Education Department official slams Public Service Loan Forgiveness program as ‘disaster’

During a meeting at the U.S. Department of Education last week, a department official made disparaging comments about the Public Service Loan Forgiveness program and said it did not support the program, a source told ThinkProgress.

The program forgives borrowers’ debt who work in public service for 10 years, such as in law enforcement, teaching, or the government, when they make 120 qualifying payments. Americans who spend a decade working in government or for a nonprofit are supposed to get their federal education loans discharged.

At a National Youth Serving Institutions Stakeholder meeting at the Department of Education last week, Diane Jones, principal deputy under secretary, called the program a “disaster” and “budget gimmick” according to a Generation Progress staff member at the meeting. Generation Progress is a research and advocacy group focusing on young people and students within the Center for American Progress. (Editor’s note: ThinkProgress is an editorially-independent news site housed within CAP.) 

Jones added that if the department were not legally obligated to provide loan forgiveness, they would not because the department does not support the program. She said the department would act on its legal obligations, however. The principal deputy under secretary said the department would not encourage people to become eligible for the program, according to the Generation Progress member who attended the meeting. Another source in the room confirmed the details the staff member of Generation Progress described.

An Education Department spokesman told Inside Higher Ed in September that the department makes efforts to reach borrowers who are eligible for the program, and this includes efforts at in-person events, social media, and the Federal Student Aid website. The spokesman did not say what the department planned to do to make the process run more smoothly for borrowers, according to Inside Higher Ed.

Jones also reportedly said that it is “absurd” that nurses with a large amount of debt working at a public hospital would be eligible for the program but not nurses at private hospitals. She reportedly said this was sufficient reason for eliminating the program. The PSLF program was created in 2007 under the College Cost Reduction and Access Act of 2007 (CCRAA) that George W. Bush signed into law. The original statutory language did not limit its application this way but the distinction came later as part of Bush administration regulations, sources told ThinkProgress. Jones served as assistant secretary for postsecondary education at the department at the time.

The Generation Progress member who spoke to ThinkProgress said they are concerned about whether department officials are being “cooperative with the spirit of the program.”

Advocates for borrowers have been concerned about the program for years, but this feeling of unease may have ratcheted up recently due to reports of the department rejecting so many applications. In September, the Department of Education said it rejected more than 99 percent of applications sent in through the end of June. Only 289 of 28,913 applications were approved. In June, Sens. Sheldon Whitehouse (D-RI) Tim Kaine (D-VA), Tammy Duckworth (D-IL) and Maggie Hassan (D-NH) wrote a letter to Education Secretary saying that the department was “significantly and needlessly restricting access” to the program. According to the Consumer Financial Protection Bureau’s 2017 report, student loan servicers haven’t been helpful to borrowers trying to use the program either, because of servicing breakdowns and not properly counting the number of qualified payments.

Ben Miller, senior director for postsecondary education at the Center for American Progress, has said that one of the reasons for so many denials is likely the complicated nature of program eligibility. But Miller added that the Education Department needs to be much more transparent about the reasons for denials. This  “could show whether the issue is mostly a product of poor messaging or if there are major and recurring problems that lead to borrowers not getting a benefit,” Miller wrote on the Center for American Progress website.

The program was intended to help public-sector workers with professional degrees who made much less than their peers in the private sector and were grappling with student debt. People made professional and educational decisions in part because of the program and what it promised. According to a CBO report published last year, public sector workers with professional degrees or doctorates made 24 percent less than they would have in the private sector. Thirty percent of young professionals working at nonprofits had more than $50,000 in student debt, according to a 2012 survey.

Source: thinkprogress