One of the controversial organisations that has managed the United States Public Service Loan Forgiveness Scheme for years, has announced it will no longer be doing so after the end of the year.
The Pennsylvania Higher Education Assistance Agency (PHEAA) informed the Department of Education’s Office of Federal Student Aid that it would not accept an extension of its student loan servicing contract.
The Agency’s spokesperson, Keith New said in an email that it wished to “more appropriately focus on its core public service mission in Pennsylvania”.
The announcement comes after years of scrutiny over PHEAA’s management of the loan program, an initiative that allows Public Servants to have their Federal student loans discharged after 120 monthly on-time payments.
Borrowers who are on track to have their loans forgiven under the program make payments through PHEAA’s servicing arm, and rely on the organisation to track their progress towards cancellation.
Massachusetts Attorney General, Maura Healey (pictured) settled a lawsuit with the PHEAA earlier this year, which accused the organisation of giving Public Servants wrong information about the loan program that delayed their progress towards forgiveness, among other allegations.
Massachusetts Senator, Elizabeth Warren cheered the news.
“Millions of loan borrowers can breathe a sigh of relief today knowing that their loans will no longer be managed by the PHEAA, an organisation that has robbed untold numbers of Public Servants of debt relief,” Senator Warren said.
Chief Operating Officer of the Department’s Office of Federal Student Aid, Richard Cordray said the Department would work with the PHEAA “to develop and implement a wind-down plan focused on ensuring borrowers transition smoothly to a different loan servicer”.
Washington, 11 July 2021