Attorney General Bonta Leads Multistate Coalition in Urging Department of Education to Fix Broken Public Service Loan Forgiveness Program
To date, the Department of Education has denied nearly all PSLF/TEPSLF applications
OAKLAND – California Attorney General Rob Bonta today led a coalition of 22 attorneys general in urging the U.S. Department of Education (ED) to take robust action to fix the broken Public Service Loan Forgiveness (PSLF) program. Since borrowers first became eligible for relief in 2017, almost all PSLF applications have been rejected, leaving millions of public servants in the lurch. These teachers, nurses, public interest attorneys, social workers, first responders, servicemembers, and others incurred significant student loan debt in order to gain the skills necessary to educate, heal, and protect our communities – under the promise that a portion of these loans would eventually be forgiven. In today’s letter, the coalition applauds ED’s commitment to improving implementation of the PSLF program and urges ED to act quickly to fix the failures in the program’s administration.
“California's public servants play a vital role in educating our children, protecting the health and safety of our communities, and running our government and non-profit sector,” said Attorney General Bonta. “These teachers, firefighters, and government workers took out student loans and went into public service with the promise of debt relief down the line. But, the current loan forgiveness system is broken and forgiveness rates are abysmal. State attorneys general have seen this misadministration first hand. That's why we're urging the Department of Education to take immediate and robust action to fix the PSLF program and provide relief to the many Californians who have devoted their lives to the service of their communities.”
A bipartisan Congress created the PSLF program in 2007 to encourage student loan borrowers to enter public service jobs in return for forgiving the remaining balance of their federal student loans after ten years of on-time loan payments. When the first wave of borrowers applied for loan forgiveness in 2017, ED denied applicants at the alarming rate of 99 percent. In 2018, a bipartisan Congress gave ED a second chance to deliver on PSLF’s critical promise by creating the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program. Despite this emergency fix, relief continues to be out of reach for nearly all who apply. To date, ED has denied 96% of TEPSLF applications.
Drastic action by ED is required to make the promise of PSLF forgiveness a reality for the nation’s dedicated public servants. State attorneys general have a unique perspective on how to improve administration of PSLF/TEPSLF resulting from their experience investigating and holding student loan servicers accountable for violating the law, including misadministration of the PSLF/TEPSLF program. California is leading the charge in pushing ED to fix the PSLF/TEPSLF program. In June 2020, California sued ED over its failure to timely implement the TEPSLF program, and litigation is ongoing. In October 2018 and August 2019, California and a multistate coalition called on then-Secretary DeVos to address the 99% denial rate for PSLF applications.
In today’s comment letter, the attorneys general urge ED to:
- Provide immediate relief to borrowers who have been harmed by the misadministration of the PSLF/TEPSLF program;
- Improve servicer oversight and accountability by carefully selecting a new servicer that will be responsive to borrowers and creating new incentives and operating procedures that put borrowers first;
- Extend the pause on payments on student loans that started in response to the COVID-19 pandemic;
- Conduct broad outreach to all borrowers potentially interested in forgiveness, including those who have yet to apply and those who have already received denials; and
- Affirmatively correct errors discovered for all affected borrowers.
Attorney General Bonta is joined by the attorneys general of Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington, and the District of Columbia in filing the letter.
A copy of the comment letter can be found here.
Source: Office of the Attorney General of California