BOZEMAN DAILY CHRONICLE: Tester demands answers for student loan forgiveness ‘bureaucratic nightmare’

by Gail Schontzler, Bozeman Daily Chronicle

Montana Sen. Jon Tester says the federal program that’s supposed to forgive college debts for public service workers has become “a bureaucratic nightmare” and he’s asking the U.S. Department of Education to explain what it’s doing to fix the problems.

Tester and Sen. Amy Klobuchar of Minnesota, a fellow Democrat, wrote a letter to Education Secretary Betsy DeVos last week, saying they’re concerned about “mishandling” of the Public Service Loan Forgiveness program.

The letter asks what actions the Education Department is taking to reduce confusion for people trying to qualify for loan forgiveness, to let people know they can appeal rejections and to make sure it’s using money as Congress intended.

Congress created the program for teachers, social workers, police, hospital and other public service employees with the promise that if they faithfully made 10 years of college loan payments, their remaining federal student debt would be canceled.

But 99 percent of people who have applied for the expanded loan forgiveness program have been rejected, the Government Accountability Office reported this month. The Education Department processed 54,000 applications in the year ending May 2019, but approved only 661.

Out of $700 million Congress gave the Education Department in 2018 to fix the original program’s problems, only $27 million has been used.

“This is about fairness,” Tester said in a phone interview Thursday. These are public service positions that can have real benefits for areas like rural Montana, he said. “When they’re turned down at a 99% rate, something’s going on.”

Congress created the original loan forgiveness program in 2007 with bipartisan support. It was intended to help millions of Americans by forgiving part of their college loan debt and to encourage people to go into jobs like teaching and nonprofit work that traditionally have low pay but require college degrees.

When 99 percent of people applying for forgiveness were rejected, there was an outcry nationally and several lawsuits brought by states and unions. Education officials blamed the complex requirements that Congress had written into the law. Last year Congress expanded the program to try to fix the original problems, but it turns out the expanded program also is rejecting 99 percent of applicants.

The senators’ letter said the Education Department’s defense that the problems result from the way Congress wrote the law “rings hollow in light of GAO’s finding that the Department barely raised a finger to inform student borrowers of the relevant requirements or correct obvious misunderstandings during the application process.”

Conservatives in the Trump administration have recommended ending the program’s budget funding entirely. DeVos testified in April, “We don’t think that one type of a job, one type of role should be incentivized over another.”

The Chronicle reported in July on several Montanans who faced broken promises from the loan forgiveness program.

A state transportation employee in Helena said she felt heartbroken when she learned that years of loan payments wouldn’t count toward her 10-year requirement because of fine-print rules. A former Missoula sheriff’s deputy said he’d phoned his loan service company a dozen times and was always assured his payments qualified, and then was shocked after five or six years when told, sorry, he’d been given the wrong information. A Glasgow teacher with $100,000 in student loans said, after learning how many people are rejected, she wondered if she has been cheated.

Tester said his office has heard from Montana constituents, but it wasn’t until the Chronicle’s story that he became aware that 99% of people were rejected for loan forgiveness.

“Those numbers are unacceptable and go against congressional intent,” Tester said.

People may criticize the press, he added, but “you’re the ones keeping people honest.”

One office that has helped people navigate the student loan program is at Montana State University. Keith Hamburg, senior financial coach in MSU’s Office of Financial Education, said the office helps 1,500 clients a year with financial issues, including paying student loans. The office is in the basement of the Strand Union Building and can be reached at 994-4388.

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