Md. Officials Press DeVos to Fix Flawed Loan Forgiveness Program

September 10, 2019
In The News

More than three dozen Maryland lawmakers are calling on U.S. Secretary of Education Betsy DeVos to answer questions about the Public Service Loan Forgiveness Program, which has attracted attention in recent months for nearly universally denying applications from federal workers. Del. Lesley Lopez (D-Montgomery) spearheaded the leader to DeVos, noting the heavy presence of eligible government and nonprofit workers in Maryland. An unknown number of Marylanders relied on the Public Service Loan Forgiveness Program when they chose their career paths. But “a growing body of evidence” has shown that the U.S. Department of Education has “mishandled this program and skirted its obligation to provide student debt relief to public servants,” the lawmakers wrote in a letter sent shortly before Labor Day. The program – first established in 2007 by legislation from U.S. Rep. John P. Sarbanes (D-Md.) – was faulted in an October 2018 Government Accountability Report for denying 99.6 percent of all applications for student loan forgiveness. It was created to forgive federal student loans for borrowers who work in local, state and federal government or certain nonprofit employers for at least 10 years while making 120 payments. Given the implementation timeline and employment requirements, flaws with the program have come to light in the last couple of years, as workers who thought they were on track for forgiveness have been turned down in droves. Last year, Congress sought a solution. Lawmakers, Sarbanes among them, pushed for and created the Temporary Expanded Public Service Loan Forgiveness, which would extend loan forgiveness to workers who paid their loans in good faith but may have been enrolled in an ineligible repayment program or been given bad advice by the government or a loan provider. Last week, a new GAO report concluded that the expanded program also has an extraordinary denial rate: 98.7 percent.