Loan forgiveness programs

[LadyHalcyon]

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Trump's budget would end student loan forgiveness program and slash repayment options

Also, slightly unrelated but still in the same realm

TV actresses among 40 people charged in college exam cheating plot

I'm conflicted about this because removing/modifying loan forgiveness programs may deter students from incurring ridiculously high amounts of student loan debt and, as a result, schools may lower the cost of tuition. On the other hand, I'm not sure that is the reasoning behind this administration's proposal.

 

[PsyDr]

That budget also reduces the largest payers of mental health services in the USA: Medicaid payments reduced by $1.4 trillion, and Medicare by $500B.

If you're wanting to go into neuropsych, that's a problem.

 

[Pragma]

One of these days, something will happen to PSLF. They've been threatening changes since the Obama years - I remember when they proposed capping the payouts for PSLF at $57K. That wouldn't have put much of a dent into a FSPP program, let alone medical school. That never passed. I'd be surprised if this one passes.

What does seem reasonable is that the proposal at least indicates that "grandfathering" would occur for folks already in the process of obtaining their degrees.

It sounds to me that a lot of the people that were denied PSLF during the first year of paybacks simply never read the fine print in the program. The requirements are basically 1) You have to have one of these types of loans, 2) You have to be on one of these specific payment plans, and 3) You should submit your employment certification form annually to keep a record of qualifying employment at a government or non-profit place at least 32 hours a week.

While figuring those 3 things out isn't necessarily as easy as making a pop tart, it isn't rocket science either. It sounds like the people who got denied didn't do one of the above, probably because they never looked at the requirements.

 

[964693]

Given that a lot of the rejections come from not having 120 qualifying payments, I believe a lot of people tried to slip it in there under the radar. They worked some, but not all the months of a given year and thought they would call it good for the whole calendar year. I think people hoped it would be more like a tax audit system where the govt is too inefficient to check, rather than having to be approved in to loan repayment.

 

[Pragma]

Given that a lot of the rejections come from not having 120 qualifying payments, I believe a lot of people tried to slip it in there under the radar. They worked some, but not all the months of a given year and thought they would call it good for the whole calendar year. I think people hoped it would be more like a tax audit system where the govt is too inefficient to check, rather than having to be approved in to loan repayment.

I am guessing a lot of people had loans and were paying on some other form of repayment plan (e.g., graduated repayment plan), and never switched to income-based. To be on an income-based plan, you have to turn in tax stuff every year too.

 

[964693]

I am guessing a lot of people had loans and were paying on some other form of repayment plan (e.g., graduated repayment plan), and never switched to income-based. To be on an income-based plan, you have to turn in tax stuff every year too.

Yeah apparently also rounding up (I.e. 450 instead of 446.67) even once puts you in paid ahead status, and not one payment in paid ahead status counts so that's 10 years of wasted payments. There are a ton of little catches like that.

 

[StellaB]

Given that a lot of the rejections come from not having 120 qualifying payments, I believe a lot of people tried to slip it in there under the radar. They worked some, but not all the months of a given year and thought they would call it good for the whole calendar year. I think people hoped it would be more like a tax audit system where the govt is too inefficient to check, rather than having to be approved in to loan repayment.

There are a LOT of fine print things with PSLF that many people appear not to understand. One is the need to re-certify your employment every single year with FedLoan. If FedLoan doesn't get it in time (and there are reports about how bad FedLoan is: https://www.washingtonpost.com/news...n-forgiveness-program/?utm_term=.a29b5c9b0e2c), or if any information is missing (your employer fills it out, so errors could easily happen even if the borrower doesn't want them to), ANY payments made in the interim before your re-certification is approved are not counted toward the 120 payments. And no, they do not immediately notify you if your re-certification has issues.

 

[Pragma]

There are a LOT of fine print things with PSLF that many people appear not to understand. One is the need to re-certify your employment every single year with FedLoan. If FedLoan doesn't get it in time (and there are reports about how bad FedLoan is: https://www.washingtonpost.com/news...n-forgiveness-program/?utm_term=.a29b5c9b0e2c), or if any information is missing (your employer fills it out, so errors could easily happen even if the borrower doesn't want them to), ANY payments made in the interim before your re-certification is approved are not counted toward the 120 payments. And no, they do not immediately notify you if your re-certification has issues.

From what I understood, recertifying every year was an optional thing, but something they recommended just to be sure your employment qualified and there was an accurate count on your payments. Theoretically, whenever you signed up for the program, they would have to go back through your whole history. You could, in theory, keep track yourself for 10 years and then send in one certification form (for each employer) at the end and have them count everything up.

 

[Sanman]

There were multiple misunderstandings about PLSF including what qualified as proper employer. Loan servicers (Navient, etc) said something different from the dept of Ed. Personally, I am for getting rid of the multiple programs and instituting the single IBR program that Trump is suggesting (Capped at 12.5% income with a 15 yr cap on college repayment and a 30 yr cap on grad school repayment). As it is right now, federal employment for psychologists is like hitting the lotto ( better than average pay, benefits, and PSLF) and everyone else is left out to dry. Put more of the burden back on the borrower and save the taxpayers some money.

 

[StellaB]

From what I understood, recertifying every year was an optional thing, but something they recommended just to be sure your employment qualified and there was an accurate count on your payments. Theoretically, whenever you signed up for the program, they would have to go back through your whole history. You could, in theory, keep track yourself for 10 years and then send in one certification form (for each employer) at the end and have them count everything up.

Not according to what I have read: Checklist for Public Service Loan Forgiveness "Some payments may not count toward PSLF if the borrower filed their annual certification paperwork late."

 

[foreverbull]

FedLoan is notorious for purposely misleading borrowers about payment plans, etc. including the requirements of PSLF, first and foremost because they gain nothing from loan forgiveness as a company and have everything to gain if you’re denied it.

Just one of many articles about their issues (1/10 calls misled borrowers during the oversight period):
https://www.google.com/amp/s/www.ph...ro-student-loans-20190214.html?outputType=amp

It’s not hard to see why many folks wouldn’t understand the fine print if their loan holder/company responsible for employment certification is sharing misinformation at different levels of the process and not giving clear answers.

My understanding is that even some folks who recertified through FedLoan every year were suddenly told their non-profit job site didn’t qualify and/or other issues at the time of forgiveness.

Even people who do everything by the book can later find out some payments didn’t qualify. In this story, the number of qualifying payments suddenly changed for this guy, although he did eventually get his loans forgiven:
https://www.google.com/amp/s/www.cn...ants-to-get-their-student-loans-forgiven.html

It makes sense to me that they’d make the process confusing to navigate when the companies responsible for the loans have a vested interest in making sure you’re paying on your loans for as long as possible, but it’s egregious that they’re able to mislead borrowers with no consequences to their company. There isn’t enough oversight happening.

