressed the Department of Education to fix the PSLF program since a wave of complains first began surfacing in 2018. That year, the U.S. Department of Education (ED) released data showing that an outsized 99% of PSLF applicants had been rejected, many through no fault of their own. In April 2018, Rep. Courtney voted to pass the Consolidated Appropriations Act of 2018, which created the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program to assist public servants who had previously been denied forgiveness on their student loans.

Despite ED’s knowledge that PSLF was not being administered properly, in December 2018, former ED Secretary Betsy DeVos and the Trump Administration issued a memorandum barring student loan servicers from releasing important data to law enforcement officials, hindering the ability of states’ Attorneys General and agencies like the Consumer Financial Protection Bureau (CFPB) to maintain oversight of loan servicers who might be engaged in unscrupulous practices. Only a few weeks later, in May 2019, a report from the Office of the Inspector General (OIG) found that 61% of loan servicers were non-compliant with ED standards.

Rep. Courtney questioned former Secretary DeVos on her Department’s efforts to undermine protections for student loan borrowers when she came before the House Education and Labor Committee for a hearing in April 2019. He stated in part: “Brazenly, the Department did not even publicly notice this [memorandum], and it was only obtained because someone at the Department leaked it. So, I want to ask, […] what is the rationale for the Department to shut off that flow of information regarding student loan servicers, which has been standard operating procedure for decades? This is a decision you made—to shut off this information to people who are law enforcement. They’re investigating things like fraud. So please explain the decision in that memo.” Click here to read more.

On August 11th, Secretary Cardona announced that his Department would restore the government’s ability to conduct oversight of loan servicers on behalf of borrowers within their jurisdictions—the oversight that Secretary DeVos did away with.

On August 24th, the Biden Administration also announced a policy under which they’ll presumptively grant full student loan relief to borrowers the Department determines were defrauded by their colleges—a departure from the previous administration’s policy. Under former Secretary DeVos, students who could prove they were defrauded were only ever entitled to receive partial relief. Instead, the Department of Education under Secretary Cardona will assume that defrauded student borrowers are entitled to 100% relief, unless evidence is presented to the contrary.

Rep. Courtney has also worked this year to extend the full benefit of PSLF to everyone who ought to receive it—particularly servicemembers. Existing rules prevent many active duty servicemembers who have deployed from applying their full period of deployed service towards PSLF, meaning that they’re made to complete a longer period of service before qualifying for student loan forgiveness. Rep. Courtney introduced the bipartisan Recognizing Military Service in PSLF Act (H.R. 3486), a bill that would finally enable American service members to count the full length of their service towards PSLF. Courtney’s bill has been endorsed by nationwide Veterans Service Organizations including the Iraq and Afghanistan Veterans of America (IAVA), the Student Veterans of America (SVA), Veterans of Foreign Wars (VFW), the Military Order of the Purple Heart, and more.

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