Problems with the Public Service Loan Forgiveness Program
April 17, 2017
There have been several stories in the news recently regarding student loan borrowers facing uncertainty over their eligibility for the Public Service Loan Forgiveness program. The program was created in 2007 to allow student loan borrowers who took public service jobs to be able to apply for loan forgiveness after ten years of employment. The first date that any borrower will be eligible to submit their application for loan forgiveness will be October of 2017. It now looks like a number of borrowers may have been under the impression they were eligible for this program when they weren't.
The Department of Education has posted their requirements for this program on their website. A borrower is required to submit their application at the end of their ten years, including evidence that they have been employed by an employer who is eligible for the program. Borrowers are instructed to submit Employment Certification Forms regularly to confirm their eligibility. The Department of Education's website instructs borrowers to submit their Employment Certification Forms directly to Fed Loans Servicing, one of the Department's servicers:
What has caused a recent panic is that some borrowers had previously received letters back from FedLoan Servicing telling them their employers qualified for the program, but now they are receiving letters denying eligibility for the same employers. This sparked a lawsuit filed by the American Bar Association on behalf of themselves and a handful of borrowers. The Department of Education set off a bomb in their answer claiming that borrowers had no right to rely upon any approval of employers' eligibility by FedLoans Servicing (even though they are still, as of today, directing borrowers to submit their Employment Certification Forms to FedLoans Servicing).
The Department has not released any statement other than their legal filings.