Loan forgiveness programs

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From a process analysis standpoint, that ratio is ridiculous. It's evidence of an extremely poorly designed process (which, being a federal program, we likely paid for). I taught OBM, and if any student designed a process with such poor processing system feedback (I used the self-managing process design of Dale Brethower et al.) that resulted in basically EVERY PERSON WHO ENTERED THE PROCESS getting kicked out at the receiving system feedback step, they would fail that assignment and get a stern talking to about whether or not they had been paying any attention at during the semester!

There seem to be minimal (in a good sense) objective criteria for eligibility. A process that does not have steps built in along the way to kick out non-eligible people before they submit their applications is highly inefficient. Seriously- a statistically not different from zero amount of applications (out of almost 30 thousand!) get denied because they do not meet objective criteria. There's a problem beyond ignorance of applicants!

That said, the solution, IMO, is not "move the goal posts and make everyone eligible," as some will likely propose.

Okay, fair enough from a process analysis standpoint. I meant that the ratio was meaningless because just because a lot of people applied doesn't mean that they should have. Just drives the media hysteria and promotes pre-existing narratives to fixate on a number without practical utility.

But, from that process analysis frame of mind, I guess what do you expect when you say "Free Money!" and just put the application online? The fact that people skipped steps or ignored information that told them they were ineligible isn't surprising to me. It's an application with one page that you fill out and one page your HR fills out (https://studentaid.ed.gov/sa/sites/default/files/public-service-application-for-forgiveness.pdf).

 

[ClinicalABA]

Just drives the media hysteria and promotes pre-existing narratives to fixate on a number without practical utility.

Undoubtedly! It's a much better story to say that 99.99% didn't qualify. Once you start looking at the equation used to get that %, you start to see that the there are some problems with the denominator. It would be a far more useful statistic (as much as any reporting of just a percentage can be a useful statistic) to let us know the percentage of people who actually should qualify who were approved (or even applied!).

But, from that process analysis frame of mind, I guess what do you expect when you say "Free Money!" and just put the application online? The fact that people skipped steps or ignored information that told them they were ineligible isn't surprising to me. It's an application with one page that you fill out and one page your HR fills out (https://studentaid.ed.gov/sa/sites/default/files/public-service-application-for-forgiveness.pdf).

I could argue that the money is not technically free, as it required, presumably, some degree of work in college, as well as working in a potentially less desirable of reinforcing job, population, etc. (it was, after all, one mission of the program to encourage working with under-served population in what are often underpaid jobs). However, that brings opinions and politics into things and is a discussion for another thread.

From a more fact based perspective, lets say that, on average, each of those 28k applications took an average of 5 minutes to process and deny. That's ~58 weeks of full-time work (plus any pre-program administrative time, development time- such as application creation and dissemination; and computer programming). That's crazy. I'd offer that, in the context of an offer of "free money," you need to account for the whole "what the hell, let me see if I actually qualify/someone will make a mistake and I'll qualify" mindset that is likely to follow. I'm pretty sure were are in agreement on that.

I just don't think (though I can't back up with data) that all of the non-qualifying people were ignorant or just taking a stab in the dark- the number is just too high. I'm guessing there were a large group who actually were away of the objective criteria and truly believed- for whatever reason- that they qualified.

 

[foreverbull]

I think it’s a combination of several factors: some poorly-trained servicer reps giving flat-out wrong advice because of the ambiguity in the program itself with no oversight or direct implementation, some intentional deception by loan servicers, a lack of incentive by the government to foot the bill for 28,000+ people increasing by the year, and some lack of crossing the “t’s” on the part of the borrowers.

To what extent do these all play into the vast majority of rejections? It’s hard to say because some borrowers may have been misled into not meeting the requirements (told they met them when they didn’t) whereas some never actually looked into it and didn’t meet requirements.

Do we know if any folks met all requirements as listed online yet were still rejected and it was claimed that they didn’t meet requirements based on some ridiculous technicality? That would make more sense given the numbers we see. One article I read discussed a woman going for PSLF who suddenly found out that she had fewer “qualifying payments” than she’d actually made, and not for any legitimate reason (payments weren’t late or over the bill amount, and she had the correct type of loan and employment and did yearly recertification). When I hear these anecdotal stories, it makes me think that there could be more going on than we hear about. I can try to find the article later for those interested.

