Someone defaults every 29 seconds.
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, signed into law by President George W. Bush and continued by the Obama administration. The initiative gives borrowers a path to debt forgiveness after 10 years, with the first consumers becoming eligible in October 2017.
However, many of those borrowers have filed complaints with the CFPB 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 shows. Many of the borrowers struggle with increasingly expensive education costs required for public service jobs with…