Has Anyone Out There Received Public Service Loan Forgiveness

Seth Frotman, old pupil loan ombudsman at the Consumer Fiscal Protection Agency, poses at NPR headquarters in September. Frotman and his team reviewed thousands of complaints about the questionable practices of student loan companies. Cameron Pollack/NPR hide caption

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Cameron Pollack/NPR

Seth Frotman, one-time student loan ombudsman at the Consumer Financial Protection Bureau, poses at NPR headquarters in September. Frotman and his team reviewed thousands of complaints almost the questionable practices of student loan companies.

Cameron Pollack/NPR

Update: Many student borrowers have responded to this story by sharing stories of their struggles with PSLF. Nosotros've curated many of them here .

On the morn of Monday, Aug. 27, Seth Frotman told his two immature daughters that he would likely be home early that day and could have them to the playground. They cheered.

He did not tell them why their dad, who often worked long hours as the student loan watchdog at the federal Consumer Fiscal Protection Agency, would be free for an afternoon play date.

Frotman assumed that after walking into his office and, at precisely 9:xxx a.grand., hitting "send" on an incendiary resignation letter of the alphabet to lawmakers accusing the Trump administration of betraying educatee borrowers, he would promptly exist walked out with his things, and his career, in a cardboard box.

"Unfortunately, under your leadership," Frotman wrote to his dominate, Mick Mulvaney, "the Agency has abandoned the very consumers it is tasked past Congress with protecting. Instead, y'all have used the Agency to serve the wishes of the most powerful financial companies in America."

Frotman arrived at this decision, in part, after he and his team reviewed thousands of borrower complaints the previous summertime. One plan kept coming upward, hurting and infuriating the very people it was meant to assistance: the U.South. government'south effort to reward student borrowers for public service — for being nurses, teachers and get-go responders.

This is the story of Seth Frotman, the mangling of the programme known equally Public Service Loan Forgiveness, and what it says about America's student loan industry.

The middlemen

Congress created Public Service Loan Forgiveness (PSLF) in 2007, in the waning days of the Bush-league assistants. The pitch to borrowers was simple:

Spend 10 years teaching, nursing, policing or otherwise working for a qualified nonprofit while also making 120 monthly payments against your student loans, and the regime would forgive any'south left. As a give thanks y'all.

But recent information from the Department of Education prove that 99 percent of applications for loan forgiveness have been denied.

The pitch may accept been simple, but the execution was anything just.

Today, the U.S. Department of Instruction is, essentially, a trillion-dollar bank, serving more than twoscore one thousand thousand student borrowers. While the authorities writes these educatee loans, information technology merely cannot run the call centers or handle the paperwork for so many borrowers. Information technology needs help. And then it pays companies — the department has contracts with nine of them — to handle customer service. These servicers, every bit they're known, are glorified tape-keepers and debt collectors. But they're also powerful gatekeepers.

And these servicers, Frotman establish, with a big assist from the Education Department, were wreaking havoc with the Public Service Loan Forgiveness program.

Staying on rails while giving back

In Greek mythology, Cassandra is the daughter of King Priam of Troy and is both blessed and cursed.

Her approval: She can run across into the future and knows, beyond a doubt, that her city's undoing awaits inside a wooden horse.

Her curse: No one believes her.

Seth Frotman is the Cassandra of the pupil loan manufacture.

Frotman served three years equally the CFPB's student loan ombudsman and head of its Role for Students and Young Consumers. A fierce watchdog for student borrowers, Frotman and his team reviewed thousands of complaints about the questionable practices of student loan companies.

Since 2011, the CFPB has handled more 60,000 student loan complaints and, through its investigations and enforcement actions, returned more than than $750 million to aggrieved borrowers.

In the spring of 2017, Frotman and his team investigated thousands of complaints virtually a range of bug and found a disturbing design with PSLF:

Borrowers would notify their loan servicers of their intent to enroll in the program, then go far years into the repayment process before being told they didn't even so qualify — because they had the incorrect loan, the incorrect repayment plan or the wrong employer.

Sometimes servicers would be aware of a borrower's condition equally a public servant — active-duty armed forces, for example — but not tell the borrower nigh the possibility of PSLF. For borrowers who needed to consolidate their loans to qualify for forgiveness, Frotman establish, a procedure that should have taken thirty days often took much longer. Servicer employees appeared undertrained, uninformed and prone to a litany of paperwork mistakes.

"I idea, 'Oh not bad, I must qualify for this program,' " says Sarah Krainin, who used loans to pay for college and a master's caste and now teaches at a nonprofit, public university in California. "And I asked my servicer at the time, 'Am I gonna qualify for [PSLF]?' And they said, 'Yes, you have federal loans. Y'all qualify.' "

Krainin says she made life choices that were informed, at least in function, past that promise. But after making vi years of payments, she recently checked in with the Education Section and was told she did not qualify, nonetheless.

