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Across the nation, an assortment of thirtysomething doctors, lawyers, and other young professionals are panicking. Since 2007, a federal program has promised that college graduates would be able to have their remaining student loan debt, no matter how great, forgiven after a decade of working in public-service careers. Though little known when President George W. Bush signed it into law, public-service debt forgiveness — along with other debt relief provisions of the sweeping College Cost Reduction and Access Act — soon became a lifeline to college graduates seeking to manage their staggering debt load.
But with the first cohort of student debtors about to hit the ten-year mark, there’s growing fear that the government won’t keep its promise. In recent months, reports have surfaced that some students had seen their certification requests rejected after initially being told that their jobs qualified them for debt relief — and many more had learned they’d have to keep making payments years after their expected end date. To top it all off, Republicans in D.C. have made noise about rescinding or limiting the program as a cost-cutting measure — three years after President Obama suggested capping the amount the feds would repay.
“I wasted ten years of my life making payments for absolutely nothing,” says Horacio Danovich, a civil engineer for Pompano Beach, Florida, who recently found out none of his payments since entering government service in 2003 qualified him for debt forgiveness. “The amount of money that I owe, I will never be able to repay.”
The sales pitch for public-service loan forgiveness, or PSLF, sounds simple and sweet for anyone looking to take on an expensive degree without having to scramble for a high-paying job to work it off: Take out federal student loans, make ten years of minimum payments, and then, so long as your employment is approved as “public service” by the Department of Education, the government will rip up your IOU. In the past five years, more than 1.2 million borrowers have sought certification from the DOE that they’re eligible for public-service loan forgiveness.
The first warning signs came last winter, when the American Bar Association filed suit, charging that several lawyers had had their jobs certified as public service, only to have the DOE later rescind that approval. The suit was launched after the ABA discovered that it had been removed from the approved public-service list because it’s not entirely not-for-profit — a move the association said made it hard to retain employees.
“It does seem like they’ve been changing what qualified and does not qualify,” says Natalia Abrams, executive director of Student Debt Crisis, a loan reform group founded in 2012. “I’ve spoken with law enforcement, government workers, nonprofits who work for a [501(c)(3)] — people who clearly should qualify, and then they fight it, and they get back onto the program.”
What’s ensnared even more government and nonprofit workers, though, is another provision of PSLF that many borrowers aren’t even aware of. The program is limited to students who took on a particular type of debt, federal direct student loans, introduced in 1992 but only later expanded to be the sole government-backed student loan program; the millions of borrowers who used the Federal Family Education Loan Program, one of the most popular forms of student loan prior to 2007, were ineligible.
The good news was the government offered a workaround: You could consolidate your debt as direct loans and regain your eligibility. But as debtors soon found out, there was a catch. Since PSLF required you to show ten years of payments on an eligible loan, this meant that once you consolidated your debt, your public-service clock started over.
Haylee Adamson, a probation officer in Arlington, Virginia, thought she’d found the perfect way to help pay off more than $65,000 in debt she’d accumulated while earning a master’s in forensic psychology in 2011. After getting a job with Fairfax County — for which she was paid $42,000 a year — she dutifully filed certification forms every year, and was told she would qualify for debt forgiveness.
The first warning sign came in December 2014, when she received an email from her loan servicer, FedLoan, asking if she wanted to consolidate her loans so she could be eligible for debt forgiveness. Adamson was dumbfounded: “I thought I was in this program for almost two years!” She immediately consolidated her loans, only to discover that by including loans that would have qualified, she had inadvertently reset her clock to zero, meaning she wouldn’t be eligible for any forgiveness until 2025.
“I don’t think it’s fair that you’re going to take three years of payments from me, because I have been doing what you’ve told me to do, and then you gave me wrong information,” she says.
Adamson is now surviving via Revised Pay As You Earn, one of several income-driven repayment programs implemented by the federal government since 2007. These allow student debtors to limit payments to a fixed percentage of their income and have the balance forgiven after twenty years. The program “has saved my life,” Adamson says — her $195-a-month minimum payments don’t even cover interest on her loans — but, she notes, “after everything I’ve been through with them, I don’t put it past them to just change the rules, and all of a sudden I have to pay for the rest of my life.”
