Do NOT plan on PSLF to free your loans. Choose your specialty wisely.

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Program to Relieve Student Debt Proves Unforgiving

A federal system to erase loans for public-service jobs is in disarray; ‘It feels like a broken promise’

When Bonnie Svitavsky first heard about the Public Service Loan Forgiveness program, she thought she had finally found a way out of the large debt she had taken on to become a public librarian.

Congress created the program in 2007 with people like her in mind. The goal was to lure people into professions like teaching, nursing or public-interest law, where pricey degrees are the ticket of entry but wages typically aren’t high enough to pay them off.

More than a decade later, now that the first borrowers are eligible, the program is in disarray. More than 73,000 people have applied for debt forgiveness as of March 31 of this year, according to Education Department data, but just 864 have had their loans erased.

Ms. Svitavsky completed two master’s programs, creative writing and library sciences, which along with her bachelor’s degree left her with more than $97,000 in loans by the time she began her job at the Puyallup Public Library just outside Tacoma, Wash., in 2008. She consolidated those loans, per the program’s requirements, and began following the steps toward debt forgiveness.

Or she thought she had.
“It’s deeply frustrating, because you know you’re done, and you’ve jumped through all these hoops,” Ms. Svitavsky said. “It feels like a broken promise.”

A mix of factors combined to derail the program, including poorly written legislation, neglect by multiple administrations, mismanagement by servicers contracted to carry it out and antipathy from conservatives—particularly in the Trump administration—who would prefer the program had never been created.
“The department’s goal of pursuing its conservative agenda is made easier by the fact that the law itself is a mess,” said Terry Hartle, senior vice president at the American Council on Education, a Washington trade group representing colleges and universities.

To qualify for forgiveness, borrowers must work for a government entity or nonprofit, hold a certain type of loan, enroll in one of several specific repayment plans and make 120 full and on-time monthly payments, or 10 years’ worth. Falling short on almost any of these requirements can mean disqualification.

Education Department data show the rejections are prompted by a wide range of issues: 16% of denials were because borrowers had the wrong type of loan, making them permanently ineligible. Twenty-five percent were turned away due to missing information in applications, a potentially fixable error. And 53% were denied for not making enough payments, which could have been due to a simple counting error or being enrolled in an ineligible repayment plan for years.
The program’s congressional backers created one obstacle from the get-go. They required that applicants hold loans made directly from the federal government. Most student loans offered at the time were federally guaranteed but privately owned, making them much more expensive to manage.

That requirement predictably tripped up initial borrowers. Law schools around the country advertised the program to their students, but many offered only private loans in their financial-aid packages.

Congress went on to eliminate federally guaranteed private loans entirely in 2010, making all future loans eligible for public-service discharge, but private loans taken out before that time remained ineligible.

At that point, with the first borrowers not eligible for forgiveness for seven years, the Obama administration put off specific steps that would have helped the program run smoothly. Officials didn’t advertise the program or establish a platform to guide borrowers through its requirements. They didn’t draw up clear guidance on which employers should qualify as public-service organizations—now a subject of litigation. A government investigation last year found that officials didn’t even produce a guidebook for the servicing company they hired, Fed Loan, to implement the program.

“We had a lot else going on at the time, and this had not really appeared on our radar as a major problem that needed attention,” said Spiros Protopsaltis, a senior education policy adviser in the Obama administration. “We did some things, but clearly it wasn’t enough.”

Borrowers, meanwhile, also accused several of the companies charged with handling their loans with allowing them to enroll in ineligible repayment plans, though they had mentioned an interest in public-service loan forgiveness. Others made payments that were slightly too small—sometimes off by cents—that disqualified them from the minimum payment count. Still others were initially told their employers qualified, only to be told by the Education Department later that the servicing company had made an error.

Ms. Svitavsky hit her first snag in 2013, when she submitted a form to ensure her employer qualified her for loan forgiveness. It did, but that step revealed another problem: For the prior 23 months, her servicer, like with so many other borrowers, had her on a plan known as extended repayment, which charges standard monthly payments over 25 years. Those payments were now all ineligible toward her payment count.

The improper payment plan issue raised particular concern in Washington, where members of Congress, led by Sen. Elizabeth Warren (D., Mass.), in 2018 created a temporary fund of $700 million to reimburse borrowers who had mistakenly enrolled in ineligible repayment plans but otherwise qualified. The program has so far granted loan relief to 442 additional people.