 

[Pragma]

Not according to what I have read: Checklist for Public Service Loan Forgiveness "Some payments may not count toward PSLF if the borrower filed their annual certification paperwork late."

That's just a statement on that person's website. When you follow the link that they link to with the PSLF tool, they indicate that it is a "tip" to recertify every year just to keep track. It was pretty clear back when I graduated and considered this program that the certification form was intended to be a practical tool for keeping your information up to date. Not having those annual certification forms wouldn't prevent someone from filing them after the fact and getting their qualifying payments tallied up during their periods of qualifying employment. It would just be a big pain to have to account for 10 years of qualifying employment all at once if you moved between institutions at any significant clip.

TIP: Since you should be on an income-driven repayment plan to get the greatest benefit from the PSLF Program, use this tool at the same time you recertify your income-driven repayment plan each year to ensure you remain on track and don't need to submit documentation for all 10 years of employment when you eventually apply for forgiveness.

ETA I probably would interpret the bold part as someone applying for loan forgiveness in its entirety without waiting for their employment certification forms to have been filed and tallied up first to legitimize their 120 payments. Pretty sure that usually takes them a couple of months to do from what I have heard.

 

[IWillSurvive]

This brings up a loosely related question of mine. My HR rejected certifying my employment for PSLF because they said as a fellow I am not an employee (though I work full-time, get paid, and receive health insurance benefits). I have heard other fellows were able to start PSLF in fellowship year but curious about other peoples' experience with this?

 

[Pragma]

This brings up a loosely related question of mine. My HR rejected certifying my employment for PSLF because they said as a fellow I am not an employee (though I work full-time, get paid, and receive health insurance benefits). I have heard other fellows were able to start PSLF in fellowship year but curious about other peoples' experience with this?

You should be able to (and it is recomended that you do) start as a postdoc. You might want to ask HR why they don’t consider you an employee.

 

[StellaB]

This brings up a loosely related question of mine. My HR rejected certifying my employment for PSLF because they said as a fellow I am not an employee (though I work full-time, get paid, and receive health insurance benefits). I have heard other fellows were able to start PSLF in fellowship year but curious about other peoples' experience with this?

Yeah, I would really try to find a way to persuade HR to reconsider; the term "employee" might mean something different to them (I'm guessing because a fellowship is not a permanent position) than it does to the gov't for the purposes of PSLF.

 

[Pragma]

FedLoan is notorious for purposely misleading borrowers about payment plans, etc. including the requirements of PSLF, first and foremost because they gain nothing from loan forgiveness as a company and have everything to gain if you’re denied it.

Just one of many articles about their issues (1/10 calls misled borrowers during the oversight period):
https://www.google.com/amp/s/www.philly.com/news/pheaa-navient-inspector-general-doe-josh-shapiro-student-loans-20190214.html?outputType=amp

It’s not hard to see why many folks wouldn’t understand the fine print if their loan holder/company responsible for employment certification is sharing misinformation at different levels of the process and not giving clear answers.

My understanding is that even some folks who recertified through FedLoan every year were suddenly told their non-profit job site didn’t qualify and/or other issues at the time of forgiveness.

Even people who do everything by the book can later find out some payments didn’t qualify. In this story, the number of qualifying payments suddenly changed for this guy, although he did eventually get his loans forgiven:
https://www.google.com/amp/s/www.cn...ants-to-get-their-student-loans-forgiven.html

It makes sense to me that they’d make the process confusing to navigate when the companies responsible for the loans have a vested interest in making sure you’re paying on your loans for as long as possible, but it’s egregious that they’re able to mislead borrowers with no consequences to their company. There isn’t enough oversight happening.

Reading the article, it sounds like some of these servicers have made mistakes. I’d assume it is a training or customer service issue. Having had the pleasure of working in a call center in another life, it’s not hard to imagine mistakes being made.

But that is a broader issue than just PSLF or Fedloan. It also is just call centers in general. Hopefully folks actually keep track of their call record/tracking number (I certainly would if getting an answer related to my finances).

Regarding your final point, is “they” the servicer or is it the government? Because from what I gather, they didn’t provide Fedloan with any clear guidance:

Public Service Loan Forgiveness: Education Needs to Provide Better Information for the Loan Servicer and Borrowers

The student loan system is confusing in general. There are so many different options that it is like a part time job to adequately consider those options. A lot of people who take out loans don’t want to think about it and avoid thinking about it (probably because going into 6 figure debt is unsettling). I’ve known several people that dreaded any discussion about loans and never took the time to even learn about their options, let alone read the PSLF document online. One guy told me “Yeah I heard after 10 years they will forgive my loans!” Guy had private loans and never looked anything up. Another had qualifying loans and assumed based on water cooler discussion that they’d get their loans forgiven, only to look it up in year 8 and note that their repayment plan was wrong. That’s on them if you ask me - figured if we are sharing anecdotes that other anecdotes are also valid.

My point is that while one can legitimately question the motives of DOE or a servicer, there is an enormous lack of personal responsibility out there with regard the the student debt crisis in general. To me, while some criticism of the PSLF system is warranted, it is also just another example of people wanting to find a scapegoat for their own avoidance or lack of effort.

 

[foreverbull]

Reading the article, it sounds like some of these servicers have made mistakes. I’d assume it is a training or customer service issue. Having had the pleasure of working in a call center in another life, it’s not hard to imagine mistakes being made.

But that is a broader issue than just PSLF or Fedloan. It also is just call centers in general. Hopefully folks actually keep track of their call record/tracking number (I certainly would if getting an answer related to my finances).

Regarding your final point, is “they” the servicer or is it the government? Because from what I gather, they didn’t provide Fedloan with any clear guidance:

Public Service Loan Forgiveness: Education Needs to Provide Better Information for the Loan Servicer and Borrowers

The student loan system is confusing in general. There are so many different options that it is like a part time job to adequately consider those options. A lot of people who take out loans don’t want to think about it and avoid thinking about it (probably because going into 6 figure debt is unsettling). I’ve known several people that dreaded any discussion about loans and never took the time to even learn about their options, let alone read the PSLF document online. One guy told me “Yeah I heard after 10 years they will forgive my loans!” Guy had private loans and never looked anything up. Another had qualifying loans and assumed based on water cooler discussion that they’d get their loans forgiven, only to look it up in year 8 and note that their repayment plan was wrong. That’s on them if you ask me - figured if we are sharing anecdotes that other anecdotes are also valid.

My point is that while one can legitimately question the motives of DOE or a servicer, there is an enormous lack of personal responsibility out there with regard the the student debt crisis in general. To me, while some criticism of the PSLF system is warranted, it is also just another example of people wanting to find a scapegoat for their own avoidance or lack of effort.

https://files.consumerfinance.gov/f/documents/201706_cfpb_PSLF-midyear-report.pdf

The incredible, rage-inducing inside story of America's student debt machine

These are worth a read.

