This administration is really committed to hurting public service workers.
The Trump administration must really loathe people who choose a life of public service. That's the only way to explain the zeal with which they've tried to stop teachers, police officers, firefighters, and more from being able to have their student loans forgiven. The Department of Education is so committed to blocking student loan forgiveness that they entered into a turf war with another federal agency to stop them from fixing the problem.
The Public Service Loan Forgiveness Program was signed into law back in 2007 under George W. Bush with bipartisan backing. If students chose public service jobs and made 120 on-time payments to their loans in 10 years, the balance of the loan was to be forgiven. It meant that people could choose a relatively low-paying job, such as a role as a first responder or legal aid attorney, without being crushed by the weight of their student loan debt.
However, under the Trump administration, the Department of Education has only approved 1% of all applications for loan forgiveness. The Consumer Financial Protection Bureau, which is tasked with regulating consumer financial products and protecting consumers, had a plan to help public service employees get the loan forgiveness they're entitled to under the law. But the Department of Education blocked it.
One of the reasons so few loan forgiveness applications are approved is that the rules are incomprehensible. People find out, after making 120 on-time payments, that there is some arcane and unknown regulation they failed to follow, rendering their on-time payments worthless for the program.
The CFPB had a fix, though. They placed examiners in the call centers of major student loan processors to help diagnose the problems. It's a lengthy process, though. NPR reported that CFPB examinations of this type "typically go on for two months," and the CFPB team is embedded at the company. After that, the CFPB follows up for several months.
This seems like a no-brainer. If there are bottlenecks or wrongdoing at the student loan processors, the CFPB can help diagnose problems and enforce the laws. But that's not what the Department of Education wants. So, it told the student loan servicing companies it couldn't share information with the CFPB because that would violate the privacy of borrowers.
That's incredibly disingenuous. Those same companies can turn over borrower data to private credit reporting agencies, but the Department of Education's stance is they can't turn over that same data to the CFPB, a federal law enforcement agency tasked with overseeing and enforcing consumer protection laws. Once the CFPB couldn't get data or work with the loan processors, they had to stop their oversight efforts.
It's tough to overstate how bad this is. A government agency dedicated to making sure consumers are protected was thwarted by another government agency. And this behavior is business as usual for Secretary of Education Betsy DeVos. Since taking the helm at the Department, she has routinely sided with private companies, including schools that rip off veterans.
Teachers got so fed up with the fact that none of them were receiving the benefits of the loan forgiveness program after following all the rules that they decided to sue earlier this year. Police officers, firefighters, first responders, and others may need to do the same, given that there are millions of public service workers who qualify for the program that are being actively thwarted by the Department of Education.
These borrowers followed all the rules, but they ran up against a government that has no intention of doing the same.
Published with permission of The American Independent Foundation.