Stu­dent loan re­lief fails to for­give

Prom­ises fall short due to red tape, bad ad­vice

USA TODAY US Edition - - OPINION - Julie Mar­getta Mor­gan

The Depart­ment of Ed­u­ca­tion re­cently re­leased a sta­tus re­port on its Pub­lic Ser­vice Loan For­give­ness Pro­gram, and the re­sults are eye-pop­ping. PSLF prom­ises loan can­cel­la­tions for bor­row­ers who com­mit to 10 years of pub­lic ser­vice, and the first group of bor­row­ers is fi­nally el­i­gi­ble. Ac­cord­ing to the re­port, how­ever, al­most no one is get­ting re­lief: Of the 32,601 ap­pli­ca­tions re­ceived by the end of June, only 96 bor­row­ers have ac­tu­ally had their debt can­celed. Ninety-nine per­cent of the ap­pli­ca­tions that have been pro­cessed were de­nied.

As law­mak­ers ex­plore new so­lu­tions to our na­tion’s stu­dent debt cri­sis and col­lege af­ford­abil­ity woes, PSLF should serve as a cau­tion­ary tale. The pro­gram’s out­comes are dis­tress­ing, but they are not en­tirely shock­ing. At first glance, PSLF sounds sim­ple and gen­er­ous. But it was packed full of red tape and fine print that made it nearly im­pos­si­ble for bor­row­ers to nav­i­gate — red tape that was com­pounded by in­ex­cus­ably poor ad­vice from loan ser­vicers. For in­stance, many bor­row­ers were un­in­ten­tion­ally en­rolled in the wrong re­pay­ment plan while com­plet­ing their years of pub­lic ser­vice, ren­der­ing them in­el­i­gi­ble for loan for­give­ness.

To de­velop poli­cies likely to gain bi­par­ti­san sup­port, leg­is­la­tors look for “sen­si­ble so­lu­tions” with mod­est price tags. But this cre­ates ten­sion when it comes to find­ing mean­ing­ful an­swers to the high price of col­lege and ris­ing stu­dent debt. With 44 mil­lion stu­dent loan bor­row­ers and more than $1.5 tril­lion in out­stand­ing debt, those so­lu­tions don’t come cheap.

There is no magic math that al­lows leg­is­la­tors to con­coct gen­er­ous ben­e­fits for stu­dents and other bor­row­ers at lit­tle to no cost. But there is math that can take a pro­gram aimed at pro­vid­ing a gen­er­ous ben­e­fit, load it up with el­i­gi­bil­ity re­quire­ments, con­di­tions and other fine print, and greatly min­i­mize the pro­gram’s cost. The re­sult is gov­ern­ment pro­grams that sound great at bill sign­ing cer­e­monies and in pol­i­cy­mak­ers’ news re­leases, but pro­vide very lit­tle value when im­ple­mented.

PSLF is one ex­am­ple: It re­quired that bor­row­ers have the “right” kind of loan, en­roll in the “right” re­pay­ment plan, work the “right” kind of job, and fill out the “right” kind of pa­per­work each year for 10 years to be el­i­gi­ble. It is not sur­pris­ing that so few com­pleted the cor­rect steps to get what they were owed.

The TEACH Grant pro­gram is an­other. In its sim­plest de­sign, the pro­gram aimed to pro­vide grants to ed­u­cate teach­ers to work in high-needs fields. In­stead of sim­ply of­fer­ing a grant, how­ever, Congress de­signed grants that turned into loans if re­cip­i­ents didn’t fol­low the highly spe­cific teach­ing ser­vice re­quire­ments upon grad­u­a­tion. The re­sult? More than 60 per­cent of TEACH grants con­vert to loans. In thou­sands of these cases, the con­ver­sion was the re­sult of pa­per­work dis­crep­an­cies and er­rors.

In­stead of choos­ing to in­vest in so­lu­tions that help stu­dents and bor­row­ers, it seems we are doomed to make the same mis­takes all over again. For ex­am­ple, New York state has im­ple­mented a “free col­lege” pro­gram that in­cludes nu­mer­ous con­di­tions and catches, in­clud­ing pro­vi­sions that would con­vert grants into loans or claw back the aid a stu­dent re­ceives.

As fed­eral and state gov­ern­ments de­bate new so­lu­tions to re­lieve stu­dent debt and de­crease col­lege prices, the pub­lic should bear in mind these ex­am­ples. We should be wary of pro­grams that prom­ise big ben­e­fits at lit­tle cost, eval­u­at­ing them for ef­fec­tive­ness rather than bud­getary im­pact. We should rec­og­nize that elab­o­rate el­i­gi­bil­ity cri­te­ria do not tar­get ben­e­fits to those who are most “de­serv­ing” — they sim­ply act as a road­block for all ap­pli­cants, re­gard­less of their merit.

And we should be vig­i­lant in en­sur­ing that back-room pro­cesses do not erode good poli­cies un­der the weight of fine print. Most of all, we should build bold pro­grams that pro­vide real value to Amer­i­can stu­dents and bor­row­ers.

Julie Mar­getta Mor­gan is a fel­low at the Roo­sevelt In­sti­tute and ex­ec­u­tive direc­tor of the Great Democ­racy Ini­tia­tive. She pre­vi­ously served as se­nior ed­u­ca­tion coun­sel to Sen. El­iz­a­beth War­ren and a se­nior pro­gram of­fi­cer at the Bill & Melinda Gates Foun­da­tion.

STEVE SACK/(MIN­NEAPO­LIS) STAR TRI­BUNE/POLITICALCARTOONS.COM

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