I don’t disagree that some folks are less responsible in general about the process, but I think we differ in opinions about how widespread irresponsibility is vs. misinformation and mishandling.

Personal example: FedLoan requires recertification of income on a yearly basis for IDR plans (including those in PSLF). Two years in a row I’ve sent appropriate documentation to recertify (all that was stated that was required by FedLoan in the instructions), then a month later (both years), was denied and told I needed more documentation to prove income despite having sent all relevant tax forms, etc. I called and they always say “oh we don’t know why you were denied. Hmmm.” I record all calls now. But you mean to tell me that those reviewing my app made a simple mistake both times (denying I had sent the correct documents to show income) or is it purposeful to delay recertification and/or cause further consequences? Reviewing w-2’s/tax forms for recalculation of loan payments is not rocket science by any means and those tasked with doing it should do it correctly. There’s just no excuse for the denial either time when my follow-up phone calls to find out why suddenly fixed the problem and my recertification was then accepted.

To me, this seems much more intentional than a simple mistake. And while this is anecdotal, combined with other lawsuits and complaints to the CFPB, seems to represent a pattern. Some may be lack of clear guidance from the DOE on PSLF, but outside of PSLF, at least some of the issues in complaints filed seem a little more intentional than call center mistakes or paperwork review mistakes.

 

[Pragma]

https://files.consumerfinance.gov/f/documents/201706_cfpb_PSLF-midyear-report.pdf

The incredible, rage-inducing inside story of America's student debt machine

These are worth a read.

I don’t disagree that some folks are less responsible in general about the process, but I think we differ in opinions about how widespread irresponsibility is vs. misinformation and mishandling.

Personal example: FedLoan requires recertification of income on a yearly basis for IDR plans (including those in PSLF). Two years in a row I’ve sent appropriate documentation to recertify (all that was stated that was required by FedLoan in the instructions), then a month later (both years), was denied and told I needed more documentation to prove income despite having sent all relevant tax forms, etc. I called and they always say “oh we don’t know why you were denied. Hmmm.” I record all calls now. But you mean to tell me that those reviewing my app made a simple mistake both times (denying I had sent the correct documents to show income) or is it purposeful to delay recertification and/or cause further consequences? Reviewing w-2’s/tax forms for recalculation of loan payments is not rocket science by any means and those tasked with doing it should do it correctly. There’s just no excuse for the denial either time when my follow-up phone calls to find out why suddenly fixed the problem and my recertification was then accepted.

To me, this seems much more intentional than a simple mistake. And while this is anecdotal, combined with other lawsuits and complaints to the CFPB, seems to represent a pattern. Some may be lack of clear guidance from the DOE on PSLF, but outside of PSLF, at least some of the issues in complaints filed seem a little more intentional than call center mistakes or paperwork review mistakes.

It’s just an automated calculation based on last year’s AGI, no? Unless you have a more complex income situation and need to file things like w2s?

It’s a matter of opinion to some degree. I’ve seen it go super smooth for people I know with Fedloan, so that’s my anecdotal frame of reference. I also think conflating things like how easy or difficult it is to document income for an income-based plan (which cuts across servicers regardless of PSLF) and the PSLF process itself makes it seem easier to try to infer some sort of intentionality (which is the part I have trouble with, as it’s very hard to infer intentions).

ETA: Maybe “they” (servicer) intend to purposefully deceive their customers just 10% of the time and get it right the other 90%? Maybe “they” had procedures in place for staff to proactively deceive people for profit? More likely, I think “they” (DOE/government) was a bit dysfuntional about all of this and never provided enough guidance, so the servicer just winged it and since procedures were rolled out slowly and in real time, some confusion was inevitable.

 

[ellenew]

One of these days, something will happen to PSLF. They've been threatening changes since the Obama years - I remember when they proposed capping the payouts for PSLF at $57K. That wouldn't have put much of a dent into a FSPP program, let alone medical school. That never passed. I'd be surprised if this one passes.

What does seem reasonable is that the proposal at least indicates that "grandfathering" would occur for folks already in the process of obtaining their degrees.

It sounds to me that a lot of the people that were denied PSLF during the first year of paybacks simply never read the fine print in the program. The requirements are basically 1) You have to have one of these types of loans, 2) You have to be on one of these specific payment plans, and 3) You should submit your employment certification form annually to keep a record of qualifying employment at a government or non-profit place at least 32 hours a week.

While figuring those 3 things out isn't necessarily as easy as making a pop tart, it isn't rocket science either. It sounds like the people who got denied didn't do one of the above, probably because they never looked at the requirements.

I did some reading about other reasons people were being denied. Many reported that they were denied because their payment amounts were higher than the minimum. So if the income driven repayment plan they were on required $100 per month and they made payments of even $101 per month, they could be denied forgiveness even if they met those three requirements you mentioned. Loopholes, loopholes, loopholes. My training director on internship ran into a similar issue and was told none of her payments for those 10 years counted.

 

[Pragma]

I did some reading about other reasons people were being denied. Many reported that they were denied because their payment amounts were higher than the minimum. So if the income driven repayment plan they were on required $100 per month and they made payments of even $101 per month, they could be denied forgiveness even if they met those three requirements you mentioned. Loopholes, loopholes, loopholes. My training director on internship ran into a similar issue and was told none of her payments for those 10 years counted.

What confuses me about those cases is that there is no logical reason to pay more than your actual income-driven payment amount. You are trying to maximize forgiveness if you are in this program. On the contrary, the instructions are very clear about this. I looked into the program back in 2012 and DOE told people not to do this. See below:

https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service#qualifying-payment

If you make a monthly payment for more than the amount you are required to pay, you should keep in mind that you can receive credit for only one payment per month, no matter how much you pay. You can’t qualify for PSLF faster by making larger payments. However, if you do want to pay more than your required monthly payment amount, you should contact your servicer and ask that the extra amount not be applied to cover future payments. Otherwise, you may end up being paid ahead, and you can’t receive credit for a qualifying PSLF payment during a month when no payment is due.

Again, is this a people not reading the instructions issue? I feel bad for them but when you do something you are explicitly told not to do, then...

 

[ellenew]

What confuses me about those cases is that there is no logical reason to pay more than your actual income-driven payment amount. You are trying to maximize forgiveness if you are in this program. On the contrary, the instructions are very clear about this. I looked into the program back in 2012 and DOE told people not to do this. See below:

https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service#qualifying-payment

If you make a monthly payment for more than the amount you are required to pay, you should keep in mind that you can receive credit for only one payment per month, no matter how much you pay. You can’t qualify for PSLF faster by making larger payments. However, if you do want to pay more than your required monthly payment amount, you should contact your servicer and ask that the extra amount not be applied to cover future payments. Otherwise, you may end up being paid ahead, and you can’t receive credit for a qualifying PSLF payment during a month when no payment is due.