Krainin was told she could consolidate her loans and qualify for PSLF, but doing so would reset her countdown to loan forgiveness from four years back to ten.

"I've spent half-dozen years thinking ane thing, and at present it's some other," Krainin says.

She was devastated and pleaded for leniency with a serial of call-heart representatives, but got nowhere.

At final, with one call-eye amanuensis, Krainin says, "I kinda let my baby-sit downward and said, 'This kinda sucks.' And [the representative] said, 'Yeah, information technology really sucks.' Just hearing her say that was a relief. It wasn't six-years-worth-of-work relief, just information technology was a petty bit of confirmation that this is not really the mode things are supposed to exist."

In June 2017, Frotman published the results of his CFPB investigation, titled "Staying On Track While Giving Back," and he recommended that policymakers consider immediate changes, including raising standards for servicers and giving more flexibility to borrowers who accept been misled by their servicers.

Frotman was non the commencement Cassandra to warn the Didactics Section and lawmakers about the plan, but his vocalization may accept been the loudest and his case the virtually thorough. Still, his recommendations brutal largely on deaf ears.

The lucky one percent

Later that year, in October 2017, after a host of warnings and red flags, the floodgates opened, and the offset generation of borrowers to consummate x years of public service began applying for loan forgiveness. Thousands of them.

It has at present been a year, and one thing is clear: Frotman was right.

In his resignation letter of the alphabet, Seth Frotman accused the Trump administration of neglecting student borrowers. Cameron Pollack/NPR hide caption

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Cameron Pollack/NPR

In his resignation letter, Seth Frotman defendant the Trump assistants of neglecting educatee borrowers.

Cameron Pollack/NPR

The Department of Education and the Government Accountability Function (GAO) have both released reviews of PSLF that dorsum upwardly Frotman's CFPB findings.

The department's recent report card for PSLF, the plan's first, was a revelation, describing a scale of dysfunction that surprised many in the loan manufacture. It institute that, over the past year, nearly 29,000 applications for Public Service Loan Forgiveness were submitted and candy. Of those, 99 percentage were denied, the vast majority for "not coming together program requirements."

Xc-nine percentage.

But days after the Didactics Department released its data, the federal authorities's contained watchdog weighed in with the results of its own investigation. Investigators from the GAO establish that, more than a decade into the programme, many borrowers and servicers still announced confused about basic requirements.

Like Frotman'due south squad, GAO found evidence of student borrowers thinking they were on the path to loan forgiveness, merely to "find out months and potentially years later that [they] don't qualify and that [they're] not really eligible for forgiveness," says GAO'south Melissa Emrey-Arras, who led the investigation.

Some borrowers had the wrong loans or employers that didn't qualify. Others were in the wrong repayment programme. In fact, more than than half of borrowers who asked to have their loans and employment double-checked, to be certain they qualified for PSLF, "either did not meet basic eligibility requirements or had yet to make whatever qualifying loan payments," according to the written report.

GAO'due south investigation found a communication breakup between the Didactics Department and FedLoan, the contractor that officially handles PSLF. For case, if a borrower calls and asks if her task qualifies as public service, the company'south representatives told investigators they generally won't answer that question over the telephone — because they take no listing of eligible employers.

"When the servicer that'southward responsible for implementing the program doesn't have a list of employers, that's hard to understand," Emrey-Arras says, making clear that the Teaching Department deserves every bit much blame, if not more than, for such failures.

"I'd say it'southward everybody's error," says Robert Kelchen, assistant professor of college instruction at Seton Hall University. "I'd put more of the blame on the Department of Educational activity, considering pupil loan servicers tin can but really exercise what the department tells them to practice."

Kelchen says one big reason the plan's initial rejection charge per unit is so loftier is because, especially in the early days, PSLF'due south basic requirements were vague.

"Servicers didn't really take much better information than borrowers," Kelchen says. "They were trying to assist students, but they were just using their best guess and trying to get through all of the different emails that the Department of Education would send to servicers instead of actually putting together a guidebook to help them out."

In its defense, the Pedagogy Department says it "is approving every eligible awarding for PSLF under the strict rules that Congress established ... The Department concurs with the [GAO's] recommendations and is committed to enhancing the process, outreach, and communications related to the program. Nosotros will soon implement and promote a new, automated 'assist tool' for borrowers and will increase communications to make borrowers enlightened of the tool and other resource related to loan forgiveness programs."

But this advice breakdown is only part of the PSLF problem. Yes, servicers and their phone call-center agents are often uninformed and unhelpful. Simply it's besides clear, servicers sometimes neglect borrowers, intentionally.

"They're doing a terrible job"

While at the CFPB, Frotman and his team found a broad pattern of servicer mistakes and mismanagement. Just days before Donald Trump's inauguration, the bureau sued one of the nation's largest servicers, Navient, alleging the company "provided bad data in writing and over the telephone [to borrowers], processed payments incorrectly, and failed to act when borrowers complained most problems."