My thought is that if these lawsuits have merit, it is because folks were misled by servicers or the latter situation above with people who do meet requirements but then get rejected for a technicality (for example, is it possible that they're told they filled out their application wrong even if they didn’t, etc.?). I really wish we could see more detailed data on this. The rejections don’t tell us much.

It’s hard for me to believe that a tiny percentage of people looked up the requirements online (and got their loans forgiven) and filled out the application correctly and the overwhelming majority didn’t bother to look it up. That seems like a bit of a stretch.

I would concur that the government really doesn’t have an incentive to uphold this program, but they made a promise in effect and should honor it for those who did their best to follow the eligibility rules and then get rid of the program completely by grandfathering it out if they don’t want to foot the bill.

My understanding is that the purpose of this program was to get folks into higher need areas and nonprofits to serve the public for 10 years and then get rewarded for it ultimately with loan forgiveness. Many people have done this and sacrificed higher paying jobs in more appealing areas at times with the promise of freedom from their loans after a decade (I know folks who stay at $55k/year jobs in LA, one of the highest cost of living areas, just to make sure they qualify for loan forgiveness in the future. They live extremely frugally and sacrifice better pay and a better quality of life for the promise of loan forgiveness). What this has turned into is unfortunate.

 

[Sanman]

They don't? When you get a statement that says "MOHELA" or "Nelnet" or "Great Lakes" - you think government?



I'm pretty certain there are regulations about what they can and can't say for particular topics. If someone had MOHELA, and someone called saying "hey, my loans are going to be forgiven" - I wouldn't think a customer service representative would need to probe around and try to figure out what the forgiveness program is. It could be forgiveness for being in the military, for working in an underserved area, through NIH, through PSLF - not their problem unless they are actually Fedloan and actually keep track of the PSLF program.



Would you rather the government expand and take over the loan servicers? Because that would be the epitome of "unnecessarily complicated" - I say that with many years of experience under my belt working at government institutions at various levels. Common denominator is how unnecessarily complicated processes are!

When you went and took out a loan, you filled out a FAFSA for a government loan. Having a private servicer with the goal of getting you off the phone as quickly as possible does not cross everyone's mind. It is a silly process we use in the U.S. so that we can make more money by selling bad paper rather than holding the risk. I know my mortgage loan servicer, but even I cant tell you who holds the note for my mortgage currently and I am pretty on top of this stuff.

Would I rather government take over? Yes actually. This whole thing is over-complicated. It can easily be done via a website with a notification that you are enrolled or not.

 

[Peacemaker36]

I think it’s a combination of several factors: some poorly-trained servicer reps giving flat-out wrong advice because of the ambiguity in the program itself with no oversight or direct implementation, some intentional deception by loan servicers, a lack of incentive by the government to foot the bill for 28,000+ people increasing by the year, and some lack of crossing the “t’s” on the part of the borrowers.

To what extent do these all play into the vast majority of rejections? It’s hard to say because some borrowers may have been misled into not meeting the requirements (told they met them when they didn’t) whereas some never actually looked into it and didn’t meet requirements.

Do we know if any folks met all requirements as listed online yet were still rejected and it was claimed that they didn’t meet requirements based on some ridiculous technicality? That would make more sense given the numbers we see. One article I read discussed a woman going for PSLF who suddenly found out that she had fewer “qualifying payments” than she’d actually made, and not for any legitimate reason (payments weren’t late or over the bill amount, and she had the correct type of loan and employment and did yearly recertification). When I hear these anecdotal stories, it makes me think that there could be more going on than we hear about. I can try to find the article later for those interested.

My thought is that if these lawsuits have merit, it is because folks were misled by servicers or the latter situation above with people who do meet requirements but then get rejected for a technicality (for example, is it possible that they're told they filled out their application wrong even if they didn’t, etc.?). I really wish we could see more detailed data on this. The rejections don’t tell us much.

It’s hard for me to believe that a tiny percentage of people looked up the requirements online (and got their loans forgiven) and filled out the application correctly and the overwhelming majority didn’t bother to look it up. That seems like a bit of a stretch.

I would concur that the government really doesn’t have an incentive to uphold this program, but they made a promise in effect and should honor it for those who did their best to follow the eligibility rules and then get rid of the program completely by grandfathering it out if they don’t want to foot the bill.