Again, is this a people not reading the instructions issue? I feel bad for them but when you do something you are explicitly told not to do, then...

I was advised (by multiple people at FedLoans when I consolidated my loans and qualified for IDR with plans to pursue PSLF) to make higher payments. They said it would be best in the long run since whatever amount is forgiven is considered taxable income, and that making higher payments (in my case I paid $50 more per month than required) would reduce that amount. My mistake was listening to the representatives and not seeking out further verification. I only worked 1 year at a university that counted toward PSLF doing this (and all of those monthly payments were verified and qualified toward the 120 monthly payments under the plan). I am no longer pursuing PSLF for a variety of reasons. I decided to go back to a standard repayment plan and am trying to pay them off as quickly as possible.

 

[Pragma]

I was advised (by multiple people at FedLoans when I consolidated my loans and qualified for IDR with plans to pursue PSLF) to make higher payments. They said it would be best in the long run since whatever amount is forgiven is considered taxable income, and that making higher payments (in my case I paid $50 more per month than required) would reduce that amount. My mistake was listening to the representatives and not seeking out further verification. I only worked 1 year at a university that counted toward PSLF doing this (and all of those monthly payments were verified and qualified toward the 120 monthly payments under the plan). I am no longer pursuing PSLF for a variety of reasons. I decided to go back to a standard repayment plan and am trying to pay them off as quickly as possible.

That’s good advice if you are not in PSLF. That’s strange because their official word of advice for PSLF was to pay as little as possible to maximize the benefit back around 2012. I remember thinking that that language on their website would probably be grounds for a lawsuit if they tried to get rid of the PSLF program without grandfathering. Pretty sure there are old threads here about it.

They might have been making suggestions about IDR. PSLF forgiveness is not taxed as income, but income-based repayment plans forgiveness are (and the advice would fit then to avoid the tax bomb).

 

[Pragma]

There are a LOT of fine print things with PSLF that many people appear not to understand. One is the need to re-certify your employment every single year with FedLoan. If FedLoan doesn't get it in time (and there are reports about how bad FedLoan is: https://www.washingtonpost.com/news...n-forgiveness-program/?utm_term=.a29b5c9b0e2c), or if any information is missing (your employer fills it out, so errors could easily happen even if the borrower doesn't want them to), ANY payments made in the interim before your re-certification is approved are not counted toward the 120 payments. And no, they do not immediately notify you if your re-certification has issues.

Just following up here with information directly on the FAQ. This makes for stimulating elliptical reading: https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service/questions

When I’m ready to submit my loan forgiveness application, do I need to submit any other documents to the PSLF servicer?
Yes. Even if you submitted PSLF Employment Certification Forms to the PSLF servicer during the entire period when you were making your 120 qualifying payments, you will need to show that you are employed full-time with a qualifying employer at the time you submit your PSLF application. The PSLF application will include an employment certification section that must be completed by the qualifying employer where you are employed at the time you submit the application.

If you did not submit any PSLF Employment Certification Forms prior to submitting your PSLF application, or if you submitted forms for only some of your employers or for only a portion of your period of qualifying employment, you will need to provide one or more PSLF Employment Certification Forms, as necessary, to cover your entire period of qualifying employment (including your current employment) at the time you submit your loan forgiveness application.

When I submit my application for loan forgiveness after making the required 120 qualifying payments, how long will it take to process my application and forgive my remaining loan balance?
Processing times will vary depending on factors such as whether you previously submitted documentation of employment for review or submitted documentation only at the time you applied for loan forgiveness, the number of your employers, any gaps in your employment or payment history, and any required follow-up.

If you periodically submitted the PSLF Employment Certification Form so that your eligibility could be tracked while you were making the required 120 payments, your application for loan forgiveness will likely be processed more quickly.

Once the PSLF servicer has received all of the documentation needed to determine whether you qualify for loan forgiveness, you will be notified. You are not required to continue making payments on your loans during the period when your loan forgiveness application is being processed. However, if you want to continue making payments, you may indicate this on your PSLF application.

 

[Pragma]

Yeah apparently also rounding up (I.e. 450 instead of 446.67) even once puts you in paid ahead status, and not one payment in paid ahead status counts so that's 10 years of wasted payments. There are a ton of little catches like that.

Although as noted above, they did tell people not to do that.

 

[StellaB]

What confuses me about those cases is that there is no logical reason to pay more than your actual income-driven payment amount. You are trying to maximize forgiveness if you are in this program. On the contrary, the instructions are very clear about this. I looked into the program back in 2012 and DOE told people not to do this. See below:

https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service#qualifying-payment

If you make a monthly payment for more than the amount you are required to pay, you should keep in mind that you can receive credit for only one payment per month, no matter how much you pay. You can’t qualify for PSLF faster by making larger payments. However, if you do want to pay more than your required monthly payment amount, you should contact your servicer and ask that the extra amount not be applied to cover future payments. Otherwise, you may end up being paid ahead, and you can’t receive credit for a qualifying PSLF payment during a month when no payment is due.

Again, is this a people not reading the instructions issue? I feel bad for them but when you do something you are explicitly told not to do, then...

There are several logical reasons to pay more than your IBR minimum:
1 - if you’re currently working for an employer who qualifies you for PSLF, but you aren’t sure you’ll do so for a total of 10 years.
2 - if you suspect PSLF might be gotten rid of while you’re making payments in the next 10 years or so.

IBR payments frequently don’t touch the principal on the loan, so if you only pay that amount for a while, your balance might be much higher after years of IBR minimum payments due to compound interest. Some people are understandably too cautious to want to do this.

 

[Pragma]

There are several logical reasons to pay more than your IBR minimum:
1 - if you’re currently working for an employer who qualifies you for PSLF, but you aren’t sure you’ll do so for a total of 10 years.
2 - if you suspect PSLF might be gotten rid of while you’re making payments in the next 10 years or so.

IBR payments frequently don’t touch the principal on the loan, so if you only pay that amount for a while, your balance might be much higher after years of IBR minimum payments due to compound interest. Some people are understandably too cautious to want to do this.

1) makes sense, although I’d probably reconsider PSLF in the first place then. I definitely wouldn’t go on an income-driven plan if I wasn’t planning to do 10 years in public service or had some other loan forgiveness mechanism targeted.

2) If it were me I’d either be all in on the program or I would just forget PSLF and pay off as much of my loans as possible as fast as possible. For reasons you mentioned like compound interest. Also, active budget proposals could be a telling guide here. Seems like even Trump is pushing a grandfathering mechanism.

 

[foreverbull]

It’s just an automated calculation based on last year’s AGI, no? Unless you have a more complex income situation and need to file things like w2s?

