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Student Loan Servicers Blunt Public Service Loan Forgiveness Program

The Public Service Loan Forgiveness (PSLF) program provides people in public service jobs with a path to debt forgiveness after 10 years, with the first borrowers eligible in October 2017. Borrowers report that servicers delay or deny access to loan forgiveness through wrong information about their loans, flawed payment processing, and bungled job certifications. 

The Consumer Financial Protection Bureau (CFPB) issued a report spotlighting complaints from borrowers about student loan servicers mishandling the PSLF program.

The CFPB also issued updated guidelines to prioritize oversight of servicers’ administration of the Public Service Loan Forgiveness program.

Additionally, the CFPB is launching the “Certify Your Service” campaign to help public servants stay on track for federal loan forgiveness.

The PSLF program, launched in 2007, is meant to encourage people to enter public service despite increasing levels of student loan debt. For these borrowers, this program can relieve the financial stress caused by unmanageable student debt and lower-wage public service work. To be eligible, borrowers must have a qualifying loan; be enrolled in a qualifying repayment plan, such as an income-driven repayment plan; and make 120 on-time payments while working for a qualified public service employer. Student loan servicers are responsible for administering these requirements.

The CFPB estimates that 25% of the U.S. workforce is employed in some form of public service, and many may be eligible for loan forgiveness under this program. These include teachers, social workers, first responders, servicemembers, nurses, and other public health professionals.

So far, more than 500,000 people have signaled their intention to pursue debt relief under this program. According to the Department of Education, almost two-thirds of them earn less than $50,000 per year, and 86 percent earn less than $75,000 per year. In October 2017, the Department of Education will begin accepting applications from the first round of eligible borrowers seeking loan forgiveness under this program.


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