By Jacob Carter, Union of Concerned Scientists
People suppress the collection of information and data when they are afraid of the results. The Trump administration is no stranger to using this strategy, as we’ve documented time and time again. So, it’s not a surprise that the Department of Education (DOE) ordered the Consumer Financial Protection Bureau (CFPB) to stop collecting information in its investigation of how student loan call centers handle information about the Public Service Loan Forgiveness program.
While it’s not a surprise, that doesn’t make it any less egregious. You know who is offered student loan forgiveness? Firefighters, military service members, nonprofit workers, teachers, government employees—all people who work and serve the public.
How student loans are forgiven
The Public Service Loan Forgiveness program began in 2007. It was implemented so that students graduating with loan debt could enter lower-paying careers—such as nursing, military service, public service law—without worrying too much about being straddled with debt they couldn’t pay off. The requirements to qualify for loan forgiveness seem quite simple at first: make 10 years of repayments on your student loans while working for a qualified employer.
Unfortunately, when you dig a little deeper, you’ll see that the requirements are a little more complex. For example, you must be on a specific type of repayment plan (income-based) every yearduring your 10 years of repayment. That means if you weren’t on a qualifying repayment plan during 3 of those years, you don’t qualify for the loan forgiveness program even if you’ve been paying off those loans for 10 years.
Additionally, not all student loans qualify under the program—only nondefaulted loans received under the William D. Ford Federal Direct Loan Program qualify. Therefore, you need to check to make sure you have the right kind of loan to qualify. I checked my own student loans to see if they qualified. It was a long process just to figure out what kind of loans were part of the William D. Ford loan program, let alone figure out where my loan service companies provide information on what type of student loans I have.
You also must certify your employment to ensure that you are full-time and that your employers’ work qualifies you for the program. And you must submit information on your employer, employment, and income every single year for 10 years to qualify for student loan forgiveness. Who can certify your employment? This depends on your organization, so you’ll have to comb through your employee handbook or send some emails to figure this all out.
The process takes some work (as you might have noticed) so one might question if borrowers have been able to qualify for forgiveness. Well, it has been more than 10 years since the Public Service Loan Forgiveness program was put in place, meaning that the Trump administration would be the first administration to approve borrowers for forgiveness in 2017. And there’s a problem —99% of applicants have been denied loan forgiveness. There are two major reasons why borrowers have not been qualified.
Borrowers were deprived
One of the major problems is that student loan borrowers may not have been made aware of what they needed to do to qualify for student loan forgiveness. Given the complexity of qualifying for the program, one might assume that the government or companies servicing student loans would have provided this information. However, this information wasn’t explicitly provided or was inconsistently communicated to borrowers.
I am one of those people who feels they were deprived of information about qualifying for the student loan forgiveness program. Until this year, when much of the news about these issues came to light, I had no idea that I wasn’t on the correct repayment plan to qualify for student loan forgiveness. I’ve been working for a qualifying nonprofit organization for three years during which time I’ve been making payments on my student loans. Those payments will not progress me towards student loan forgiveness since I wasn’t on the correct repayment plan.
One of the companies that services my student loans, Navient, is currently in an ongoing lawsuit filed by CFPB in 2017 that alleges a variety of unfair and deceptive practices that harmed student loan borrowers. Some of the documents revealed in the case showed that Navient’s leadership failed to make its borrowers aware of their income-based repayment plan (one of the plans that qualifies borrowers for loan forgiveness) until 2012, even though they started offering the plan in 2009.
Borrowers were deceived
There also have been several cases where borrowers claim they checked in frequently with the companies servicing their student loans and were told they were on track. Guess what? They weren’t on track. Many borrowers had been on the wrong repayment plan or didn’t have qualifying loans, but student loan servicing companies misinformed the borrowers and told them that they were on track to qualify for forgiveness.
Now many borrowers are questioning why these companies didn’t just tell them years ago to change their repayment plans. The borrowers are arguing that these loan servicing companies provided them with bad information or advice, which has resulted in several lawsuits and consumer complaints.
And therefore, many are looking to the CFPB to step up and help these borrowers.
But the Trump administration is sidelining CFPB
Multiple reports have now confirmed that the CFPB had attempted to fix these issues with the student loan forgiveness program but were stopped by the Trump administration. The CFPB sent teams of examiners to the call centers of student loan servicing companies. The examiners’ job was to collect information on the student loan forgiveness program that could then be used to identify issues and provide solutions. The DOE told these companies not to share any information about borrowers with the CFPB, citing privacy concerns. The consumer watchdog’s own director, who was appointed by President Trump, Kathy Kraninger, said in a letter that the DOE was blocking CFPB efforts to police the student loan industry.
Kraninger isn’t the only CFPB employee who has said the Trump administration is stalling the agency’s work on student loan oversight. In 2018, the federal official at CFPB leading the charge to protect student loan borrowers from predatory lending, Scott Frottman, issued a derisive resignation letter criticizing President Trump and prior CFPB acting director Mick Mulvaney for not protecting consumers. His letter to Mulvaney read, “Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting. Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.”
Profits over public
This is not the only area in which the Trump administration is prioritizing financial interests over student loan borrowers. The DOE also recently ignored a court order and garnished the wages and taxes of former Corinthian College students to collect student loan payments. Corinthian filed for bankruptcy, and the federal government announced that 335,000 students could erase their student loans, voiding their debt and prompting a refund of their prior payments.
As someone who has student loans and could have qualified for the loan forgiveness program, this all makes me furious. People shouldn’t be deprived of important information from their government or deceived by companies. Experts should be allowed to collect information to do their jobs effectively. The federal government should not skirt the law. That’s not too much to ask for, right?