Report Finds Borrowers Denied Student Loan Forgiveness

Thousands of student loan borrowers have been denied Public Service Loan Forgiveness (PSLF) due to mismanagement and abuse of the program by the Department of Education and its loan servicers, according to a joint investigation by the American Federation of Teachers (AFT) and Student Borrower Protection Center.

As of September, more than 98% of applicants have been denied loan forgiveness, the report, published Tuesday, said. The data shows at least 70,000 times where borrowers with Federal Family Education Loans (FFEL) "have been knocked off track after being unable to certify that they have the right type of loan,” the report said.

The Department of Education did not immediately have a comment on the situation when contacted Wednesday morning.

The borrowers—generally consisting of public service workers, like nurses and teachers—have been frequently misinformed about their loans and the steps they could take to qualify for the PSLF program, the investigation found. Eligible applicants were first able to apply for loan forgiveness in 2017, 10 years after the program’s inception.

Applicants that have loans through the defunct FFEL program should have been able to consolidate them into a current loan program, making them eligible for forgiveness, per PSLF rules established by Congress, the report said. However, applicants said they depended on their loan servicers for this information and that these institutions—which could lose out on revenue if borrowers consolidated their loans—never advised them about the process or created unnecessary delays, according to the report.

The investigation concluded that the Department of Education did not provide oversight, guidance, or direction to the contracted loan servicers. With hundreds of thousands more eligible borrowers potentially applying to this program in the coming years, the AFT and Student Borrower Protection Center are asking policymakers to take the necessary steps to prevent this from happening again.