Student loan borrower advocacy groups are raising alarms over the Education Department’s recent rollback of student loan forgiveness credit, warning that the efforts could trap borrowers in debt for additional months or years. It could even result in the reinstatement of student loans that have already been forgiven, they warned this week.
The concerns center on the department’s reversals this month of qualifying payments toward Public Service Loan Forgiveness, a program that promises debt relief for borrowers who commit to working in the nonprofit or public sectors for at least 10 years while repaying their student loans under certain repayment plans. PSLF, enacted under President George W. Bush in 2007, was intended to provide an incentive for graduates to work in high-need fields that traditionally pay less than equivalent positions in the private sector. The department, citing efforts to fix data errors it blames on the Biden administration, has been clawing back qualifying payments that borrowers had earned toward student loan forgiveness.
“This unprecedented reversal may require teachers, nurses, servicemembers, and other public service workers to make years of additional student loan payments before obtaining the debt relief guaranteed under PSLF; it might even result in reinstated loans,” said Protect Borrowers, a student loan borrower advocacy group, in a statement on Thursday.
Here’s the latest on the PSLF reversals, and what they may mean for student loan forgiveness.
Borrowers Face Setbacks In Getting Student Loans Forgiven After PSLF Credit Reversals
PSLF requires that borrowers make 120 qualifying payments (the equivalent of 10 years), while working in eligible public service employment, to get their student loans forgiven. The program requires periodic employment certifications to ensure that monthly payments ultimately count towards the 120 needed to receive loan forgiveness. Borrowers can track their progress and view their PSLF qualifying payment counts on StudentAid.gov.
But earlier this month, some borrowers began receiving notifications that the Education Department had suddenly reversed some of their earned PSLF credit. This resulted in borrowers seeing their qualifying PSLF payment counts drop overnight, pushing their student loans further away from their anticipated discharge eligibility date.
The Education Department has provided scant public information about the PSLF reversals. Blaming the Biden administration for introducing unspecified data errors into its systems, the department has only said that these data errors “resulted in inaccurate payment counts for some borrowers” and that the department was simply fixing the issues.
“The Department remains committed to ensuring that every qualifying payment is properly credited to a borrower’s account,” said a department spokesperson via email earlier this week.
But it appears that some borrowers are losing PSLF credit despite meeting all of the requirements of the program during the rescinded periods, including making full, on-time payments on Direct federal student loans under an income-driven repayment plan while doing full-time public service work. It is unclear what, if any, “error” would mean that they now must lose that properly-earned credit toward student loan forgiveness.
“Borrowers who could see the light at the end of the tunnel are now being forced to pay more and defer their dreams for months and years on end,” said Randi Weingarten, President of the American Federation of Teachers, in a statement on Thursday. “The Department of Education needs to ensure no public service worker pays the price for someone else’s mistake.”
The Education Department has made no public acknowledgment that its fixes to the alleged data errors could be introducing new problems into its systems, or causing borrowers who have fully complied with the PSLF rules and made on-time payments to lose legitimately-earned student loan forgiveness credit. A department spokesperson indicated earlier this week that most of the adjustments have already been completed. However, a vague banner message on some borrowers’ StudentAid.gov dashboards suggests that PSLF payment counts may continue to be updated.
Advocates Warn PSLF Reversals Could Lead To Reinstatement Of Forgiven Student Loans
The rollback of earned PSLF credit is raising concerns that it won’t just be current borrowers in repayment who are impacted. It could also potentially impact borrowers who have already gotten their student loans forgiven, warned some advocates.
The PSLF credit reversals could result in the reinstatement of forgiven student loans, suggested Protect Borrowers in its statement on Thursday, “dragging public service workers back into debt.”
“The people who get Public Service Loan Forgiveness have spent 10+ years working in service based on a promise of loan forgiveness,” said Julie Margetta Morgan, President of the Century Foundation, in a statement. “They’ve been jerked around by the Department of Education and by servicers who care more about making a dollar than upholding the law.” Morgan warned that the Education Department must be held accountable “before you even think about reinstating a single loan.”
The Education Department has given no public indication that borrowers who already got their student loans forgiven through PSLF are at risk of having their loans reinstated. Such a move on a mass scale would be largely unprecedented, and there is at least some legal basis to argue that a broad reinstatement of forgiven student loans could be unlawful, with federal district and appeals courts citing the “irreversible impact” of student loan forgiveness in some of the pertinent rulings involving Biden-era student debt relief initiatives. But, there also does not appear to be a precedent for the current mass clawbacks of earned PSLF credit, either.
Rollback Of PSLF Credit On Student Loans Follows Education Department Court Losses
The new rollback of PSLF credit comes less than two months after the Education Department’s efforts to restrict student loan forgiveness under the PSLF program ended in dual court losses. Two federal judges struck down proposed regulations in June that, had they been enacted, would have allowed the department to unilaterally disqualify employers from participating in the PSLF program if, in the department’s determination, the organization’s activities had a “substantial illegal purpose.”
“The Administration’s efforts to keep workers crushed by debt appears to be the latest attempt by Education officials to target the PSLF program and punish public service workers,” said Protect Borrowers, which participated in the legal challenges against the department, in its statement this week. “Attacks on public service workers’ right to student debt relief come amid a broader, coordinated effort by the Trump White House to strike back at public service workers, who the President believes to be his political enemies.”
While many questions about the latest rollback of PSLF credit remain unanswered, borrowers are still getting their student loans forgiven under several federal programs, including through income-driven repayment plans. And there are some signs that relief under PSLF Buyback, a related program offering student loan forgiveness, may be accelerating.
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