GAO: Many barriers to entry in Public Service Loan Forgiveness program

Public Service Loan Forgiveness program failures raises questions

By Brendan Pringle

September 5, 2019

Democratic presidential candidates are touting an expansion of loan forgiveness programs however, a recent government study cast doubt on the efficacy of such programs.

A $700M expanded public service loan forgiveness program is confusing and likely unfamiliar to many, according to a GAO report from the Government Accountability Office. Less than one percent of applicants were accepted off as a result of filing errors.

As loan forgiveness programs remain key components of most Democratic presidential campaign platforms, the report draws questions about the implementation of larger, more expensive programs.

The Public Service Loan Forgiveness (PSLF) program, established in 2007, offers loan forgiveness for certain public service employees after making 120 payments greater than ten years. Congress expanded the program in 2018 to help borrowers whose repayment plans were ineligible for PSLF. While well-intentioned, the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) has been a clear flop.

In the months between May 2018 and May 2019, the Education Department approved a minuscule one percent of applicants (661 total). About 71 percent of these requests were denied because they had not first submitted an application for PSLF—a program for which they are ineligible in the first place.

Additionally, it appears many qualified borrowers might not even know about the program. The report found that a year after Congress funded the program, some of the Education Department’s key online resources, including their Online Help Tool, still did not include information on the program. The Department also did not require all federal loan servicers to include TEPSLF information on their websites.

“The Department’s failure to implement this program is mystifying and unacceptable,” said Rep. Robert C. “Bobby” Scott (D-Va.), Chairman of the Committee on Education and Labor. “The GAO’s report reveals that the Education Department is failing to competently implement the Temporarily Expanded Public Service Loan Forgiveness program.”

Christina Dragonetti, Outreach and Communications, director and Nonprofit Student Debt  Project Manager for CalNonprofits, agreed with the findings and called the entire system “chaotic.”

“The report is not surprising given what we hear from members, and we really urge the Education Department to simplify and streamline the application process,” Dragonetti said. “We are disheartened by the fact that it continues to be a problem and that the Department continues to not respond.”

Dragonetti argues that loan servicers have incentives to give people bad information. She mentioned that CalNonprofits is pushing AB-376, a bill that would require loan servicers to provide accurate information to everybody, not just to those who qualify for PSLF.

The Education Department blames congressional design for TEPSLF’s high denial rate and suggests that the mess was inherited from the past administration.

“Some of the very lawmakers decrying TEPSLF’s high denial rate are the same ones who created a program that is difficult to qualify for,” said Angela Morabito, press secretary at the U.S. Department of Education. “When PSLF was written more than a decade ago, the Department provided clear technical assistance and made Congress aware that only a tiny fraction of borrowers would qualify. In authorizing TEPSLF in 2018, despite claiming to solve the shortcomings of the PSLF program, Congress continued to exclude borrowers who had been making payments on their Federal Family Education Loan Program (FFELP) loans.”

Morabito highlighted other issues with the design of TPSLF, including how Direct Loan (DL) payments were not counted in certain cases, and how a borrower current in making their required payments could still fail to qualify for debt relief.

She said that the Trump administration has already worked to tried to solve some of the underlying issues with the program.

“This Administration is ending the penalties imposed by the prior administration on borrowers who made advanced payments, and were therefore considered to have “missed” payments simply because they were paid in advance,” said Morabito.

The Education Department also agreed with the four recommendations outlined in the GAO report, including the integration of a TEPSLF request into the PSLF application; providing more information to borrowers about options available to contest TEPSLF decisions; mandating that loan servicers provide TEPSLF information on their websites; and including TEPSLF information in the Department’s PSLF Online Help Tool.

Chairman Scott promised that the Committee will be taking action on information coming out of the report.

“This month, the Committee will hold a hearing to examine the issues raised in this report and remind the Department of its responsibility for ensuring that tens of thousands of dedicated public servants – including our nation’s teachers, first responders, servicemembers, and many others – receive the loan forgiveness they were promised,” said Scott.


Christina Dragonetti, Outreach and Communications , director and Nonprofit Student Debt,  Project Manager for CalNonprofits


Rep. Bobby Scott (D-Va.)