My understanding is that the purpose of this program was to get folks into higher need areas and nonprofits to serve the public for 10 years and then get rewarded for it ultimately with loan forgiveness. Many people have done this and sacrificed higher paying jobs in more appealing areas at times with the promise of freedom from their loans after a decade (I know folks who stay at $55k/year jobs in LA, one of the highest cost of living areas, just to make sure they qualify for loan forgiveness in the future. They live extremely frugally and sacrifice better pay and a better quality of life for the promise of loan forgiveness). What this has turned into is unfortunate.

I agree with this. Knowingly or unknowingly, the government has used these people to provide poorly-compensated, demanding work in locations that traditionally have difficulty attracting professionals. The fact that many of the duped psychologists wanted PSLF because they took out large loans to attend diploma mills is completely irrelevant. There are definitely students with little debt who took these positions because they wanted to serve and because they assumed the government was telling them the truth.

I find it odd that people are blaming the victims here. Maybe in part it's because some of us, myself included, don't trust the government, and specifically didn't apply to these jobs because we had no faith that the government would come through with loan forgiveness. But from a legal standpoint the gullibility of victims generally has no bearing on whether or not a crime has been committed. If you steal candy from a baby, you're going to jail.

 

[WisNeuro]

I agree with this. Knowingly or unknowingly, the government has used these people to provide poorly-compensated, demanding work in locations that traditionally have difficulty attracting professionals.

Haven't really seen this to be true. Rural areas still have access problems, and, there is usually a surplus of providers and a shortage of open positions. A lot of people take these jobs, because they are the only ones that they can find in some areas. I'm not really sold on the idea that some people only took certain jobs (at least in clinical psych) due to this and had better options. I'm more willing to bet that many of these jobs were the only option, especially for the diploma mill peeps who generally would not be competitive for the higher paid institutional jobs.

 

[StellaB]

Haven't really seen this to be true. Rural areas still have access problems, and, there is usually a surplus of providers and a shortage of open positions. A lot of people take these jobs, because they are the only ones that they can find in some areas. I'm not really sold on the idea that some people only took certain jobs (at least in clinical psych) due to this and had better options. I'm more willing to bet that many of these jobs were the only option, especially for the diploma mill peeps who generally would not be competitive for the higher paid institutional jobs.

This is both anecdotal and irrelevant to the larger point of the thread. People were promised debt relief based on a government program attempting to reward public service in jobs that are often underpaid. Whether people would've taken those jobs anyway is a legitimate complaint about the PSLF program as written by congress, it does not justify blaming the borrowers.

The existence of programs like PSLF (plus lax lending standards and virtually no limit for grad borrowers) supercharges the inflation of educational costs by providing a reasonable career pathway out of debt. It hurts our field (and law, and others), it contributes to a systemic problem of rampant student borrowing and potential federal liabilities for loans in default, as most loans are backed by Uncle Sam regardless. This is my problem with the program *as written.* That does not mean that we should be apathetic to borrowers working toward PSLF potentially getting screwed out of the benefit they were promised. I have to agree with Peacemaker, the intense focus on blaming the borrowers by some people on here is odd.

 

[foreverbull]

--- This article discusses the practices of loan servicers in the PSLF process, including a link to some anecdotal stories.

Student loan relief for public servants: 38,460 applied, only 262 accepted

As the Education Department denies the vast majority of loan-relief applicants, critics point to confusing, rigid rules

www.cbsnews.com

-- According to this article, 38,460 applied, 262 accepted. That's 0.007% of applications accepted.

GAO report: Public Service Loan Forgiveness: Education Needs to Provide Better Information for the Loan Servicer and Borrowers
Per an APA article, summarizes the GAO report: "The U.S. Government Accountability Office (GAO) determined that the U.S. Department of Education has failed to give appropriate guidance to both borrowers and loan servicers. The investigation found that the department has provided only 'piecemeal guidance' to FedLoan, the servicer that the government contracts with to process PSLF loan applications. Because guidance and instructions are scattered across hundreds of emails and other documents, FedLoan staff sometimes don’t know about key policy clarifications. The GAO also found that the Department of Education has failed to provide both FedLoan and borrowers with definitive information about which employers qualify. The department has also failed to ensure that FedLoan receives consistent information from the eight other federal loan servicers, which could lead to miscounts of qualifying payments. GAO called on the department to develop a timeline for providing comprehensive guidance to FedLoan, among other changes. There has also been confusion at best or malfeasance at worst among the loan servicers that borrowers must use to manage their loans, prompting lawsuits from borrowers who received incorrect information about their PSLF eligibility."

