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“student Loan Servicers: Navigating Borrower Rights And Responsibilities” – Media Domino: A Student Debt Blog Why are so many of our military deprived of student loan forgiveness?
In 2017, the CFPB reported that 200,000 service members owed nearly $3 billion in federal student loan debt. While this debt weighs on the lives of service members and their families, it also jeopardizes the ability of our nation’s armed forces to focus on the mission at hand. Research has long shown that financial readiness is an essential part of military readiness, and student debt has become one of the leading causes of financial distress in the military.
“student Loan Servicers: Navigating Borrower Rights And Responsibilities”
For military borrowers, the Public Service Loan Forgiveness Promise (PSLF) offers a much-needed lifeline – after ten years of paying off affordable student loans, borrowers working in the public service may see their loans forgiven. The protections offered by the PSLF program are so critical to the long-term financial security of military borrowers that, over the past decade, PSLF has served as a key recruiting and retention tool for nearly every branch of the military. American.
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However, as we have already documented, the PSLF program is plagued with abuses and breakdowns that negate the promise of loan forgiveness to the vast majority of applicants. Our joint investigation with the American Federation of Teachers revealed routine errors, poor record keeping, and conflicting policies throughout the process of determining whether the borrowers’ employers qualify them for federal loan forgiveness. These outages severely affect service members seeking loan forgiveness.
Our investigation uncovered Department of Education (ED) records showing, among other things, particularly troubling data regarding the total number of active duty military personnel submitting an Employer Certification Form (ECF) – the form used to determine if an employer qualifies a borrower for loan forgiveness – as well as alarming rejection rates. It is important to note that ECFs are the first step in documenting a borrower’s intention to pursue PSLF and tracking progress during repayment.
Table generated from data produced by the Ministry of Education. Branches are identified in the data based on their Employer Identification Number (EIN) as reported by the Department of Health and Human Services. Note that each line includes both active duty military and reservists, with the exception of the Coast Guard, which also includes retirees, since the Coast Guard uses an EIN that includes retirees.
These results highlight the problems faced by military borrowers when trying to access the PSLF. As documented in a new SBPC report,
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Military borrowers face hurdles trying to meet each of the PSLF program requirements, including having the right type of loan, the right type of job, the right repayment plan, and the right number of payments. A military borrower described the obstacles he faced in overcoming the many service outages he faced while trying to earn PSLF:
The Education Secretary may use the authority granted under the Higher Education Support Opportunities for Students (HEROES) Act 2003 to ensure that all service members with student debt receive the credit promised to them in exchange for their service in our country. In times of war, military operation, or national emergency, the HEROES Act allows the Secretary to waive requirements that impede military borrowers’ access to essential repayment protections. As America has remained a nation at war since 2001, the Secretary has the ability to provide much needed relief to all military borrowers for the duration of the PSLF program.
The secretary must match student loan records with active duty records already available at ED to ensure military borrowers receive PSLF credit for each month they served –
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. Additionally, for service members who have served at least ten years, either exclusively through military service or through a combination of military and civilian service, the secretary must take immediate action to cancel their student loans.
The US student loan system is broken. As a result, we as a country have broken our promise to the men and women who have sacrificed so much to defend us. We promised them a way out of student debt, and instead we burdened them with endless paperwork and service errors. But the secretary can change that and, in doing so, chart the way forward to ensure that no service member is financially left behind.
Mike Saunders is a member of SBPC Military Affairs and Director of Military and Consumer Policy at Veterans Education Success. Previously, he spent nearly a decade advocating for service members, their families, survivors and veterans at the Retired Enlisted Association. Mike is a 3rd generation member of the military.
Seth Frotman is executive director of SBPC and previously served as deputy director and student loans ombudsman at the Consumer Financial Protection Bureau, where he led a government-wide effort to crack down on student loan industry abuse and protect borrowers. Prior to this job, Seth served in the Office of Membership Affairs of the CFPB as a senior advisor to Holly Petraeus.
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[1] There are significant limitations to the data provided by ED in response to our request. For example, ED omitted the reasons for any ECF denials, and the data here is cumulative counts of ECFs received from the start of the program through the end of 2015 (see discussion of the ED “initial list”) produced in response to our survey). Nonetheless, these results raise important questions about the quality and accuracy of student loan service that military borrowers receive, and are the best data available given ED’s limited public reporting of data related to PSLF, TEPSLF and to ECFs, especially with regard to the military. 7 things to do before your student loan repayments resume First things first: Get to know (or rediscover) your loans. And do not count on the general cancellation of loans.
A little over three months. That’s how much time remains before some 41 million federal borrowers have to start repaying their loans again.
The federal government froze student loan payments at the start of the coronavirus pandemic, and it has extended that freeze several times since, most recently just before Christmas.
The Department of Education said payments would resume on May 1. What should borrowers do to prepare? Betsy Mayotte has ideas. She is the founder of the Institute of Student Loan Advisors, a noofit organization that offers free advice to borrowers. Here are his seven tips for borrowers ahead of the May 1 restart:
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“Despite the fact that the break has been extended, borrowers should take this opportunity to put their affairs in order,” said Mayotte.
Get answers to the following questions: How much are your balance(s)? What kind of loans do you have? What company is your repairer? What are your interest rates?
The more you know about your loans, the better you will be able to determine how to manage them. And knowing which company is managing your loans is very important because some managers have changed during the pandemic.
Make sure your loan officers have your correct contact information: email address, mailing address, and phone number. When the payment pause ends, Mayotte says, they’ll send you some really important information that you’ll want to see.
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Your student loan account with your servicing agent should show a monthly payment. If you cannot access this information online, you can also call your repairer. Once you have an idea of your monthly payment, ask yourself: is it affordable? If not, there are several payment options available. (More info below!)
The pause on student loan repayments has also set loan interest rates at 0%. It’s a gift ! This means that all payments made during the break go directly to principal – not interest. For borrowers who might be in a comfortable financial position, Mayotte says now is a great time to pay off as much of that debt as possible.
The Federal Student Loans Program offers a few options for lowering your monthly payment. Some are based on your balance; others are based on your income.
“Fortunately, there are some really good tools out there to help borrowers figure out not only what their payment will be under each of these plans, but more importantly, how much they’ll pay in the long run under each of these plans,” says Mayotte.
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The Loan Simulator, on the Department of Education’s website, and the Student Loan Calculator, developed by the Institute of Student Loan Advisors, are two tools that can help you determine which payment plan is right for you.
If you are pursuing loan forgiveness programs, such as the Civil Service Loan Forgiveness, both calculators will also indicate whether these programs will actually be profitable for you.
As repayment draws near, Mayotte says she’s starting to see more student loan scams on social media, through email, and through calls and voicemails.
If someone contacts you asking for your student loan account PIN or password, that’s a huge red flag. No legitimate student loan company will ever ask you for this. In fact, under the STOP law, it is illegal for servicers to use personal information to access borrower assistance records. Any of them
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