UNITED STATES
The US Department of Education has appeared before Congress in an attempt to explain why just 1 per cent of applicants for the Public Service Loan Forgiveness Scheme have been accepted.
Officials working for Secretary of Education, Betsy DeVos told the hearing they could not rewrite the rules for the scheme but admitted they could do a better job of explaining them.
Director of Policy Liaison and Implementation in the Department’s Office of Federal Student Aid, Jeff Appel (pictured) acknowledged that a loan forgiveness program with a 99 per cent rejection rate “presents numerous obstacles to borrowers”.
The Public Service Loan Forgiveness Program is meant to wipe away student-loan debt for people who work in Public Service jobs including law enforcement, teaching and the military.
Mr Appel said the low approval rate was because of the program’s complexity — not to mention the fact that about 80 per cent of forgiveness applicants still haven’t made the required 10 years of repayments to become eligible.
“Naturally, as time progresses, more borrowers will have a real opportunity to meet the criteria,” Mr Appel said.
To have their balance wiped away in the program, borrowers need to make 120 repayments and show they have been or are working in an eligible public sector profession during that time.
Employees of non-profits and nurses are some of the people who, technically at least, receive clean slates.
While this seems simple, there are twists.
Only one sort of Federal loan, a Direct Loan, is eligible, while about two-thirds of borrowers had different types of loans when lawmakers enacted the program in 2007.
As of June, 1,526 borrowers had wiped away their debts out of more than 100,000 who applied.
Mr Appel said the Department agreed with Government Accountability Office (GAO) recommendations to better explain the rules to applicants.
However, while the GAO made the recommendations last year, the Department still has not put them into effect.
Washington, DC, 23 September 2019
