Prob­lems plague stu­dent loan for­give­ness pro­gram

USA TODAY US Edition - - MONEY - Kevin McCoy @km­c­coynyc

Stu­dent loan bor­row­ers who seek for­give­ness of part of their debt be­cause they work in public ser­vice jobs are be­ing hurt by prob­lems and break­downs at the com­pa­nies that ser­vice the loans, ac­cord­ing to a new fed­eral re­port.

The Con­sumer Fi­nan­cial Pro­tec­tion Bureau re­port fo­cused on the Public Ser­vice Loan For­give­ness pro­gram, an Obama ad­min­is­tra­tion ini­tia­tive that gives bor­row­ers a path to debt for­give­ness af­ter 10 years, with the first con­sumers be­com­ing el­i­gi­ble in Oc­to­ber.

How­ever, many of those bor­row­ers have filed com­plaints with the bureau, say­ing their ef­forts were sab­o­taged by in­cor­rect or in­suf­fi­cient in­for­ma­tion from loan-ser­vic­ing com­pa­nies, pro­cess­ing er­rors or cer­ti­fi­ca­tion prob­lems.

“Bor­row­ers have told us about stu­dent loan in­dus­try prac­tices that de­lay or deny ac­cess to ex­pected help such as the Public Ser­vice Loan For­give­ness pro­gram,” said CFPB Di­rec­tor Richard Cor­dray, who is sched­uled to ad­dress the is­sue Thurs­day at a North Carolina event. “We want those in public ser­vice jobs who give back to our com­mu­ni­ties to be able to stay on track and not worry about un­nec­es­sary debt due to ser­vicer er­rors.”

Teach­ers, doc­tors, so­cial work­ers, nurses, first re­spon­ders and other public ser­vice work­ers may qual­ify for elim­i­nat­ing their stu­dent loan debt if they make 120 qual­i­fy­ing monthly re­pay­ments, get en­rolled in a qual­i­fy­ing re­pay­ment plan and work full time for a qual­i­fied em­ployer, such as a public school or hos­pi­tal.

More than 500,000 bor­row­ers have sig­naled plans to seek debt re­lief un­der the pro­gram, and nearly two-thirds of those con­sumers earn less than $50,000 a year, De­part­ment of Ed­u­ca­tion data show.

Many of the bor­row­ers strug­gle with in­creas­ingly ex­pen­sive ed­u­ca­tion costs re­quired for public ser­vice jobs with low salaries that make it dif­fi­cult to re­pay stu­dent loans.

The Trump ad­min­is­tra­tion’s 2018 bud­get calls for elim­i­nat­ing the pro­gram. Although that change is not ex­pected to af­fect bor­row­ers who have taken stu­dent loans be­fore next year, un­cer­tainty over eli­gi­bil­ity is­sues has con­tin­ued.

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