There are lies, and there is the Public Service Loan Forgiveness program

Arizona Opinion: There are lies, and there is the Public Service Loan Forgiveness program,, Lisa Ansell and Christina Winton.

USC Associate Director Lisa Ansell discusses the predicament Christina Winton is in with Loan forgiveness applied for after 10-years in public service and the foot dragging by the PSLF program to cancel her student loans. And then there is loan repayment scheduled to start again September 1 of this year. Christina is faced with having to make payments even though her application was accepted.

The following is the opinion and analysis of the writer (Lisa):

Christina is a 40-something Arizonan who has dedicated her career to public service. From her years working in the State of Arizona Department of Economic Security to her years spent working for a public university, if there ever was a candidate to receive full student debt cancellation by way of the Public Service Loan Forgiveness program “PSLF,” it would be a candidate like Christina. However, despite having far exceeded the 10 years of requisite work in public service, her PSLF application has been “pending” in the purgatory of the MOHELA to the Department of Education loan discharge pipeline hunger game.

Since Christina was not able to obtain a signature of her previous employer due to employee turnaround and loss of records, she had to go through the arduous process of providing all her previous W-2s and pay stubs for the entire duration of her employment at her previous position. Despite this burden placed on borrowers in similar circumstances, Christina was able to produce these records and was informed by a supervisor at MOHELA that her application was complete and thus ready for discharge and will be submitted to the Department of Education for the final approval. This was in early April. We are now in the middle of June, with the payment pause expiring on Aug. 31.

Christina’s story illustrates an epic failure of the disastrous PSLF program, yet her story is by no means unique. White House statistics as of May 2023 indicate that there are over 20 million public servants employed by the US government. Moreover, public servants make up 7.75% of the total adult population of 258 million people.

However, to date, only 615,000 public servants — including teachers, first responders, nurses, and members of the military have received student loan cancellation through the PSLF program. In other words, only 3.07% of the total public servant population has received PSLF and that was with the application of the limited waiver, which allowed borrowers to receive credit for past periods of repayment that would otherwise not qualify for PSLF. The limited waiver expired on Oct. 31, 2022.

While there are some permanent changes coming to the PSLF program starting on July 1, such as establishing a flat 30-hour work week, credit to adjunct faculty refining which deferment periods count towards PSLF, allowing contractors who provide services to publicly funded institutions to apply for PSLF, and a formal reconsideration process, these changes do nothing for borrowers such as Christina whose applications are stuck in a holding pattern until the Department of Education gets around to approving them for discharge.

The potential for tremendous financial harm to borrowers in this situation is immediate and urgent. Specifically, once the loan payments are restarted at the end of the summer, borrowers like Christina, who have already passed the 10-year and 120-payment threshold to be eligible for debt cancellation, will find themselves forced back into repayment on loans that legally should be canceled.

If one were to point to the genesis of this insidious crisis, it would be the unique removal of constitutional bankruptcy protections and truth in lending laws from student loan debt which essentially gives license to both the federal government and private lenders to trap millions of borrowers into a lifetime of indentured servitude. Perhaps this was an oversight of the Department of Education. Still, if past behavior is any indication of future performance, these borrowers are justified in their skepticism and well within their rights to consider legal action lest they fall through the cracks of this abysmally failed system.

Lisa Ansell is the Associate Director of the USC Casden Institute and Christina Winton is a Data Analyst with the State of Arizona.

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