
Education Dept. rejects most applicants for student loan forgiveness program - ilamont
https://www.latimes.com/business/la-fi-student-loan-forgiveness-education-department-betsy-devos-20190403-story.html
======
rayiner
I started law school shortly after the PSLF program was created. The program
created a loan forgiveness option after 10 years of qualifying public service.
The criteria for qualification are clearly specified up front. Among other
things, you need to make 120 monthly payments on a qualifying income-driven
repayment plan. None of these criteria are arbitrary or hard to understand.

Nonetheless, because so many people couldn't figure it out, Congress allocated
an _additional $700 million_ to help those folks. But, as far as I can tell
from the article, the people being denied are the ones who still can't figure
it out. 28,640 of the 38,640 had not previously applied for loan forgiveness.
Of course those people must be rejected--this $700 million is a _supplemental
program_ for people who goofed up and got rejected from the regular PSLF. It
would make no sense to let people get money from that program before they were
rejected from regular PSLF. The other reasons for rejection are even more
meritorious. If you haven't been paying for 10 years, or were paying less on
your incorrect plan than you would have under the PSLF plan, you shouldn't get
loan forgiveness--you haven't paid in what you were supposed to. Likewise, the
federal government cannot do anything about private student loans. It goes
without saying that people who don't have 10 years in a qualifying public-
service job shouldn't get forgiveness. Literally every reason mentioned in the
article for rejecting these applications are good reasons for rejecting these
applications.

~~~
excitom
OK so let's back up and look at this from a higher level.

A program that is supposed to help 10s of thousands of students ends up
helping very few. Does this mean that all the rejected people are lazy,
stupid, or grifters? Or is the program implemented poorly?

~~~
rayiner
This is not a welfare program for needy people. It’s a transactional
arrangement with specific terms for college and graduate-school educated
people. The government should be able to expect that the applicants will be
able to dot their Is and cross their Ts.

~~~
tzs
Why are there any Is to dot and Ts to cross at all? Why isn't the application:

    
    
      Name: _________________
      Taxpayer ID: __________
    

? The government should be able to figure out from that what government loans
you have that are eligible for the program, and if you've satisfied ongoing
payment requirements. They should be able to figure out from your income tax
returns if you are working in a qualifying public service job.

~~~
zaroth
As it turns out, random government agencies can’t just data mine your tax
returns, bank accounts, and payment history from a third party servicer.

To build the infrastructure to do this would cost the government probably $100
billion. See healthcare.gov for an example where they tried to do something
similar.

~~~
addicted
Healthcare.gov was insanely successful after the initial poor launch (the
initial launch was poor only because the Supreme Court struck down certain
aspects of the law, which meant that the entire scope of healthcare.gov
changed overnight).

------
Alupis
FTA:

    
    
        In response to an inquiry from Kaine, the Education Department
        disclosed last week that 38,460 people had submitted requests 
        for forgiveness as of Dec. 28 under the new program. Most of 
        those, 28,640 people, were immediately rejected because they 
        had not previously filled out a formal loan forgiveness 
        application — one of the many criteria of the relief program.
        
        Of the 9,820 applicants who cleared the first hurdle, 1,184 
        are still under consideration. The rest were rejected for 
        myriad reasons. Of the applicants who cleared the initial 
        hurdle, 40% still had years to go before hitting the required 
        10-year mark. Nearly a quarter were ineligible because they 
        were paying less money in the wrong payment plan than they 
        would have in the correct one.
        
        Others were turned away for having the wrong type of federal 
        loan — those originated by private lenders through the 
        now-defunct Federal Family Education Loan Program. Some had 
        not made enough on-time payments or had not had at least 10 
        years of full-time employment certified by a qualifying 
        employer, according to the department.
    

I really don't see the problem here. People aren't qualifying for the program
(many in obvious ways, such as not meeting the 10 year minimum, or making on-
time payments), and I'm supposed to (from the article's clear intent) feel
outraged by this?

