Public Service Student Loan Forgiveness (PSLF) is perhaps the most valuable and most frustrating federal student loan program.
It is incredibly valuable because borrowers are able to get their entire federal student loan balance forgiven after just 10 years… all without any taxes. Unfortunately, PSLF is also terribly frustrating due to high rejection rates.
Many borrowers attribute the issues with their application to inaccurate information provided by their federal student loan servicer.
Years ago, these borrowers may have been told that their loans were eligible or that they were on the rate repayment plan. Many years later, they learn that the information was not accurate. Many stand to lose thousands of dollars because they relied upon bad information from loan servicers such as Navient, FedLoan Servicing, Nelnet, or Great Lakes.
Today we will look at methods for borrowers to address issues with their federal student loans and public service forgiveness.
The Situation for Borrowers who Got Bad Information from Loan Servicers
Unfortunately, there is no easy fix in most cases.
Even when a loan servicer admits that they gave bad information, most borrowers do not have an easy remedy. Ideally, the loan servicer would have the authority to verify the error and retroactively fix the issue so that borrowers do not suffer.
To fix this problem, the federal government created the Limited Waiver Program, which corrected many of these issues. Sadly, this program expired on October 31, 2022.
Today, borrowers can still benefit from the more limited Temporary Expanded Public Service Loan Forgiveness program, which helps borrowers who were on the wrong repayment plan.
Outside of the one remaining temporary fix, options are limited.
Even though there is no direct route to solving this issue, there are a number of approaches that borrowers can use to get things corrected.
Not all mistakes are permanent
Some PSLF mistakes cannot be easily corrected. Others are fixable.
For example, qualifying for PSLF requires more than just 120 certified payments. The borrower must also be working full-time in a PSLF-eligible job at the time they apply and at the time the loans are forgiven.
If you left your job before finalizing forgiveness, those ten years of progress are not lost forever. If you find a new PSLF employer, you can submit a new application and have the debt discharged.
Get your ducks in a row
The things you think or remember are much different than the things you can prove.
One of the best things a borrower can do to help their cause is to keep detailed records. This is the reason we suggest communications be done through email whenever possible. By emailing, you have the exact words and promises made by your student loan servicer.
When an email is not an option, keeping a journal of phone conversations can be very valuable. Write down the time of the call, who you talked to, and exactly what you were told. Don’t rely upon student loan servicers to keep themselves accountable.
Additionally, keep track of all of your payments and statements. Loan servicers should keep track of all of these documents, but the best practice is to keep all of these records. This also includes sending out yearly PSLF certification forms. Sending out this form won’t fix past issues, but it is the best way to ensure you are on the right track going forward.
Having detailed records and proof of steps taken can assist your pursuit of correcting a loan forgiveness issue.
File a Complaint with the Consumer Financial Protection Bureau
It may seem redundant to complain to a government agency about another government agency and its contractors, but the CFPB has an excellent track record of consumer advocacy with student loans.
In fact, the Consumer Financial Protection Bureau is currently litigating a lawsuit against Navient for failing as a student loan servicer.
Borrowers who got snubbed chasing student loan forgiveness can benefit from filing a CFPB complaint in two ways. First, filing a complaint creates a record of your student loan issue and usually forces a student loan servicer to respond. Second, the CFPB takes action when certain complaint types start to accumulate.
The more borrowers that file complaints about student loan forgiveness issues and their student loan servicer, the more likely the CFPB is to get involved.
The Lawsuit Option for Retroactive Forgiveness
With the massive amounts of debt that many borrowers have, we suspect that litigation around this issue with be forthcoming.
If you have strong evidence to support your claim that your loans should be forgiven, it may be worth considering hiring a local attorney to take your case. Litigating this matter could be very expensive, and the Department of Education has a huge interest in not losing any lawsuits of this nature. That being said, the only way to know for sure is to find a good local attorney to discuss your options.
Another possibility is a class-action lawsuit. A few years ago we saw a high-profile class-action lawsuit for borrowers who had their employer certifications retroactively canceled.
A team of attorneys may decide that there is money to be made representing the many borrowers who lost out on public service loan forgiveness because of servicer mistakes. The idea behind a class action lawsuit is that a “representative plaintiff” tries a case on behalf of the many people who were wronged in the same manner. Borrowers who think they fall into this category should follow us on twitter or on facebook to stay on top of any developing lawsuits.
Stay in communication with other Borrowers
Resolving this situation is still in the very early stages.
The Department of Education may adopt a new policy, a lawsuit could change things, or new legislation could be enacted. There are many variables in the future.
For this reason, keeping in contact with other borrowers in the same boat is another great way to make sure that you are doing everything possible to get the situation resolved.
The more people that speak out, the more likely the President and Congress are to act.
What not to do
Borrowers in this situation are justifiably angry and frustrated. However, some actions will only serve to make things worse.
Don’t stop making payments on your loans – It might be tempting to conclude that you have met all of your obligations, so you stop making payments. Unfortunately, you will do far more damage to yourself than you will to Navient or the government. They will just add extra fees, charge interest, and destroy your credit score.
Don’t take it out on customer servicer representatives – Call center representatives can be incredibly frustrating to deal with. Hearing “I’m sorry we told you that, but you still owe us thousands of dollars” would make anyone’s blood boil. Unfortunately, these people have no authority to fix things. Yelling will only make them less inclined to help you or others. Your fight is with the big company, not the underpaid and undertrained person they have answering the phone.
This is an ugly situation.
Ten years ago many borrowers were told that their loans were eligible or that they are on the right repayment plan. Today they are learning that information was wrong and that there is nothing that can be done to undo ten years worth of wasted payments.
Things may be bad, but they are not hopeless.
Borrowers given bad information should put together as much proof as possible and start sharing their stories with anyone who will listen.