The Trump administration, for its part, has done little more than the law requires to set up clearer processes for borrowers or the companies serving them. In its last three budget recommendations, the administration has proposed ending the program entirely.

In a hearing last month, Education Secretary Betsy DeVos criticized the program for, as she put it, elevating certain professions over others. “We don’t think that one type of a job, one type of role should be incentivized over another,” she said.

Critics on the right and the left bring up a broader contention: As more people work their way through the program’s labyrinthine requirements, some wealthier borrowers could stand to save big sums. That is because the government’s definition of public service extends to higher-paid professors at nonprofit universities and doctors at nonprofit hospitals.

“If Congress was totally honest with taxpayers about what they’re doing, which is creating a loan forgiveness program for people with master’s degrees who are fully employed.…I don’t think Congress could get away with doing that,” said Jason Delisle, a resident fellow at the American Enterprise Institute.

As for Ms. Svitavsky, who now earns $72,000 a year, the establishment of the congressional reimbursement fund last year means her 23 ineligible payments now count. In August 2018, she filed for forgiveness of her remaining roughly $80,000 in loans.

She was rejected.

The problem: Three different servicing companies had handled Ms. Svitavsky’s loan, and each time her account was transferred, her automatic payments hadn’t been made, which she didn’t notice.

She made three additional payments and tried again in November.

Again, her application was rejected.

This time, Ms. Svitavsky couldn’t find the flaw. She counted 121 qualifying payments. A review of her documents by The Wall Street Journal and two independent higher-education analysts confirmed her count.
A customer-service official with Fed Loan agreed with Ms. Svitavsky’s contention and appealed her case.

She is still waiting.

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I've been seeing this phenomenon in teaching and other fields but I'd be interested in how it's worked out for folks who decided to use a position with the National Health Services Corps, after residency, as opposed to taking the scholarship during med school, for loan forgiveness.
 
Our wonderful president wants to straight up get rid of it anyway... :rolleyes:
 
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Our wonderful president wants to straight up get rid of it anyway... :rolleyes:
I have so many negative opinions of him and this is just one more on the pile. I'm sure he sees it as free money for the undeserving instead of a way to provide for areas where it's harder to get people to consider serving due to money and perceived hardship/lower desirability.
 
I have so many negative opinions of him and this is just one more on the pile. I'm sure he sees it as free money for the undeserving instead of a way to provide for areas where it's harder to get people to consider serving due to money and perceived hardship/lower desirability.

Lower desirability tends to equal more rural. We cannot have outsiders infiltrating right?

I agree with you. It is quite sad. It isn’t to his benefit so screw it.

My biggest issue with him right now are his infanticide comments. Disgusted.
 
the biggest wtf to me in that article is that somebody paid almost 100k for masters' degrees in friggin writing and library science
 
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Ms. Svitavsky completed two master’s programs, creative writing and library sciences,
1 - You don't get what you pay for. These degrees are only slightly more valuable than toilet seat liners. These people are feeling the pinch after shying away from difficult degree programs because of the math and it's biting them in the tuchus. I don't feel sorry for a single art history major, never will.

2 - Hoping for a government that, by design, turns itself inside out every other year to keep you afloat and eat your debt is thoroughly foolish. Hope is not a strategy.

3 - Even if Warren were to get reelected, her pie-in-the-sky promises will never happen. Ever.

Keep dreaming, dreamers.
 
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I think the title of this thread should be changed to "Don't count on PSLF-or anything else really-if you're an idiot."

I mean it's pretty clear why these people didn't qualify. It says it right there in the article:

16% denied because they stupidly tried to get their PRIVATE loans discharged via a program expressly targeted at FEDERAL loans

25% were denied because they *****ically failed at filling out the dam form correctly! Wow, you had ONE job fella...

53% were denied because they thought they could just, like, apply for the loan forgiveness without actually making the payments that would have qualified them for it.
EllipticalVelvetyGardensnake-small.gif


0% were declined because of a vast right wing conspiracy to deny the proletariat its rightful share of the means of production.

The lesson here is this: life is hard if you're stupid. Qualifying for PSLF is a part of life. The End.
 
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I have a couple coworkers who are approaching 10 years. I really hope for their sake it works. I never trusted the system and refinanced and paid mine off. I sincerely doubt this program will be here 10+ years from now and if it is I can almost guarantee it will have a cap or exclusions for high earning professionals.
 
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I think the title of this thread should be changed to "Don't count on PSLF-or anything else really-if you're an idiot."

