Your Money: Your Student Loan Servicer Will Call You Back in a Year. Sorry.

anastasios pallis

The emails started arriving in my inbox from borrowers in the federal Public Service Loan Forgiveness program in late February. Their states of residence — Tennessee, California, Michigan — were all different. So were their jobs — teacher, doctor, member of the military.

But their stories were the same. FedLoan, the servicer the federal government employs to administer the program, had undercounted the payments they had made, sometimes by years. And when they called to request a review, FedLoan told them that it would take a year to sort it all out.

You read that right. A year.

Trying to have kids? Considering buying a house? Pondering your next career move? You’ll need to make those big life decisions without knowing whether your student loan payments will go away in 2021, or five years later instead.

“It is enough to make a grown man cry,” wrote David Russell, a science teacher in Ann Arbor, Mich. Another bewildered borrower, Meghan Keller, a lower and middle school counselor in Washington, D.C., simply asked this: “What in the world is going on over there?”

Here’s what’s going on: The Public Service Loan Forgiveness program is an administrative quagmire unlike nearly anything I’ve covered in a quarter-century as a journalist.

It wasn’t supposed to end up like this. When the program was created in 2007, the big idea was to dismiss the remaining loan balances of government and nonprofit employees after 120 on-time payments. Participants have to be in the right kind of repayment plan with the right kind of loan, and end up at the right servicer: FedLoan.

These rules did not end up being easy to explain or administer. The program became such a mess that Congress stepped in recently with $700 million-plus to try to help people who inadvertently disqualified themselves.

Tales of Woe
The persistent problems with the Public Service Loan Forgiveness program.

Amid this chaos, plenty of borrowers have managed to follow the right-job-right-loan-right-plan rules only to discover that their all-important payment count is off. So they call FedLoan and ask for a review.

I started making inquiries with both the Department of Education and FedLoan about a month ago. Since then, the story that FedLoan has told borrowers has started to change a bit: from a long estimated wait time, to a refusal to render a guess. I asked readers to take careful notes about their conversations.

Nicole Skrzyniarz, a physical therapist who lives in Medford, Mass., said she had been requesting a review since March 2018. But when she asks how long it will take, she gets different answers. “Three months, six more weeks expedited, up to one year and, today, ‘a long time; nobody should have given you a time frame,’” Ms. Skrzyniarz, who works at a nonprofit hospital, wrote in an email last week.

On Wednesday night, Katherine Cejda Bailey, who counsels children and families in a Memphis hospital, pressed a FedLoan phone worker for an updated timeline. She said the representative had told her that even expedited reviews “are taking forever.”

Kyle Stefano, a Sacramento social worker for the homeless, thought FedLoan had botched her initial inquiry. Then, she said, she was told that she shouldn’t bother following up for now because FedLoan was prioritizing reviews for people who have already made 120 payments. The reason: increased media attention. The representative would not offer a timeline for her case. “It’s a mess,” Ms. Stefano told me.

FedLoan’s own phone representatives seem to be losing patience, too, according to an email from Ms. Keller, the school counselor. During a call to FedLoan this week, she asked whether her account would just stay under review until she simply gave up. She said the rep had told her: “That about sums it up. It’s not O.K. how they are treating people.”

I asked FedLoan and the Education Department about these problems. I heard back from the Education Department, which said it would speak for them both. “Any excessive delay in customer service is unacceptable,” the department said.

“We understand the time it takes for borrower accounts to be reviewed is a problem, and we are working with our loan servicers to fix it,” said the department’s press secretary, Liz Hill.

A United States Government Accountability Office report last year enumerated many flaws in the system that could lead to payment miscounts and confusion.

In a budget hearing last month, Senator Jeff Merkley, Democrat of Oregon, grilled Betsy DeVos, the secretary of education, over the sorry state of the Public Service Loan Forgiveness program (and the journey of Jed Shafer, a borrower whose story I chronicled over the last two years). Ms. DeVos said Congress had made it difficult to qualify, while Mr. Merkley insisted that the Education Department wasn’t holding servicers accountable for poor customer service.

Who’s right? The law is indeed complicated. That makes FedLoan’s job difficult, particularly as more people qualify — or want to find out if they do — for a highly popular program. And because of the many moving parts, borrowers may discover that they have misunderstood the rules, or that the servicer has miscounted their payments.

One big problem, Ms. Hill said, is that borrowers often need their previous servicer to transfer payment records to FedLoan. If it’s not in a format FedLoan’s software can read, that creates delays. FedLoan has hired a consulting firm to make the process more efficient, Ms. Hill said.

A bill introduced in the Senate on Thursday could simplify the program. Senator Tim Kaine, Democrat of Virginia, who helped coordinate the proposal for that $700 million-plus in fix-it money, also helped lead the effort on proposed legislation that would allow every federal loan and every federal repayment plan to qualify for the program. Another proposed change: Allow partial loan forgiveness after five years in a public service job.

When I told Mr. Kaine about what I had heard from readers, he did not seem surprised. “I’m incredibly pissed off about it,” he said. “And it’s evidence for my proposition that this is not accidental but an intentional effort to sabotage.”

There’s reason to be concerned. President Trump’s most recent budget suggested dismantling the program altogether. The odds of this happening are low, and borrowers already in the program would almost certainly be grandfathered in if it did. But budgets are a statement of values, and the Department of Education ultimately answers to the president.

Mr. Kaine’s hope is that the new bill could be attached to a reauthorization of the federal Higher Education Act, which may happen this year. If it does, is he confident that FedLoan can follow whatever new regulations survive the legislative gantlet?

“I don’t have confidence that would enable me to celebrate if this thing passes,” he said. “I’m going to feel good if it passes, and then there is going to have to be executive oversight.”

The shame here is that it took a decade to recognize that the program’s dysfunction had become so acute. And even the best legislative developments are only as effective as the people who carry them out.

So I expect that this problem will be with us for a long time. If you’re one of the people doing good work in the world and counting on the program, don’t just trust what you’re told. Print everything. Ask for written verification. And cross your fingers the next time you call for help, and hope the very people who are supposed to be looking out for you won’t tell you to come back in a year.

This article is from NYT – go to source

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