It’s a matter of opinion to some degree. I’ve seen it go super smooth for people I know with Fedloan, so that’s my anecdotal frame of reference. I also think conflating things like how easy or difficult it is to document income for an income-based plan (which cuts across servicers regardless of PSLF) and the PSLF process itself makes it seem easier to try to infer some sort of intentionality (which is the part I have trouble with, as it’s very hard to infer intentions).

ETA: Maybe “they” (servicer) intend to purposefully deceive their customers just 10% of the time and get it right the other 90%? Maybe “they” had procedures in place for staff to proactively deceive people for profit? More likely, I think “they” (DOE/government) was a bit dysfuntional about all of this and never provided enough guidance, so the servicer just winged it and since procedures were rolled out slowly and in real time, some confusion was inevitable.

Is it just simple error to twice ignore one’s documentation sent with an application and then on the phone acknowledge that they actually had the correct documents both times? If it happened just once, I would be more likely to chalk it up to an innocent mistake. I’ve also contacted FedLoan about interest accrual and have been bounced around to different reps, told someone else will get back to me, etc. and then no one did until I (after repeated contacts and months later) filed a complaint with the CPFB.
Of note, these situations had nothing to do with PSLF, so it was unrelated to gray area regulations from the DOE.

Ultimately you and I disagree about whether FedLoan and other loan servicers ever intentionally mislead loanholders. I think it’s entirely possible and plausible at least some of the time, based on complaints I’ve seen filed. Some is also inadequate training/error on the part of the reps, certainly. But at times, I do think it’s more than just error. If it’s always just error, FedLoan has the most incompetent, indifferent, and careless workforce I’ve ever experienced with a company.

 

[Pragma]

Is it just simple error to twice ignore one’s documentation sent with an application and then on the phone acknowledge that they actually had the correct documents both times? If it happened just once, I would be more likely to chalk it up to an innocent mistake. I’ve also contacted FedLoan about interest accrual and have been bounced around to different reps, told someone else will get back to me, etc. and then no one did until I (after repeated contacts and months later) filed a complaint with the CPFB.
Of note, these situations had nothing to do with PSLF, so it was unrelated to gray area regulations from the DOE.

Ultimately you and I disagree about whether FedLoan and other loan servicers ever intentionally mislead loanholders. I think it’s entirely possible and plausible at least some of the time, based on complaints I’ve seen filed. Some is also inadequate training/error on the part of the reps, certainly. But at times, I do think it’s more than just error. If it’s always just error, FedLoan has the most incompetent, indifferent, and careless workforce I’ve ever experienced with a company.

I’m sorry that you had that experience, but I believe there are a lot of potential explanations for it short of a broad conspiracy to mislead borrowers.

 

[Pragma]

Is it just simple error to twice ignore one’s documentation sent with an application and then on the phone acknowledge that they actually had the correct documents both times? If it happened just once, I would be more likely to chalk it up to an innocent mistake. I’ve also contacted FedLoan about interest accrual and have been bounced around to different reps, told someone else will get back to me, etc. and then no one did until I (after repeated contacts and months later) filed a complaint with the CPFB.
Of note, these situations had nothing to do with PSLF, so it was unrelated to gray area regulations from the DOE.

Ultimately you and I disagree about whether FedLoan and other loan servicers ever intentionally mislead loanholders. I think it’s entirely possible and plausible at least some of the time, based on complaints I’ve seen filed. Some is also inadequate training/error on the part of the reps, certainly. But at times, I do think it’s more than just error. If it’s always just error, FedLoan has the most incompetent, indifferent, and careless workforce I’ve ever experienced with a company.

Just to follow up on this post, more directly related to your experience, Fedloan was my servicer for the loans I took out in graduate school. It generally took a month or two for anything to get processed, but I never thought twice about it. Think there was a mistake one time that got resolved after a couple of phone calls. Again, never thought twice about it. I guess I chalked it up to customer service/call center/administrative paperwork processing issues for a large organization.

There's a lot of points where things can break down when you are working in a customer service type of position at a call center. Sometimes people don't document calls the right way. There's high turnover and sometimes scheduled follow-ups don't get passed on appropriately or at all when an employee leaves. There might be different departments that are approving your supplemental documentation vs. who is communicating with you for telephone calls. I'm pretty sure I watched Fedloan go from having documents faxed/snail mailed to being uploaded on the website, which probably created new processes for employees and perhaps the need to hire more employees. I’d also imagine that Fedloan got slammed with large multipliers of paperwork as 2017 came around. Huge potential for mistakes to happen. It sucks when they do, but they do in all enormous organizations at some rate.

My point might be worth a separate thread. What’s the threshold for declaring malfeasance on the part of the government or on the part of an organization? What is the threshold for declaring a monolithic conspiracy over perhaps some peripheral dysfunction or mistaken (or even wrongful) actions on the part of individual employees? I am genuinely curious as these accusations seem to be casually thrown about in this thread, and it seems like a trend in society as well.

 

[Lotus143]

This brings up a loosely related question of mine. My HR rejected certifying my employment for PSLF because they said as a fellow I am not an employee (though I work full-time, get paid, and receive health insurance benefits). I have heard other fellows were able to start PSLF in fellowship year but curious about other peoples' experience with this?

I was able to get it during internship AND fellowship working at the VA. I had my supervisor sign it. It doesn’t need to go through HR.

 

[StellaB]

What’s the threshold for declaring malfeasance on the part of the government or on the part of an organization? What is the threshold for declaring a monolithic conspiracy over perhaps some peripheral dysfunction or mistaken (or even wrongful) actions on the part of individual employees? I am genuinely curious as these accusations seem to be casually thrown about in this thread, and it seems like a trend in society as well.

https://www.washingtonpost.com/educ...servicing-contractors/?utm_term=.82909de3b8d7
Is FedLoan, America’s giant student loan servicer, running out of money?
Student Loan Servicers’ Frequent Mistakes Went Unpunished, Audit Finds
Malfeasance does not mean a "monolithic conspiracy" even if the end result is similar. All it takes is a bad incentive structure and lack of oversight to see the type of widespread problems at a servicer such as FedLoan. Honestly, it's not all that dissimilar from the problems at Argosy; a non-government company gets a ton of revenue courtesy of the federal government with minimal oversight and eventually it blows up. The thousands of call center customer service mistakes are adding up to a giant problem. Because loans cannot be discharged, there is basically no recourse for borrowers. It is not akin to a typical crappy call center (like, say, Comcast), because as a Comcast customer, you can just quit using Comcast.