I mean it's pretty clear why these people didn't qualify. It says it right there in the article:

16% denied because they stupidly tried to get their PRIVATE loans discharged via a program expressly targeted at FEDERAL loans

25% were denied because they *****ically failed at filling out the dam form correctly! Wow, you had ONE job fella...

53% were denied because they thought they could just, like, apply for the loan forgiveness without actually making the payments that would have qualified them for it.
EllipticalVelvetyGardensnake-small.gif


0% were declined because of a vast right wing conspiracy to deny the proletariat its rightful share of the means of production.

The lesson here is this: life is hard if you're stupid. Qualifying for PSLF is a part of life. The End.
Pretty much this. I feel like most of the people who applied were like #yoloswag and threw in an application without having any idea how the program worked. Or at least that seems to be about the extent of the thought process for most applicants. If anything, all this says is that if the government offered money to qualified people to pay off loans, a bunch of leeches would try and abuse the system. Sounds familiar *cough* *cough* welfare
 
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It should not take $100,000 to train a librarian... i am sad she was bamboozled into making those choices.

"more education! coding bootcamps! Time to smarten up our workforce!" are great rallying cries, but all degrees are not equal. I think there needs to be questions asked with respect to the kind of college experience people are taking out loans for. The current college apparatus is simply unsustainable.
1- $200,000 to party away from mom and dad in an idyllic, movie-set-looking campus with a bunch of other 18 year olds to get that Art History degree?
2- $50,000 for a degree in Hospitality Criminal Justice from Trump University with the promise of being a Pool Jail warden?

Not everyone gets to go to a super pretty place for 4 years, drink, party, and line the pockets of a guy who spent his life studying what women's lips in renaissance paintings symbolize. I'm sure a lot of people have very fond memories of that time, but college in its current form is a luxurious vacation. It is not a human right. The "human right" part of education should be what K-12 is, as opposed to running out the clock until you turn 18.

The idea that there is some civil service job for everyone commensurate with what they spent on college, and that we can give them civil service repayment while continuing to subsidize ridiculous degrees and departments is absurd.
 
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@Osteosaur Preach. Yeah, I partied a lot in UG because I was away from my parents. I kind of regret it because I didn't have many skills when I graduated, and it was tough to find a good paying job.

If there's anything that I would have done differently, I would have pursued an engineering degree and engineering internships alongside being pre-med, just to give myself more gap year options. I am currently working a low-paying gap year job, pinching pennies and living with my parents to cover moving expenses and to still have a tiny emergency fund of ~$5000 at the start of medical school. Some of my friends that were smart and now work in banking or tech startups, they make double of everything i have in savings in just ONE MONTH...and they definitely aren't living with their parents.

First world problems, but yeah, this whole medical school thing is no joke financially. I hope it all works out.
 
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I don't understand why people:

1) Take out expensive loans for degrees that do not provide them with the means to easily pay off these loans

2) Expect that the taxpayer should fund this kind of irresponsibility .

Are librarians important? I would say yes because back in my day I used to spend a ton of time at the library but it really shouldn't require 100k in loans to become one. Do you really need more than an associates and maybe a one year externship? Degree creep is a huge problem in the US and I think it's mostly due to the perverse incentives that the essentially unlimited guaranteed federal loan programs create.


Even if she was only making 50K she could have probably paid this down if she was living on beans and rice and chipping away at the loan instead of expecting it all to be forgiven.
 
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Our wonderful president wants to straight up get rid of it anyway... :rolleyes:

The left isn't much better in this regard. Warren wants to cap it at 50 or 70k. Obama wanted to do the same. They aren't interested in helping "rich" doctors and lawyers.
It continues to amaze me that physicians can think that the liberals are going to be good for us.
 
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The left isn't much better in this regard. Warren wants to cap it at 50 or 70k. Obama wanted to do the same. They aren't interested in helping "rich" doctors and lawyers.
It continues to amaze me that physicians can think that the liberals are going to be good for us.

I amazes me anyone thinks Trump is good for us either.

But this isnt the SPF, i wont say more.

Yes, I know Warren wants a cap. It is what it is. We’ll have good paying jobs and the ability to pay off loans.
 
I have a couple coworkers who are approaching 10 years. I really hope for their sake it works. I never trusted the system and refinanced and paid mine off. I sincerely doubt this program will be here 10+ years from now and if it is I can almost guarantee it will have a cap or exclusions for high earning professionals.
Exactly. Social Security as we know it is likely gonna tank in that timeframe and people think this program will still be alive?
 
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