Congress created the Public Service Loan Forgiveness program in 2007 to lure people into professions like teaching, nursing or public-interest law, where pricey degrees are the ticket of entry but wages typically aren’t high enough to pay them off. More than a decade later, now that the first borrowers are eligible, the program is in disarray, according to a Wall Street Journal analysis. More than 73,000 people have applied for debt forgiveness as of March 31 of this year, according to Education Department data, but just 864 have had their loans erased. A mix of factors combined to derail the program, including poorly written legislation, neglect by multiple administrations, mismanagement by servicers contracted to carry it out and antipathy from conservatives—particularly in the Trump administration—who would prefer the program had never been created. “The department’s goal of pursuing its conservative agenda is made easier by the fact that the law itself is a mess,” said Terry Hartle, senior vice president at the American Council on Education, a Washington, D.C.-based trade group representing colleges and universities. To qualify for forgiveness, borrowers must work for a government entity or nonprofit, hold a certain type of loan, enroll in one of several specific repayment plans and make 120 full and on-time monthly payments, or 10 years’ worth. Falling short on almost any of these requirements can mean disqualification. Read more. (Subscription required.)
The issue of student loan debt and bankruptcy is addressed in the Final Report of the ABI Commission on Consumer Bankruptcy. Click here to download your copy.