~~~
sosodev
People aren't qualifying because, as the article points out, the requirements
for the program are absurd. It's really apparent when you look at how little
student debt has been forgiven compared to the amount allocated for the
program.

~~~
rayiner
What requirements are “absurd?”

~~~
derstander
From personal experience, I can tell you the requirement referenced in this
snippet feels absurd:

“Others were turned away for having the wrong type of federal loan — those
originated by private lenders through the now-defunct Federal Family Education
Loan Program.”

Federal loan? Check. Working for a 503c? Check. Oh, wait — the type of federal
loan you took out is the wrong kind. So you need to consolidate under this
other kind. And yeah, it resets it such that none of the payments you made for
the past 10 years count.

I’m lucky enough that it personally doesn’t really matter to me. I took on the
loans for my education when the foregiveness program wasn’t in existence so I
certainly wasn’t banking on a bailout. But the FFELP was still in existence
when this program was being developed so I have no idea why those loans
weren’t included.

~~~
rayiner
The government pays for PSLF, in part, through revenues brought in through
federal loan programs. Why would PSLF apply to loans where a private lender is
getting the interest payments?

------
droithomme
Article is clear.

$700 million funding for this secondary phase program.

Only 262 applicants had success; 38,198 no success.

So program costs 2.67 million per successful applicant. With loans between a
few thousand and a quarter million dollars. Let's say $40,000 on average,
which is 10.5 million for all of them spent, and the remaining $690 million is
thus the administrative overhead.

People OK with this seem to believe the $690 million in administrative
overhead is money well spent and the $10.5 million spent on actual loan
payouts is nearly an extravagance.

Interesting.

~~~
dragonwriter
There's a not-insignificant school of thought in American politics that it is
vastly more important to prevent people from getting benefits who are not
ideal recipients than it is to make sure people who should get benefits do.

This spending ratio is in line with those priorities.

~~~
lamarpye
I'll bet you went to the same school as the OP.

------
samsa
It's worth noting that there aren't many people who SHOULD be eligible for
PSLF yet. This Forbes piece does the math:

[https://www.forbes.com/sites/robertfarrington/2019/01/22/why...](https://www.forbes.com/sites/robertfarrington/2019/01/22/why-
the-public-service-loan-forgiveness-headlines-are-misleading/)

I say this as someone who has a lot of money on the line; I have been in an
income based repayment plan for about nine years, work for a local government,
have a Direct Loan, etc., etc.

We'll see how the program still stands when I'm actually eligible to apply in
October 2020...

------
scythe
There are some interesting case studies of these weird denials provided by
'jhfdbkofdcho below:

[https://www.americanbar.org/news/abanews/aba-news-
archives/2...](https://www.americanbar.org/news/abanews/aba-news-
archives/2019/02/judge-overturns-changes-to-student-loan-forgiveness-program-
by-e/)

> _In a 54-page opinion, U.S. District Judge Timothy J. Kelly said changes to
> the eligibility requirements, made several years after the program began,
> were “arbitrary and capricious.” Kelly called one of the Education
> Department’s main arguments “nonsense” and said a series of internal
> Education Department emails “decimates” another argument._

> _Kelly ruled in favor of three individual plaintiffs who worked several
> years in public service and were initially approved for loan forgiveness,
> only to be notified years later that the approval was retroactively denied
> by the Education Department based on new rules._

[https://www.cnbc.com/2018/12/18/borrowers-denied-public-
serv...](https://www.cnbc.com/2018/12/18/borrowers-denied-public-service-loan-
forgiveness-file-lawsuits.html)

> _Here’s another example but it’s about being in the wrong loan program or
> repayment plan. But the fact pattern is similar. The servicers and the dept
> of Ed did a bad job implementing this program._

> _“Lawson-Ross said she spoke to staff at Great Lakes around 10 times to
> confirm that she was on track for the forgiveness. "They told me, 'Don't
> worry about it. You're good to go,'" she said. Had she known her loans
> didn't actually qualify, she could have simply rolled them into a kind that
> did.”_

------
jtchang
It comes down to what the goal was of the program. Was it to issue $700MM and
incentivize people to go into public service? If so then it really did fail if
they only managed to dole out $10MM or so.

I would think the end goal would be that the program could say "Hey you gave
us $700 MM and we managed to get all these public servants in it and on
track".

------
reagan83
It took 8 requests from our end to get approval for my wife. We were rejected
for the most ridiculous reasons on a 10 field form.

