Loan Servicers Warned About Public Servant Forgiveness

Make sure those borrowers get every chance to qualify, government watchdog says

A person studies information on a laptop.

Hill Street Studios / Getty Images

The government’s consumer finance watchdog is warning private companies that handle federal student loan payments: If public servants miss their chance at loan forgiveness, it had better not be your fault.

The Consumer Financial Protection Bureau issued a bulletin last week cautioning loan servicing companies that they could face enforcement actions if they fail to identify borrowers who qualify for Public Service Loan Forgiveness (PSLF), or otherwise mislead or omit information about the program. Servicers who violate these rules could have to make direct payments to borrowers, the bureau said.

The PSLF program wipes out remaining student loan balances when people who work for government or nonprofit organizations have made payments for 10 years. But in the past, loan servicers have given borrowers bad information, including telling them they would only qualify if they worked for a nonprofit (omitting that a school or government agency also count) or misleading them about the process for certifying an employer or applying, the bureau said.

“Illegal conduct by a student loan servicer can be ruinous for borrowers who miss out on the opportunity for debt cancellation,” Rohit Chopra, the bureau’s director, said in a statement. “We will be working closely with the U.S. Department of Education to ensure that loan cancellation promises for public service are honored.”

It’s especially important for borrowers to know about the program now, because the clock is ticking on a temporary expansion of PSLF that dramatically increased the number of people who qualify. Under a series of changes announced by the Education Department in October, vast swaths of payments that never counted toward the 10 years now qualify, including late payments, partial payments, and payments made under varying kinds of repayment plans.

To give some idea of how sweeping the changes were: While only 7,000 people had been granted forgiveness before the special waiver was issued, 70,000 have gotten it in the months since. Under the temporary waiver, borrowers only have until October to consolidate their loans, apply for forgiveness, or both. To do that, many will need the assistance of their student loan servicer, the bureau said.

Have a question, comment, or story to share? You can reach Diccon at

Was this page helpful?
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Consumer Financial Protection Bureau. “CFPB Steps Up Scrutiny of Student Loan Servicers That Deceive Borrowers About Public Service Loan Forgiveness | Consumer Financial Protection Bureau.”

Related Articles