When you look at these practices discussed in the articles and the GAO report, it's painting a picture of a systemic failure. This isn't to say that folks aren't responsible for their due diligence, but again, I find it hard to believe that 99.99% of applicants failed to check the requirements with their servicer/online or failed to fill out their PSLF forgiveness applications correctly. There is misinformation and/or mishandling happening at every step.

 

[PsyDr]

The entire process is extremely well designed. It's just labeled incorrectly.

If you choose to participate in the process, you own the consequences.

But you shouldn’t think the system is really about putting you through school.

 

[Pragma]

I agree with this. Knowingly or unknowingly, the government has used these people to provide poorly-compensated, demanding work in locations that traditionally have difficulty attracting professionals.

Any government or nonprofit work would qualify. So any VA employee, state university employee, employees at large AMCs, and large medical centers with non-profit status would qualify. No location or underserved population requirement. At one point, an attorney for the NFL could have qualified.

I find it odd that people are blaming the victims here. Maybe in part it's because some of us, myself included, don't trust the government, and specifically didn't apply to these jobs because we had no faith that the government would come through with loan forgiveness. But from a legal standpoint the gullibility of victims generally has no bearing on whether or not a crime has been committed. If you steal candy from a baby, you're going to jail.

I find it odd that people are automatically defining people as victims here.

I'm good with letting the court cases play out. If there was wrongdoing on the part of the servicers, it should get to light and be dealt with accordingly, and I don't doubt that was the case at least some small percentage of the time. But I don't think that is the primary issue here. It is apparent that the vast majority just don't qualify (yet). Based on one of the above articles, only 7% of borrowers had direct loans being paid out on an IDR program IN 2013! So 93% of borrowers just over 5 years ago weren't even in compliance to qualify, let alone back in 2007-2009. It's a base rate issue here.

 

[WisNeuro]

This is both anecdotal and irrelevant to the larger point of the thread. People were promised debt relief based on a government program attempting to reward public service in jobs that are often underpaid. Whether people would've taken those jobs anyway is a legitimate complaint about the PSLF program as written by congress, it does not justify blaming the borrowers.

Hardly irrelevant, it directly pertains to the purpose of these programs, of which there is zero evidence that the program is achieving its goalabove and beyond underlying market forces. Also, people were promised debt relief if they qualified for the program under certain conditions. It's their fault that they failed to actually look into the eligibility rules.

 

[WisNeuro]

I find it odd that people are automatically defining people as victims here.

I agree, willful ignorance does not make one a victim.

 

[Peacemaker36]

Here's yet another article about teachers suing the Education Department for their part in this:

The Financial Calamity That Is the Teaching Profession

Teachers are suing the government over debt relief that never came—but their financial problems go much deeper than student loans.

www.theatlantic.com

It's facile to say that the teachers should have known better. If all of the these teachers "knew better," we would have had far fewer teachers over the last 10 years and the public school system would be in shambles.

I guess the conservative response to this would be that nothing says we need a public school system. Or maybe that a crisis would be good because it would lead to better teacher compensation. Maybe these rebuttals are straw men and people on this board have different reasons for taking pleasure in the PSLF fiasco. I don't know, man. I never got involved in this personally but I can't see a decent person blaming the victims.

 

[WisNeuro]

Teachers are another ballgame altogether. Generally, my comments are relegated to doctoral level providers. Again though, I think we have a way to broad view of victimhood, regardless of political spectrum.

 

[Pragma]

Here's yet another article about teachers suing the Education Department for their part in this:

The Financial Calamity That Is the Teaching Profession

Teachers are suing the government over debt relief that never came—but their financial problems go much deeper than student loans.

www.theatlantic.com

It's facile to say that the teachers should have known better. If all of the these teachers "knew better," we would have had far fewer teachers over the last 10 years and the public school system would be in shambles.

I guess the conservative response to this would be that nothing says we need a public school system. Or maybe that a crisis would be good because it would lead to better teacher compensation. Maybe these rebuttals are straw men and people on this board have different reasons for taking pleasure in the PSLF fiasco. I don't know, man. I never got involved in this personally but I can't see a decent person blaming the victims.

Taking pleasure? Looking for truth without spin.

I’ll ignore the ad hominem part.

 

[Peacemaker36]

I apologize, that was too far. I generally think of both of you as decent people and I enjoy your posts on this board.