She and other student debtors may have cause to worry, as there is growing talk in Washington of restricting public-service forgiveness. The Government Accountability Office startled many lawmakers last year when it issued a report showing that income-driven repayment and other forgiveness programs would cost the government $28 billion more than previously projected. The Obama administration had already proposed capping forgiveness at $57,500 — which, though far less than the accumulated debt loans of many graduate students, would have saved an estimated $6.7 billion over ten years. (Or, looked at another way, dumped an additional $6.7 billion in debt back in graduates’ laps.)
While the Republican Congress blocked Obama’s move, GOP advocates of government cost-cutting soon took up the cause. The conservative American Enterprise Institute issued a paper last year urging either capping or eliminating PSLF, and Education Secretary Betsy DeVos has refused to commit to upholding debt forgiveness.
The prospect of limits on loan forgiveness has been especially chilling to students who took on large loans for medical or law school and are now working in lower-paying public jobs. Dan Galante, a graduate of Touro College of Medicine in Harlem working at Sinai Hospital in Baltimore, says when he first learned about PSLF back in 2007, it sounded “too good to be true.” If Congress eliminates or caps loan forgiveness, he and his wife, Diana, will suddenly be facing hundreds of thousands of dollars in debt — and, he says, would likely end up stopping payment and looking for a higher-paying private-sector job to have any hope of paying down his debt, as he’s seen colleagues do.
“If they were to stop this, I think they’d see a lot less people going to underserved areas,” says Galante. “Not because people don’t want to help people. But when you come out of so much training with so much debt, you have to think about yourself.”
What all sides in the debate can agree on is that the present system is a poorly implemented mess. Jason Delisle, author of the American Enterprise Institute report, who as a staffer on the Senate Budget Committee had a front-row seat for the passage of the 2007 bill, blames the political process. “If you make it complicated and opaque, it’s easier to get it passed, because people don’t know what you’re doing,” he says. “But now you’re stuck with this program that’s complicated and opaque.”
That still doesn’t explain why servicers of student loans have done such an atrocious job informing borrowers of their forgiveness rights, or why the DOE has continued to contract with them as lenders regardless. In particular, numerous public-service workers have charged FedLoan with telling them they’d soon be eligible for forgiveness, then later backtracking to say their clocks would be restarted because they had ineligible loans. Danovich, the Florida civil engineer, says that not only did FedLoan officers deny having told him he’d have his debt forgiven, but one said if he wanted to know if his loans would qualify for the program, “maybe you should have watched TV the day it was announced.”
(Neither FedLoan nor the U.S. Department of Education had replied to Voice queries by press time.)
“I’d like to think it’s just human error,” says Student Debt Crisis’s Abrams, who suggests that any borrowers who have been unfairly turned down for debt forgiveness contact the Consumer Financial Protection Bureau and file a claim. She points to the CFPB’s pending lawsuit against loan-servicing giant Navient for, among other things, tagging paid debts with the wrong three-digit code, miscategorizing as deliquent thousands of veterans and people with disabilities.
Even if it’s mere incompetence and not malfeasance, that’s cold comfort for public-service workers now facing many more years of payments while hoping that the loan forgiveness program lasts long enough for them to take advantage of it. “As a 22-year-old, having no experience in any of this, [a salary of] $30,000 a year sounds great,” says Adamson. “But no one ever helped me understand the amount of money I was taking out, and what that would do for the rest of my life.” She says if she’d known she’d be denied loan forgiveness, she would have made entirely different educational choices, seeking either a cheaper degree program or one that would lead to a higher-paid job.
“I feel like they just get away with whatever because no one really oversees them,” she says. “I am not trying to get out of paying my bills — I understand that I went to school, and I am responsible for that. But if you put these programs in place, help people take advantage of them.”