Student loan forgiveness program not forgiving after all

Washington state Attorney General Bob Ferguson sued the Trump administration in 2017 for failing to uphold Obama-appointed regulations that aimed to protect students from predatory higher education lending practices.

According to a July 6 press release from the office of the attorney general in 2017, allegations of the lawsuit focus on the Department of Education’s attempt to delay implementation of borrower defense regulations.

A federal judge ruled in favor of Ferguson’s lawsuit in September, finding the federal department guilty of improperly delaying implementation of the regulations, which are designed to hold for-profit colleges accountable for discharging student loan debts should the college close, among other stipulations.

The Attorney General’s office estimates that there are more than 800,000 Washington students borrowing federal money to pay for college. This lawsuit is only one of dozens from several states aimed at stricter federal regulations for student loan providers who have a history of deceptive lending practices.

A prime example of this deception can be found in something known as the Public Service Loan Forgiveness program.

According to the Federal Student Aid government webpage, this program is meant to enable direct loan forgiveness for employees of government or non-profit organizations.

The requirement as written states that applicants must make 120 qualifying payments under a qualifying repayment plan while working full time for a qualifying employer.

It’s the failure of loan providers assisting students that determine what each of those qualification requirements inspired the latest round of lawsuits.

While the government explains the requirements on their webpage, the problem lies in the service loan provider’s execution: the Department of Education does not oversee how these loan forgiveness programs are implemented and hire outside companies to manage the applications and repayments.

According to an NPR article published on Oct. 17, borrowers who enrolled in the loan forgiveness program and faithfully made payments for years were then told they didn’t qualify.

Reasons given to borrowers ranged from having the wrong type of loan to having the wrong type of employer.

To date, 99 percent of all Public Service Loan Forgiveness program applicants have been denied in their requests for repayments.

Last year, the Consumer Financial Protection Bureau’s office of student loans – then an independent watchdog organization tasked with protecting student loan borrowers – sued Navient, one of the largest student loan lenders and provider for Pierce College students.

Allegations included creating obstacles to successful loan repayments by providing students bad information, processing payments incorrectly and failing to act when students complained.

The CFPB’s student loan office has almost disintegrated after new director Mick Mulvaney, a Republican congressman who in the past was a vocal critic of the organization he now runs, combined several departments once focused on investigating complaints pertaining to student loan lenders.

The department is now focused on sharing information rather than investigating complaints against lenders, with no oversight that requires action be taken if unlawful or unfair practices in student lending are discovered.

Inquiries to Pierce’s financial aid department regarding how current legislation may affect students hoping to benefit from federal loan forgiveness programs were not responded to.

For information on what Washington state is doing to help guide and protect its students, visit the Washington state office of the attorney general’s Student Loan Resources page at

The Puyallup Post is the award-winning news media of Pierce College Puyallup in Puyallup, Washington. Copyright The Puyallup Post 2018. Find us on Facebook, Twitter, Instagram and Youtube @thepuyalluppost

Dawn Hammer

Student loan forgiveness program not forgiving after all

by Dawn Hammer time to read: 2 min