 

[Pragma]

https://www.washingtonpost.com/educ...servicing-contractors/?utm_term=.82909de3b8d7
Is FedLoan, America’s giant student loan servicer, running out of money?
Student Loan Servicers’ Frequent Mistakes Went Unpunished, Audit Finds
Malfeasance does not mean a "monolithic conspiracy" even if the end result is similar. All it takes is a bad incentive structure and lack of oversight to see the type of widespread problems at a servicer such as FedLoan. Honestly, it's not all that dissimilar from the problems at Argosy; a non-government company gets a ton of revenue courtesy of the federal government with minimal oversight and eventually it blows up. The thousands of call center customer service mistakes are adding up to a giant problem. Because loans cannot be discharged, there is basically no recourse for borrowers. It is not akin to a typical crappy call center (like, say, Comcast), because as a Comcast customer, you can just quit using Comcast.

If the argument was that there was a lack of organization on the part of Fedloan, or perhaps some mismanagement/lack of oversight, then I wouldn't be asking the question. I also brought up earlier that it looks like DOE didn't give them much guidance, and it suggests to me that there has been dysfunction at the DOE level in even communicating with Fedloan over the years, which to me would translate into that dysfunction trickling down on some level through the servicer to the borrower.

What people are saying here is that Fedloan is intentionally misleading borrowers. That's a different animal, if you ask me. It's a serious allegation. That's what I meant by "monolithic conspiracy" because wouldn't that be what a large organization intentionally misleading borrowers is?

 

[Pragma]

It is not akin to a typical crappy call center (like, say, Comcast), because as a Comcast customer, you can just quit using Comcast.

Unless Comcast is the only high speed ISP for your residence, and you need that high speed to stream bad new episodes of Arrested Development to your tablet while you work out. Or to stream variations of Baby Shark to keep your child occupied while you watch those bad new episodes of Arrested Development in peace.

Actually, warm fuzzy for Comcast tech support - they've got a superstar on that team that managed to resolve all of my problems turning every room of my house into a place where I can watch whatever show that I want, whenever I want.

 

[StellaB]

I guess we can all just wait to see how the various class-action lawsuits pan out. And the one filed by Massachusetts AG. I only saw one person indicate the misleading of borrowers was intentional - everyone else on this thread and others has essentially said FedLoan was a bad actor, which there is ample evidence to support.

 

[GradStudent2020]

Unless Comcast is the only high speed ISP for your residence, and you need that high speed to stream bad new episodes of Arrested Development to your tablet while you work out. Or to stream variations of Baby Shark to keep your child occupied while you watch those bad new episodes of Arrested Development in peace.

Actually, warm fuzzy for Comcast tech support - they've got a superstar on that team that managed to resolve all of my problems turning every room of my house into a place where I can watch whatever show that I want, whenever I want.

I need a trigger warning for any mention of baby shark.

 

[Pragma]

I just think it is interesting that I posted about Arrested Development and the next post mentioned bad actors.

 

[GradStudent2020]

I just think it is interesting that I posted about Arrested Development and the next post mentioned bad actors.

This entire thread is so helpful for me. It definitely illustrates how complicated and unclear the loan forgiveness process can be.

 

[foreverbull]

If the argument was that there was a lack of organization on the part of Fedloan, or perhaps some mismanagement/lack of oversight, then I wouldn't be asking the question. I also brought up earlier that it looks like DOE didn't give them much guidance, and it suggests to me that there has been dysfunction at the DOE level in even communicating with Fedloan over the years, which to me would translate into that dysfunction trickling down on some level through the servicer to the borrower.

What people are saying here is that Fedloan is intentionally misleading borrowers. That's a different animal, if you ask me. It's a serious allegation. That's what I meant by "monolithic conspiracy" because wouldn't that be what a large organization intentionally misleading borrowers is?

I never claimed a monolithic conspiracy; I simply stated that it's possible and plausible that borrowers are misled purposefully at least some of the time (could be a small percentage), and errors/incompetence amongst loan servicers is a problem.
https://files.consumerfinance.gov/f/documents/201704_cfpb_Supervisory-Highlights_Issue-15.pdf

2.3.2
Deceptive statements about interest capitalization
during successive deferments

And I quote: "...one or more servicers had engaged in deceptive practices by stating that interest would capitalize at the end of the deferment period." (When in fact, they capitalized interest multiple times).

Deception implies malfeasance rather than simple error. Whether or not this was Fedloan, this is evidence of intention to deceive by a loan servicer.

EDIT: Navient malfeasance: Audit points to deceptive practices by student loan provider Navient

"...the five states suing Navient — Illinois, Pennsylvania, Washington, California and Mississippi — say the behavior breaks their laws regarding consumer protection. The Consumer Financial Protection Bureau says in its own lawsuit the practices are unfair, deceptive and abusive and break federal consumer protection laws."

Conduent Education Services (this one is a little trickier in terms of evidence, since it settled the lawsuit, but importantly, is now not allowed to service federal loans for the next 5 years): Student Loan Servicer Settles With NY for $9M Over Deceptive Practices Claim | New York Law Journal

"Regulators alleged the company, for several years, directed borrowers into forbearances, or a temporary pause in payments, when they were struggling to afford the cost of repayment. According to the state, the company decided not to tell borrowers they could apply for a program that would reduce their payments based on their income, rather than the time left in their repayment.
The company was also accused of telling borrowers who were behind on their payments that they were more overdue than they actually were. That was an effort to maximize the company’s collections, according to the state"

 

[Sanman]

I’m sorry that you had that experience, but I believe there are a lot of potential explanations for it short of a broad conspiracy to mislead borrowers.

You know it's funny, I do believe that there is a conspiracy, but it is not the that people are suggesting. Whether you speak about loan forgiveness, Argosy, clinical work (in the Argosy Update thread), the previous financial crisis, the recent fall of Sears, etc. It is all driven by a host of common factors. It is a combination of the emergence of the U.S. focus of companies on the short term capital gains related to the stock market and the resulting push that has led to the erosion of employee benefits and security. Investment partners focus on short term profits and cutting of costs with no concern related to long-term quality has led to a country of short-timers looking for the next best thing. From the CEO/capital partners on down to the individual employee, everyone is looking to wring as much profit out of a company as possible and get out before the music stops and they are left without a chair. Personally, I partially blame Clinton for the cap on executive pay that has led to CEOs getting paid in stock, which they all attempt to pump and dump. This infects the staff and you get useless private loan servicers, Wells Fargo employees opening fake bank accounts for bonuses/ongoing employment, Countrywide employees approving mortgages to dogs because you will just quit and go on the next company. There are no reasons to stick around after getting your bonus by hook or crook. Until be there is a backlash or fiscal punishment for prioritizing short- term productivity at the expense of quality, nothing will change. Okay, off the soap box and back to work.

 

[Pragma]

I guess we can all just wait to see how the various class-action lawsuits pan out. And the one filed by Massachusetts AG. I only saw one person indicate the misleading of borrowers was intentional - everyone else on this thread and others has essentially said FedLoan was a bad actor, which there is ample evidence to support.

