Advocacy groups representing student loan borrowers sent a warning Monday that student loan service companies could provide misleading information to borrowers about a further expansion of a key federal student loan cancellation program.
“A review of industry practices … found that many of these companies are currently providing misleading and outdated information to borrowers that could derail efforts to access loan forgiveness relief. recently overhauled civil service, âthe Student Borrower Protection Center (SBPC) said in a report.
The Biden administration recently expanded the Public Service Loan Forgiveness Program (PSLF). The PSLF offers a federal student loan discount for borrowers working in the public service. The program had been plagued by complicated eligibility requirements, poor monitoring and management, and very low approval rates. As part of new changes announced by the administration in October, the administration is temporarily relaxing key rules governing the program, which will allow thousands more borrowers to become eligible for a loan forgiveness in the coming months.
According to the Education Department, 30,000 borrowers will receive at least $ 2 billion in student loan forgiveness under the new PSLF changes. The ministry expects thousands more to receive student loan forgiveness as well over the next year.
But many of these borrowers will need to take some specific steps to qualify, such as consolidating their Federal FFEL student loans through the Federal Direct Consolidation Loans program. FFEL student loans are commercially issued student loans guaranteed by the federal government; the program was discontinued in 2010. Other borrowers must certify their employment in the public service by completing the required application forms. Borrowers must act before October 31, 2022.
The SBPC and a coalition of unions have warned borrowers that two months after the enactment of the PSLF expansion, student loan services were providing borrowers with outdated or incorrect information about the PSLF program, which could lead some borrowers (in especially, borrowers with FFEL-program loans) not to take the required action before the October 2022 deadline. The coalition sent letters to major student loan service companies on Monday, warning them not to induce borrowers in error.
âIt is the job of every FFELP duty officer to prepare their staff to provide accurate and timely information to the public service employees whose loans they manage, and every FFELP duty officer should understand that an implementation Poor or evil work of ED waiver will not be tolerated, âthe coalition wrote. The coalition also asked maintenance services to publish their implementation plans for the expansion of the PSLF and provide regular updates.
Student loan managers have a history of mismanagement of the PSLF program, particularly for federal student loans from the FFEL program. The Federal Bureau for Consumer Financial Protection (CFPB) released a report earlier this year that “found a number of ways student loan officers gave borrowers incorrect information, resulting in missteps that could cost money. thousands of dollars to consumers, “including leading borrowers to” believe they couldn’t access the PSLF if they had older loans under the Federal Family Education Loans Program (FFELP), even if they could access the PSLF by consolidating FFELP loans into direct loans. Service officers also initially botched the rollout of the new PSLF expansion, leading some borrowers to be denied the relief they were entitled to Duty officers blamed Congress for creating the complex requirements of the PSLF program in the first place, and the Education Department for providing poor guidance. entation.
“Public service workers have already faced more than a decade of abuse and broken promises from companies that had no qualms about denying them a earned student loan,” wrote the coalition today. âWe intend to remain extremely vigilant so that these borrowers are never again deprived of their rights. “
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