Senators call for investigation into student loan forgiveness program

Twenty-three Democratic Senators have called for an investigation into a loan servicer over its handling of a student loan forgiveness program.

The group of Congressmen asked the Consumer Financial Protection Bureau to launch an investigation of the Pennsylvania Higher Education Assistance Agency, which helped administer the Public Service Loan Forgiveness. The PSLF program, which was intended to reward public servants with student loan forgiveness after certain conditions were met, has reportedly denied 99 percent of applicants.

“For several years now, government watchdogs have repeatedly found that PHEAA’s missteps, errors, and mismanagement of the PSLF program caused public service workers to be denied the loan forgiveness that they had earned,” the senators wrote in a letter to CFPB Director Kathy Kraninger.

The PSLF is set up to aid police, military servicemembers, teachers, employees of nonprofits and others. If participants make qualifying payments for 10 years, the remainder of their student loan debt is slated to be forgiven.

According to recent reporting, however, nearly all applicants have been denied forgiveness in the program’s first year of eligibility, many on technicalities or poorly communicated information.

The CFPB’s student loan ombudsman cited PHEAA’s “flawed payment processing” and paperwork errors in its forgiveness denials in a 2017 report. A 2018 Government Accountability Office report blamed PHEAA’s failure to “properly account for qualifying payments and reliance on inaccurate information.”

The Department of Education said in a statement it “takes its responsibility to provide high-quality service to federal student loan borrowers very seriously” and that the high PSLF denial rates are “by Congressional design, not by accident or failed implementation by the Department.”