Yeah, as someone that considered this program years ago, I just find it so interesting how comfortable people have been about making assumptions about the program, without reading the very clear information that has been available on the DOE website (as indicated in some of my earlier posts on this thread).

I remember saying to myself "Hm, I guess I'd have to go from Graduated to IBR or ICR (for you younger people, those were some of the earlier iterations of IDR) before I could start having my payments count towards this program." Interestingly enough, last year the government went ahead and approved $350 million so that students who did not read the fine print/follow instructions still could potentially get forgiveness anyways (How To Get $350 Million Of Student Loan Forgiveness).

My interest in this thread is in having people acknowledge their own responsibility when it comes to taking on loans and navigating the loan system. Sure, it isn't easy, but the information was and is readily available. For various reasons, a lot of people have not chosen to educate themselves about these matters, despite the information being readily available.

So, even though I acknowledge that there are problems (government didn't give Fedloan much guidance and also isn't giving them much compensation to administer the program, Fedloan, like any other servicer or large organization, makes some rate of mistakes/mishandlings, etc), people often invoke these "bad actors" without acknowledging that individual people might have been pretty bad actors too, in A LOT of cases. Now, if it comes to light that there was some kind of systemic attempt to mislead borrowers, then I'm happy to pile on with everyone else, but I'm not comfortable making those types of assumptions or relying on anecdotes. I'm assuming dysfunction and some employees lacking in competence/training, over assuming that they are knowingly deceiving people.

There's a lot of people out there who would like to see PSLF go away, and keep these nefarious students from stealing from the taxpayers. I can't wait to see the spread on the amount of debt forgiven once a large N of people has cashed in. I know medical students and other very expensive graduate program students planning on cashing in on this - working at almost any university or health/hospital system will qualify you (aside from for-profits).

 

[foreverbull]

My interest in this thread is in having people acknowledge their own responsibility when it comes to taking on loans and navigating the loan system. Sure, it isn't easy, but the information was and is readily available. For various reasons, a lot of people have not chosen to educate themselves about these matters, despite the information being readily available.

So, even though I acknowledge that there are problems (government didn't give Fedloan much guidance and also isn't giving them much compensation to administer the program, Fedloan, like any other servicer or large organization, makes some rate of mistakes/mishandlings, etc), people often invoke these "bad actors" without acknowledging that individual people might have been pretty bad actors too, in A LOT of cases. Now, if it comes to light that there was some kind of systemic attempt to mislead borrowers, then I'm happy to pile on with everyone else, but I'm not comfortable making those types of assumptions or relying on anecdotes. I'm assuming dysfunction and some employees lacking in competence/training, over assuming that they are knowingly deceiving people.

I've acknowledged that some folks aren't as responsible about finances earlier in the thread. I never said people shouldn't take responsibility for their actions, but I also don't assume that everyone is fiscally irresponsible and expecting everyone else to pay for their loans because they're entitled.
I've acknowledged that there does seem to be an issue with incompetence at times.
I've supported my claim that there is malfeasance (to some extent, not claiming generally or the majority of time) with facts given some of the lawsuits and findings by the CFPB.

I'm just waiting for you to support your claim that individual people have likely been "bad actors" in "A LOT of cases."
This is an assumption, just as much as me saying that there's probably malfeasance some of the time (I didn't even claim a lot of the time as you are here). But I've supported my claim with evidence.

I'd like to see your evidence, since you're making a very sweeping and generalizing statement about people's motivations, efforts, and intentions ("wanting to find a scapegoat" and not take responsibility). And how do you know this other than the anecdotes you mentioned? The burden of proof shouldn't only rest on one side.

 

[Pragma]

I've acknowledged that some folks aren't as responsible about finances earlier in the thread. I never said people shouldn't take responsibility for their actions, but I also don't assume that everyone is fiscally irresponsible and expecting everyone else to pay for their loans because they're entitled.
I've acknowledged that there does seem to be an issue with incompetence at times.
I've supported my claim that there is malfeasance (to some extent, not claiming generally or the majority of time) with facts given some of the lawsuits and findings by the CFPB.

I'm just waiting for you to support your claim that individual people have likely been "bad actors" in "A LOT of cases."
This is an assumption, just as much as me saying that there's probably malfeasance some of the time (I didn't even claim a lot of the time as you are here). But I've supported my claim with evidence.

I'd like to see your evidence, since you're making a very sweeping and generalizing statement about people's motivations, efforts, and intentions ("wanting to find a scapegoat" and not take responsibility). And how do you know this other than the anecdotes you mentioned? The burden of proof shouldn't only rest on one side.

You claimed that Fedloan intentionally misled you. I questioned how someone could infer intent and I don't think that your logic that because it happened twice it had to be intentional was enough to convince me. You haven't provided any evidence for that. You've linked to some lawsuits filed against different loan servicers, and seem to think that the constellation of your own anecdotes and other peoples' gripes about other loan servicers constitutes "evidence."

The only point that I have repeatedly tried to make in this thread is that the information has been out there for people. When people cite the click-baiting headlines about how many rejections there are for PSLF, that's really the only evidence that I need to present. You have the vast majority of borrowers applying for forgiveness and being rejected because of not meeting the requirements. What was it, 70% did not meet requirements based on the Forbes 2018 article about the 99% rejection rate? Does 70% count as "A LOT" or is that too sweeping of a generalization? And yes, I think filing an application for PSLF without reading the FAQ section of the PSLF website does constitute being an ignorant borrower (bad actor, if that clarifies it).

There are some other good pieces out there that highlight how the rate of approval is likely to rise a lot over the coming years. The fact that someone could apply for this while doing things the DOE clearly stated not to do (see some examples of how this has been stated earlier in the thread).

Everyone Calm Down About Rejected Student Loan Forgiveness Applications

Why The Public Service Loan Forgiveness Headlines Are Misleading

PSLF Snowball Effect: Why the Approval Rate Will Hit Over 50% by 2024 | Student Loan Planner

So, citing the huge number of rejections and the public outcry/hysteria about the program, I argue that there is a public misunderstanding about the program and its actual outlook. The number of people who actually would qualify for forgiveness to date is miniscule given a number of issues that would make meeting all of the requirements hard RIGHT NOW, but where more and more successful completions will occur in the coming years. That last article cites some very interesting data - just look at the approved ECFs table and the number of people enrolled in PSLF year over year. Moreover, it only makes my earlier point that the paperwork burden has been increasing immensely as the program has gotten exponentially more utilized. Outlook appears to be that there will be huge $ in loan forgiveness, increasing every year as more people that are ACTUALLY ELIGIBLE apply.

I better go actually go do some work that I did all that schooling for now!

