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Public Service Loan Forgiveness Horror Story - PLEASE help
February 11, 2015
5:24 pm
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February 11, 2015
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Dear Student Loan Sherpa,
Thank you for providing this service. I really hope you can help me. I'm not very good at navigating these forums but I will try.

I have a 6 figure student loan. I am a psychologist with a position at a state psychiatric hospital. When I heard about the Public Service Loan Forgiveness program, I jumped on it right away. I consolidated my eligible loans with the Dept of Ed and called to "sign up". The people on the phone always told me something different, it was a new program and there were no brochures or contracts or anything. I pretty much had to take it on faith that I was "on the program".

5 years later, I learn that I am on the "wrong" repayment plan. I panic. I call the Dept of Ed, and switch to the correct payment plan (income based), and at that time I am assured by the manager I spoke with that my previous payments would be honored. However, there is now a new company administering the program (FedLoan Servicing), and they are not counting ANY of my previous payments. I am FREAKING OUT about this, we are talking about over 6 YEARS worth of payments that they are saying are not eligible to be counted. Adding insult to injury, I was paying about $200 MORE per month than I would have been had I been on the "correct" plan. No one at FedLoan or the Dept of Ed will help. They all say that since I wasn't paying under an "eligible" plan, the payments don't count.

I feel there must be some recourse, some way to make this right. I have never missed a payment, I'm in my 9th year of public service, and I just cannot accept that this is happening.

Please help, Sherpa!

February 11, 2015
9:06 pm
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Indiana
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Jolie,

The situation you describe is definitely the nightmare that everyone working towards Public Service Fears. Because the government website shows that only the 10 year plan, IBR, PAYE, and ICR plans are eligible for public service forgiveness, your lender probably isn't going to provide much help to you.

That being said, there are a few options that you have. For starters, you need to do your best to keep track of all your loan related documents and communications. If you can prove that you were told by your lender that the plan you were on will count, you will have much better odds. Try and collect all of your old records and be sure to keep detailed ones going forward.

One step you can take would be to try and get your previous payments "certified" as public service payments. The government form can be found here: https://studentaid.ed.gov/sites/default/files/public-service-employment-certification-form.pdf

If you can't get your previous payments certified, one option would be to file a complaint with the Consumer Financial Protection Bureau. A CFPB complaint forces your lender to respond to your allegations and gets the CFPB involved in the process. Here is an article on the process: http://studentloansherpa.com/f.....n-company/

Given that the situation you describe is dramatic difference between what you expected and what his happening (not to mention a huge financial difference), you may also want to reach out to an attorney to represent your interests. Paying for an attorney can be expensive, but there is clearly a lot of money at issue in your situation. By hiring an attorney they can review all of your documents and give you personalized advice. They can also represent you in court if it reaches that point.

Good luck with your situation and keep us posted!

- Michael

February 12, 2015
4:32 pm
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Okay, thank you. I will try anything and everything. I don't have notes from 2007, unfortunately, so I don't have anything to prove that I was given the wrong information except for the fact that I was overpaying and in public service...why would I ever do that on my own?
I'll start with the certification step and go from there. I'll let you know what happens. In the meantime, if you think of anything else, or know of anyone at the Dept. of Ed I can speak with, please let me know!
Thanks again--
Jolie

April 21, 2015
2:25 am
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Billy
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Same here. I've been paying since 2007 and in public service/non-profit. Actually submitted work documentation and was accepted as valid employment status. Then the "wrong payment plan" crap. Just resolved to pay at this point at 8.25% Letter stated that I am in correct plan now HOWEVER by the time ten years pass (starting in 2014) there will be no balance to forgive. This is some shady business.

April 21, 2015
7:03 am
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Indiana
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That really sucks Billy. When you say you submitted the work documentation and it was accepted as valid employment what do you mean? Did they certify your payments and then change their mind later?

August 25, 2015
3:48 pm
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Julie
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Add me to the list of people just told by FedLoan Servicing today that the eight years of payments I've been making toward Public Service Loan Forgiveness don't qualify because while I was enrolled in the 10 Year Standard Repayment Plan, and told numerous times by representatives with Direct Loan Servicing and ED Financial Services that I was in the right program (once even today!) since my loans were consolidated eight years ago, I was actually in the 10 Year Standard CONSOLIDATED Repayment Program and those payments don't qualify for forgiveness. Eight years of payments down the drain because incompetent customer service reps have been telling me that everything was fine. That I was in the right program. I am livid! I will attempt to get my payments "certified" and I will certainly file a complaint. I have left a message with the legal department at ED Financial Services to retain my recordings and my file. I was informed that Direct Loan Servicing (which held my loan from 2008-2012) is now out of business and those files were not transferred. Is this true? I have been calling for years to ensure that I am in the right program. I'd also like to be put in touch with a lawyer that specializes in this field. Any suggestion? I am from Chicago IL. Thank you.

August 27, 2015
7:01 pm
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Indiana
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Julie,

I'm so sorry to hear about your situation. It is scary how common it is becoming.

To answer your question, I don't know of any student loan specialists in the Chicago area.

The fact that you have a government servicer of student loans that went out of business without forwarding your paperwork seems really sketchy. This is definitely something you may want to discuss with an attorney.

As for the filing of a complaint, I think that is a must do in your situation. What you are describing sounds terrible.

Please keep us posted on how things go for you!

Good luck!

October 10, 2015
12:49 am
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Liz
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I am also in this horrifying situation. I have about 5 years of payments that don't count because I was on the graduated plan (where I was paying more and making less, I might add). I started making payments back in 2006 before the program came into being and it was several years before I even heard about the program. Then when I did find out about it, it certainly was not clear to me that only payments under certain plans counted, so I just stayed in my plan. I immediately switched to IBR as soon as I figured that out, but I estimate the mistake set me back about $12,000 (sure could use that for retirement!).

No one misled me about being in the right plan because it was not something I was even aware to check into. Mostly, I'm frustrated that very little information was provided about the public service student loan forgiveness program. I found out about both it and the payment plan requirements completely by happenstance. Nothing has ever been systematically communicated to those who might qualify. I have over $50,000 in loans and hopefully they will be forgiven in 2022. At this point, though, I can't help feeling like I've been punched in the gut.

June 8, 2016
12:35 pm
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Steve B
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Personally I'd welcome such problems as difficulties with forgiveness. I don't think its fair (or legal) to select certain degrees (ie teaching) or certain federal jobs for forgiveness and exclude others. Perfect example is federal workers at the Post Office. Its a public service and non profit yet none of their employees could get loan forgiveness. Students who also graduated before these programs were in place may have chosen a different field had they know they could get into a program for forgiveness. Even those who have student loans who have served in the military should have been able to apply for forgiveness. Overall, if the government is going to take tax dollars to forgive loans, ALL students should be eligible.

June 8, 2016
11:24 pm
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Indiana
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Interesting perspective. Do you think the government as an employer has a right to create the forgiveness programs to recruit people?

June 9, 2016
10:43 pm
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Steve B
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The federal government is separate from state and city governments so be more specific. The military and USPS are federal, under federal control and regulated by the feds. school teachers are local, under control of cities and towns.

August 22, 2016
3:59 pm
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Paul Willard
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I would certainly suggest contacting your Congressional Representative and State Senator's. They need to understand the potential boondoggle heading their way in 2017 because they will get a lot of flak at that time. They might as well know now.

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