The American Federation of Teachers (AFT), one of the nation’s largest teachers unions, sued the U.S. Department of Education earlier this month, claiming that a federal program designed to forgive certain student loans had refused loan discharges in error.
Created in 2007, the Public Service Loan Forgiveness (PSLF) program forgives student debts once participants complete 10 years of monthly payments while employed full time in service occupations such as teaching, nursing, policing, and select nonprofit and public service jobs.
As of June 2018, the program had discharged $534.8 million in eligible student debts, according to the Education Department. But data from the department also shows that PSLF administrators denied tens of thousands of claims that the AFT says were refused in error and not the borrowers’ fault.
Turmoil has surrounded the PSLF program for nearly two years. Borrowers complain about its complex eligibility rules, and many say they made their 10 years of payments only to find out they weren’t eligible because they didn’t have the right type of loan or payment plan.
Congress attempted to provide a temporary fix to the beleaguered program by issuing $350 million in funding as part of the omnibus spending bill passed in March 2018. But those funds have benefitted just 262 borrowers of the more than 38,000 who applied, The Washington Post reported. Six months later, the Government Accountability Office urged the Education Department to enact more cohesive guidelines and controls on the program.
Some Democrats blame Education Secretary Betsy DeVos for failing to fix the issues with PSLF. But DeVos countered that Congress created the mess with the program’s needlessly complex rules. She also has raised questions about the inequities of incentivizing certain types of jobs over others, and President Donald Trump recommended eliminating the program as part of his 2020 proposed budget.
Some critics, like the American Enterprise Institute’s Jason Delisle, complain that the program is overly generous and overburdened with high-debt borrowers. “Department statistics show that most participants borrowed well in excess of $50,000 in federal loans, and one-third borrowed more than $100,000,” he wrote last year. “Such high debt levels indicate that the program is mostly benefiting borrowers with graduate degrees.” Delisle explained that taxpayers foot the bill for the entire remainder after the 10th year, regardless of the original loan amount. Including interest, that can easily exceed $100,000 per borrower, he said.
Education Department spokeswoman Liz Hill said the agency does not comment on pending litigation, but the department is “faithfully administering the complex program Congress passed.” —L.E.