~~~
lawnchair_larry
Rayiner has asserted with authority that you can’t possibly end up in that
situation if you and your wife have even basic reading comprehension skills
once, let alone 7 times.

Can you provide examples of these ridiculous reasons so we can either conclude
that the two of you are indeed invalids, or so he can re-evaluate his
assumptions and perhaps stop denigrating folks like yourself?

~~~
scythe
Please don't be so confrontational. This forum depends on constructive
engagement to be useful.

~~~
lawnchair_larry
Are you kidding? _That’s_ what passes for confrontational now? You kids, I
tell ya ;)

It was very slightly snarky perhaps, but appropriate to make a point. Maybe
it’s better to hold off on the assumptions that everyone else must just be
idiots. I’m fine with someone deciding that they are indeed idiots, but at
least ask some questions and get their side first before declaring them so to
the whole internet. Shit is rarely as simple as it might seem to an outsider.
I doubt anyone who can manage to register for HN could fuck up the forgiveness
application 7 times if the process was truly as simple as claimed.

------
akudha
The fact that there is a need for such a program in the first place makes me
uncomfortable. How bad has the student debt gotten to warrant such programs?

~~~
xemdetia
I don't blame student debt wholly for this, the second factor is that public
sector jobs are somewhere between 1/2 to 2/3 of a private sector salary. There
is also general hostility to match private sector salary with public funds
(for many reasons) and the math just doesn't line up. This forgiveness program
makes sense for some of the silliness of government funding and budget
allocation but it doesn't make common sense. It also makes sense if salary is
lower that you get some benefit for the fact you can't pay down loans
aggressively to minimize the impact of interest.

I would also indicate that I feel like it's disingenuous to compare
forgiveness programs of bachelors education compared to specialists like
lawyers and PhD types where even state schools put you in the 80k+ club.

------
exabrial
I'm a little unclear why this is the taxpayer's burden to carry.

~~~
sosodev
Should public workers be in debt for the rest of their life or should they be
uneducated?

~~~
dnautics
Maybe we should make educational debt dischargeable through bankruptcy.

~~~
poilcn
Current "official" proposal is to make colleges pay share of the debt burden
in case of the student's default to bind them with the risks.

~~~
dnautics
...I can't even. Why _not_ take a Byzantinely complex situation with a major
flaw even more complex, instead of using a socially acceptable, simple
solution that revolutionized human society for the better? I guess politicians
have to put "plans" to their name, cant use something NIH

------
UncleEntity
Huh, isn't at all like the stop-loss payment program they had for military
personnel.

They sent a bunch of letters which I ignored because (I thought) I didn't
qualify until the last one with "Final Notice" so I figured why not? A while
later they sent me a check for something like $2,600 -- they were literally
begging me to take their money.

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olliej
well yes, because loan forgiveness is only for corporations.

~~~
deepakhj
Money for GM is ok but not for increasing the quality of public teachers.

------
musicale
This program seems to be poorly structured - the loan forgiveness schedule
should not be 0% for 10 years and then suddenly 100%.

------
RickJWagner
A shocking example of the federal government actually doing good work.

The article explains the reasons for the rejections. It's pretty clear that
rules were established and are being followed.

------
dorchadas
If I needed any more of a sign to get out of public education, this is it.

------
microcolonel
Yes, if you have a good reason to reject a loan forgiveness application, you
should reject it.

I don't even agree with the concept of outright forgiveness of a loan without
collateral without some genuine settlement; but surely a program like this
needs some standards even if you don't disagree with the basic concept.

