asheffey@businessinsider.com (Ayelet Sheffey)
© Provided by Business Insider FSA head Richard Cordray Pete Marovich/Getty Images)
The Education Department recently announced temporary reforms to Public Service Loan Forgiveness.
FSA head Richard Cordray told borrowers "not to flood our phone lines" as he delivers debt relief.
Thousands of public servants were previously denied relief due to flaws in the loan forgiveness program.
A top student-loan official said much more student-debt relief is to come — borrowers just need to sit back and wait.
"Please continue to be patient, log in to FedLoan's borrower portal to check your progress, and try not to flood our phone lines so we can focus on doing this work for you," Federal Student Aid head Richard Cordray wrote on Twitter last week.
His plea comes after thousands of student-loan borrowers saw their debt balances turn to zero after President Joe Biden's Education Department launched temporary reforms to the Public Service Loan Forgiveness (PSLF) program in October.
PSLF was created in 2007 to forgive student debt for public servants, like teachers and nonprofit workers, after ten years of qualifying payments. But since the first group of borrowers became eligible for forgiveness in 2017, the program ran up a 98% denial rate, prompting reforms from Biden's Education Department. Although some of the reforms are limited-time — including a waiver through October that would allow any past payments to count toward forgiveness progress — the department said at the time thousands of borrowers would become eligible for billions in relief.
For example, a month after the reforms were announced, Education Secretary Miguel Cardona said 10,000 public servants had already gotten $715 million in student debt wiped out, and $2 billion in relief would be coming for over 30,000 more borrowers. According to recent Education Department data, over 70,000 borrowers have had their debt wiped out to date.
"Over the last year 70,000 first responders, teachers, service members & other public servants received debt forgiveness, 4x the previous total," Under Secretary of Education James Kvaal wrote on Twitter in January. "We are proud to have their back."
As Insider previously reported, and as Cordray noted in his tweet, little action on the borrower's part needs to be taken to receive loan forgiveness. The main thing borrowers must do is ensure their loans are consolidated into a direct federal loan, and after submitting a PSLF application, the department will take it from there.
To help deliver relief to borrowers, the Pennsylvania Higher Education Assistance Agency (PHEAA) — a controversial student-loan company that manages PSLF — announced in November it would extend its contract one additional year to allow time for impacted borrowers to smoothly transition to a new company.
Even so, some public servants are confused by what the reforms mean for them and are waiting for the loan forgiveness they think they deserve. One borrower told Insider in November that even after working in public service for two decades, she has yet to receive relief and it's "anxiety-inducing" not knowing where her debt load stands.
Lisa Ansell — a teacher who got her remaining $44,000 student-debt load forgiven — told Insider she has "a new lease on her life," but she will not stop fighting until 45 million Americans holding $1.7 trillion in student debt can say the same.
"I'm just a sliver of the totality of borrowers drowning in crippling student debt," Ansell said. "I happen to have been fortunate enough in that of the millions of applications, somehow mine managed to land in the yes file."
Student-loan companies' 'illegal conduct' can ruin borrowers' chances of debt forgiveness, Biden's top consumer watchdog says — and they're about to face stepped up scrutiny
asheffey@businessinsider.com (Ayelet Sheffey)
The Education Department recently reformed the Public Service Loan Forgiveness program.
The CFPB is stepping up scrutiny over the information some student-loan companies provide on the reforms.
The agency reported companies' misleading behavior that can block borrowers from debt relief.
President Joe Biden's top consumer watchdog says he's cracking down on student loan companies' bad behavior that's jeopardizing some borrowers' chances of forgiveness.
Last week, the Consumer Financial Protection Bureau (CFPB), led by Rohit Chopra, released a bulletin detailing how it will monitor student-loan companies' actions when it comes to debt forgiveness. Particularly, the agency is overseeing how companies are informing borrowers of recent reforms to the Public Service Loan Forgiveness (PSLF) program, which forgives student debt for public servants after ten years of qualifying payments.
Leading up to Biden's presidency, the program ran up a 98% denial rate, and the CFPB is stepping up its scrutiny over companies to ensure borrowers are no longer misinformed on the program.
"Illegal conduct by a student loan servicer can be ruinous for borrowers who miss out on the opportunity for debt cancellation," Chopra said in a statement. "We will be working closely with the U.S. Department of Education to ensure that loan cancellation promises for public service are honored."
The agency wrote that over past years, it has found that companies "made deceptive statements to borrowers about their ability to become eligible for PSLF," and the failure to provide accurate information has misled borrowers and resulted in tens of thousands of dollars of student debt that should have been canceled.