 

[foreverbull]

You haven't provided any evidence for that. You've linked to some lawsuits filed against different loan servicers, and seem to think that the constellation of your own anecdotes and other peoples' gripes about other loan servicers constitutes "evidence."

The only point that I have repeatedly tried to make in this thread is that the information has been out there for people. When people cite the click-baiting headlines about how many rejections there are for PSLF, that's really the only evidence that I need to present. You have the vast majority of borrowers applying for forgiveness and being rejected because of not meeting the requirements. What was it, 70% did not meet requirements based on the Forbes 2018 article about the 99% rejection rate? Does 70% count as "A LOT" or is that too sweeping of a generalization? And yes, I think filing an application for PSLF without reading the FAQ section of the PSLF website does constitute being an ignorant borrower (bad actor, if that clarifies it).

So, citing the huge number of rejections and the public outcry/hysteria about the program, I argue that there is a public misunderstanding about the program and its actual outlook. The number of people who actually would qualify for forgiveness to date is miniscule given a number of issues that would make meeting all of the requirements hard RIGHT NOW, but where more and more successful completions will occur in the coming years. That last article cites some very interesting data - just look at the approved ECFs table and the number of people enrolled in PSLF year over year. Moreover, it only makes my earlier point that the paperwork burden has been increasing immensely as the program has gotten exponentially more utilized. Outlook appears to be that there will be huge $ in loan forgiveness, increasing every year as more people that are ACTUALLY ELIGIBLE apply.

I better go actually go do some work that I did all that schooling for now!

I actually wasn't specifically referring to PSLF at all in any of my posts (and made that clear), whereas you seem to be. I was speaking more broadly about loan servicing and its issues, and you were also responding to broader issues, not just PSLF, although now suddenly it's only about PSLF and that's where your "evidence" lies?

My ultimate claim is that malfeasance happens sometimes, whether or not Fedloan is directly part of that. Certainly if you stick to one smaller point I said earlier and ignore the overall point, then you can nitpick the earlier statement, but my general point was supported, which you have dismissed for reasons I don't find clear. You were looking for proof that intentional misleading borrowers is happening at all by loan servicers. The "evidence" that you dismissed is CFPB's own findings after investigating complaints, not just "lawsuits," "anecdotes," and "gripes." If an agency created to be a watchdog to protect consumers finds evidence of deceit but that doesn't convince you, I guess no evidence will!

 

[StellaB]

I am interested in this topic as someone who has no student loans at all. I don't have a dog in this fight aside from the way this brewing crisis threatens our field and the broader economy. There is plenty of evidence to suggest that loan servicers are not acting in the best interest of borrowers. If the borrowers end up owing more at the end of the 10 year payment plan due to the servicers' incompetence, the servicers make more (taxpayer) money. It is a problem.

 

[Pragma]

My ultimate claim is that malfeasance happens sometimes, whether or not Fedloan is directly part of that. Certainly if you stick to one smaller point I said earlier and ignore the overall point, then you can nitpick the earlier statement, but my general point was supported, which you have dismissed for reasons I don't find clear. You were looking for proof that intentional misleading borrowers is happening at all by loan servicers. The "evidence" that you dismissed is CFPB's own findings after investigating complaints, not just "lawsuits," "anecdotes," and "gripes." If an agency created to be a watchdog to protect consumers finds evidence of deceit but that doesn't convince you, I guess no evidence will!

I think something got lost in translation here. I'm not fully aware enough about all of the different loan servicers that are out there, and I wouldn't ever dismiss actual evidence that suggested systematic wrongdoing. I just had a reaction to you citing your specific experience with Fedloan and indicating that your negative experience was evidence for intentional deception on their part. I'm not sure where you are finding anything that I said that would indicate that I was defending the entire community of loan servicers? My point in this discussion has been that people have been pointing fingers about PSLF and Fedloan, when the information that they have needed to avoid these problems has been at their fingertips the entire time.

So maybe we've been arguing about two different things here...I'm focused on PSLF (although the broader debt issue is another matter). And yes, your anecdote you brought up was about IDR (including those in PSLF) - I just had a response to your assumption that there was intentional wrongdoing on their part based on your example.

Hey I am all for getting crooks in trouble when there is evidence of actual wrongdoing. An institutional/systems level policy that would try to prevent someone from going on IDR or to obtain PSLF would probably be an enormous story. Without that though, I'm just assuming disorganization over intentional wrongdoing.

 

[StellaB]

Hey I am all for getting crooks in trouble when there is evidence of actual wrongdoing. An institutional/systems level policy that would try to prevent someone from going on IDR or to obtain PSLF would probably be an enormous story. Without that though, I'm just assuming disorganization over intentional wrongdoing.

I feel like part of the miscommunication here is what type of bad behavior we are talking about. Criminal negligence is far more likely in this case than an overt, organized system set up to defraud borrowers. There is a fundamental problem with the business model of these loan servicers: they financially benefit from being bad at what they are doing. In the case of FedLoan, they have a monopoly on servicing debt that may at some point qualify for PSLF. FedLoan doesn't have to train their customer service reps to defraud the customers; they only have to fail to train them at all and the end result is the same: more money for FedLoan. The customer's can't leave, and the taxpayers can't refuse to pay.

 

[Pragma]

I feel like part of the miscommunication here is what type of bad behavior we are talking about. Criminal negligence is far more likely in this case than an overt, organized system set up to defraud borrowers. There is a fundamental problem with the business model of these loan servicers: they financially benefit from being bad at what they are doing. In the case of FedLoan, they have a monopoly on servicing debt that may at some point qualify for PSLF. FedLoan doesn't have to train their customer service reps to defraud the customers; they only have to fail to train them at all and the end result is the same: more money for FedLoan. The customer's can't leave, and the taxpayers can't refuse to pay.

Can we talk about that? The business model for a loan servicer like Fedloan running something like PSLF for the government? Because I am just beginning to understand the basics of all of that.

Do they actually receive loan interest? Something I read suggested that they just get an amount of money per borrower serviced. Do they actually have anything to gain by doing their job poorly? That seems like an assumption being made but I wonder if it is certainly true.

 

[WisNeuro]

Just remember, we wouldn't even have to have this particular discussion about loan servicers if people didn't take out absurdly stupid amounts of loans in the first place 🙂

 

[StellaB]

Can we talk about that? The business model for a loan servicer like Fedloan running something like PSLF for the government? Because I am just beginning to understand the basics of all of that.

Do they actually receive loan interest? Something I read suggested that they just get an amount of money per borrower serviced. Do they actually have anything to gain by doing their job poorly? That seems like an assumption being made but I wonder if it is certainly true.

They are paid a fee by the government for each active borrower.

 

[Pragma]

They are paid a fee by the government for each active borrower.

So if that is the case, why would they want to stop someone from going on an income-based plan? Wouldn’t they profit more in the long term from that? They would do best by having people pay less, not more, right?