Beware of your Loan Forgiveness Program!

3 Steps to Help Ensure You’re Compliant

Hands-Money Photo by Alexander Mils on UnsplashIt has come to light that since 2017, thousands of former students who participated with full faith and effort in the US Education Department's various loan forgiveness programs — such as working as an inner-city teacher or rural doctor — have gotten "stiffed" on their loan forgiveness applications. Some people have been told they haven’t made the required 120 consecutive on-time payments, even though they have. Some have been told their employment doesn’t qualify, even after being reassured at time of hire that it did.

It’s a sticky situation that started coming to light in 2017, ten years after the program (passed in 2007 by the US Congress and enacted by President George W. Bush) began when the forgiveness time came due. Many borrowers found that due to lack of oversight, important information about their loan payments or work history did not get recorded properly, and their loan forgiveness was denied.

What Should I Do?

If you are currently or planning to take advantage of one of the loan forgiveness programs, we suggest  you:

  1. Log on to the National Student Loan Data System to ensure that your loan record is correct.
  2. Make sure that you keep your Public Service Loan Forgiveness Employment Certification (PDF) current. Clark Howard (consumer advocate hero!) suggests that you file this form each year. Can’t hurt!
  3. Visit the Public Service Loan Forgiveness page and tool
    to see if there is an option for you there. Currently (2019), they show an alert that there is a temporary loan forgiveness program available for some loans. Go now... first come, first served! Warning: You need to apply for the main loan forgiveness program BEFORE applying for the temporary emergency program.

    (9/9/19 note: The US government's General Accounting Office released a report that the US Department of Education is denying over 99% of applications for the temporary program. This is so wrong. All we can say is to apply anyway, be very patient, expect to get denied, and hopefully by the time you appeal the politicians will have a fix. See below for links to find your federal legislature to contact them about this atrocity.)

If you currently do not qualify, you should try to identify and speak to your loan officer, or some other representative from the lender/servicing company to see if they have any options for you. If you don’t know who that is, you can reach out to your former school’s financial aid office and they should be able to help trace your loan.

One suggestion is to consolidate your loans and change it to one of the available income-driven repayment plans which may be available for forgiveness. NOTE: This may reset the 120 month timer, so this option would be better for recent graduates. If you choose this option, know that debt consolidation is a free service. There a several marketers who try to sell you their loan consolidation services for a fee. Know that you are paying for their service, not any fees in connection to the loan consolidation.

Another suggestion is to try to wait it out. The current administration has indicated in their 2020 Budget Proposal a desire to end the forgiveness program (as well as subsidized loans in general) to save the government money. While this is not a guaranteed eventuality as Congress will insert their politics, the intent of the current administration is clear — the students of today don't matter. A new administration may well keep the programs which have allowed so many students to prosper — and contribute long term to the economy! (Just our opinion.)

What Can I Do?

Meanwhile, if you’re the activist type, go ahead and submit your opinion about the future of student loan programs. Here are some links:

US Student Aid feedback
"We want to hear from you about your federal student aid experience."

Raw source for current regulations open to comment on "student aid forgive"

Find your federal legislator (and write them a letter/send an email!):
US House of Representatives
US Senate

US Government Student Loan Forgiveness Statistics

Student Loan Information Resources

NerdWallet 10+ Student Loan Forgiveness, Cancellation and Discharge Programs

Forbes magazine Student Loan info

Resources pulled from Clark.com:

*Note the suggestions in this article are for general information only. Contact your financial professional for advice specific to your situation.

Author: ASG Kristin

Editor of Adult Student Guide to Survival & Success