But things seem to be turning around for borrowers who have struggled to get relief from the program. As a result of announced reforms in October, the Education Department is temporarily allowing prior ineligible payments to qualify for PSLF through a waiver, and over 70,000 borrowers have so far seen their student debt wiped out as a result.
Federal Student Aid head Richard Cordray wrote on Twitter last week that the already delivered relief is "the tip of the iceberg." To ensure borrowers can continue reaping the benefits, the CFPB said it will be paying close attention as to whether student-loan companies are providing accurate information regarding the waiver and ensuring the waiver is being promoted to all borrowers who might be eligible.
"We want to make sure that every single borrower who could benefit from the PSLF Waiver has the chance to do so, and giving borrowers accurate and timely information about their eligibility is critical," Education Secretary Miguel Cardona said in a statement.
The Pennsylvania Higher Education Assistance Agency (PHEAA) —the student-loan company that manages PSLF — announced in November it would extend its contract one additional year to allow time for impacted borrowers to smoothly transition to a new company. However, PHEAA is checkered with controversy and has come under fire by lawmakers like Massachusetts Sen. Elizabeth Warren, who said the company has an "atrocious record" of misleading borrowers into taking on more debt than they can pay off.
This isn't the first time the CFPB is cracking down on student-loan companies. In July, the agency found borrowers "regularly" got inaccurate information from the companies collecting their debt, including misrepresenting eligibility requirements for PSLF.
Read the original article on Business Insider
asheffey@businessinsider.com (Ayelet Sheffey)
© Provided by Business Insider CFPB head Rohit Chopra. Getty/Tom Williams
The Education Department recently reformed the Public Service Loan Forgiveness program.
The CFPB is stepping up scrutiny over the information some student-loan companies provide on the reforms.
The agency reported companies' misleading behavior that can block borrowers from debt relief.
President Joe Biden's top consumer watchdog says he's cracking down on student loan companies' bad behavior that's jeopardizing some borrowers' chances of forgiveness.
Last week, the Consumer Financial Protection Bureau (CFPB), led by Rohit Chopra, released a bulletin detailing how it will monitor student-loan companies' actions when it comes to debt forgiveness. Particularly, the agency is overseeing how companies are informing borrowers of recent reforms to the Public Service Loan Forgiveness (PSLF) program, which forgives student debt for public servants after ten years of qualifying payments.
Leading up to Biden's presidency, the program ran up a 98% denial rate, and the CFPB is stepping up its scrutiny over companies to ensure borrowers are no longer misinformed on the program.
"Illegal conduct by a student loan servicer can be ruinous for borrowers who miss out on the opportunity for debt cancellation," Chopra said in a statement. "We will be working closely with the U.S. Department of Education to ensure that loan cancellation promises for public service are honored."
The agency wrote that over past years, it has found that companies "made deceptive statements to borrowers about their ability to become eligible for PSLF," and the failure to provide accurate information has misled borrowers and resulted in tens of thousands of dollars of student debt that should have been canceled.
But things seem to be turning around for borrowers who have struggled to get relief from the program. As a result of announced reforms in October, the Education Department is temporarily allowing prior ineligible payments to qualify for PSLF through a waiver, and over 70,000 borrowers have so far seen their student debt wiped out as a result.
Federal Student Aid head Richard Cordray wrote on Twitter last week that the already delivered relief is "the tip of the iceberg." To ensure borrowers can continue reaping the benefits, the CFPB said it will be paying close attention as to whether student-loan companies are providing accurate information regarding the waiver and ensuring the waiver is being promoted to all borrowers who might be eligible.
"We want to make sure that every single borrower who could benefit from the PSLF Waiver has the chance to do so, and giving borrowers accurate and timely information about their eligibility is critical," Education Secretary Miguel Cardona said in a statement.
The Pennsylvania Higher Education Assistance Agency (PHEAA) —the student-loan company that manages PSLF — announced in November it would extend its contract one additional year to allow time for impacted borrowers to smoothly transition to a new company. However, PHEAA is checkered with controversy and has come under fire by lawmakers like Massachusetts Sen. Elizabeth Warren, who said the company has an "atrocious record" of misleading borrowers into taking on more debt than they can pay off.
This isn't the first time the CFPB is cracking down on student-loan companies. In July, the agency found borrowers "regularly" got inaccurate information from the companies collecting their debt, including misrepresenting eligibility requirements for PSLF.
Read the original article on Business Insider
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