Student debt is on the rise in the U.S.
California is once again urging the United States Department of Education to explain why 99 percent of applicants for the Public Service Loan Forgiveness Program have been denied, according to a letter sent Wednesday by Attorney General Xavier Becerra.
Becerra joined Illinois Attorney General Kwame Raoul in leading a multi-state effort to obtain data that would explain why only 864 of 76,002 of program applicants were approved. Less than 500 of nearly 12,500 applicants have similarly been denied debt relief under the Temporary Expanded program.
In the letter sent to Education Secretary Betsy DeVos, Becerra asks the department for “more complete data” on the program to “examine the scope and source of the problems.”
“College graduates who committed to careers as hard-working public servants – including teachers, librarians and first responders – relied on a promise by the federal government that their direct student loans would be forgiven if they made 10 years of full, on-time payments on those loans,” Becerra said in a press statement. “Hundreds of thousands of Americans relied on this promise to make life plans and career decisions. They will be left in financial turmoil if the Trump Administration reneges on the promised loan forgiveness.”
The loan forgiveness program was established in 2007 as a way for public workers to obtain relief from student loan debt for their service to the country and community, but is limited to government and nonprofit workers who have made at least 120 qualifying monthly loan payments.
Because of the strict requirements, many applicants have been told they don’t qualify despite having made payments for 10 years while working in public-service jobs. President Donald Trump has proposed eliminating the program.
The department did not immediately respond to requests for comment.
Wednesday’s initiative builds on a letter Becerra also sent in October 2018 to DeVos that asked for approval rate data and for the agency’s plans to reform the program. In the letter, Becerra called on loan service representatives to help borrowers determine if they qualify for the program.
The federal department responded in July 2019 with what Becerra said was “incomplete information that was not meaningfully responsive to the states’ request.”
The department acknowledged that borrowers don’t fully understand the program’s conditions, according to Becerra’s latest letter.
The agency also said borrowers did not know they had to consolidate Federal Family Education Loans into Direct loans, and recognized that 53 percent of the applicants made disqualifying payments.
Becerra is now asking for the total number and dollar amount of payments that didn’t qualify for assistance, as well as who were servicing the loans.
“The borrowers seeking to have their loans discharged have given 10 years of service in working for the betterment of this country at nonprofits, schools, and government departments like yours and ours,” the attorneys general wrote.
“These jobs often pay less than their private sector equivalents and student loan borrowers rightly relied upon the promise of (the program) to enable their decisions to pursue public service careers.”