At the time, Navient was managing more 6 million educatee loan accounts for the federal government. Since and so, five country attorneys full general have also filed suit: Illinois, Washington, Pennsylvania, California and Mississippi.

Navient declined to comment for this story, but its CEO, Jack Remondi, offered this spirited rebuttal when California announced its lawsuit:

The allegations are unfounded, and the lawsuit is another attempt to arraign a unmarried servicer for the failures of the higher pedagogy organisation and the federal student loan plan to evangelize desired outcomes.

Remondi went on to remind Navient's critics that the government's student loan servicers do not "make, own or have a fiscal interest in the loans" they manage or "design the circuitous and confusing repayment options and enrollment requirements for borrowers."

FedLoan is also at the center of a state-led lawsuit. Massachusetts Attorney Full general Maura Healey is suing the servicer for its treatment of both the PSLF plan and the Teacher Teaching Assistance for Higher and Higher Education (TEACH) Grant program.

"They're doing a terrible job," Healey, a Democrat, told NPR earlier this twelvemonth.

Healey alleges FedLoan has overcharged educatee borrowers and "prevented [them] from making qualifying monthly payments that count towards loan forgiveness, shifting the consequences of its loan servicing failures onto the pupil borrowers themselves."

FedLoan also declined to comment for this story just has previously told NPR that the company "does not concur with the allegations made by the Massachusetts Attorney General'south Office." The company said information technology "remains committed to resolving outstanding borrower issues while following the U.S. Department of Teaching'south policies, procedures, and regulations as mandated by the Agency's federal servicing contracts."

In an ongoing investigation, NPR has documented FedLoan'due south mismanagement of the TEACH Grant programme, revealing that thousands of teachers who received college grants to teach in low-income public schools have unfairly had those grants converted to loans, with interest. The Education Section has since launched a "top-to-bottom" internal review of the program.

And at that place's i more than plough to this story — something Frotman tried to headline in his resignation letter:

The Trump administration has chosen sides in this fight over loan forgiveness, and it's non with borrowers. In the absence of federal efforts to rein in servicer mistakes and bad beliefs, states have tried to fill the void, passing increasingly tougher consumer protection laws and, occasionally, suing.

Ordinarily a fierce advocate for states' rights, Pedagogy Secretary Betsy DeVos is making a bold legal argument: Considering these companies work for the federal government, they need not answer to state authorities. They are, in essence, protected from such lawsuits.

In response, half of state attorneys general, including reliably conservative Montana, Tennessee, Kansas and Texas, wrote to DeVos, urging her to reject this "ongoing entrada by student loan servicers and debt collectors to secure immunity for themselves from land-level oversight."

Simply this month, 12 state attorneys general signed a pointed letter to DeVos, writing that "the shocking 99 per centum PSLF programme denial charge per unit is quite simply unacceptable, and borrowers need fixes for the program now."

Cupcakes

Seth Frotman was wrong.

Not about the problems with Public Service Loan Forgiveness. They are legion, indeed. He was wrong about being able to have his daughters to the playground after turning in his resignation.

Despite grabbing headlines across the country, Frotman's resignation letter did not get him walked out of the edifice with a paper-thin box. He stayed through the week.

In fact, CFPB leadership met his departure largely with indifference.

Days later, Acting CFPB Director Mulvaney gave an interview to CNBC and was asked most Frotman's fiery departure.

"I never met the gentleman," Mulvaney said, laughing. "Don't know who he is."

The CFPB tells NPR in a statement: "While nosotros disagree with the assertions fabricated in [Seth Frotman'south] resignation letter, we wish him the best in securing his future employment."

Fri, Aug. 31, was Frotman's last day, and he did something unusual for a man who had, earlier that calendar week, publicly savaged his dominate and the Trump administration:

He brought his married woman and daughters to work.

For parts of his vii years at the CFPB, Frotman says, the work had often taken him abroad from home, and he wanted his girls to meet where he'd been all this time, to sit in his chair, to play with his landline telephone (their favorite function) and to meet some of the colleagues who had go dear friends.

They posed for pictures. His daughters dressed for the occasion, the 2-year-one-time wearing a purple sundress and necklace, the 5-year-quondam in pink with a white flower in her hair. Frotman wore faded jeans, sleeves rolled to the elbows.

"What do you do?" his 5-yr-old asked.

"We help people," he replied.

Frotman says the visit was bloodshot, because he was proud of the piece of work he had done and wished he could have kept doing it. He says his daughter could tell there was more to his story, but cupcakes appeared and all was forgotten.

For the record, the cupcakes were not for Frotman's going-abroad political party.

Someone else was leaving, too.

To hear our Planet Money episode on Seth Frotman and Public Service Loan Forgiveness, click here .