Attorney General James Urges Department of Education to Fix Broken Public Service Loan Forgiveness Program

To Date, Department of Education Has Denied Nearly All PSLF/TEPSLF Applications

NEW YORK – New York Attorney General Letitia James today continued her fight to address the nation’s ongoing student loan crisis. As part of a coalition of 22 attorneys general, Attorney General James today sent a letter to the U.S. Department of Education, urging the agency to take robust action to fix the broken Public Service Loan Forgiveness (PSLF) program. Since borrowers first became eligible for relief in 2017, almost all PSLF applications have been rejected, leaving millions of public servants in the lurch. These teachers, nurses, public interest attorneys, social workers, first responders, servicemembers, and others incurred significant student loan debt in order to gain the skills necessary to educate, heal, and protect our communities — under the promise that a portion of these loans would eventually be forgiven. In today’s letter, the coalition applauds the Department of Education’s commitment to improving implementation of the PSLF program and urges the agency to act quickly to fix the failures in the program’s administration.

“For 10 or more years, thousands of New Yorkers served our state and this nation, but the promises made to them for a decade of service didn’t even amount to a single penny,” said Attorney General James. “Promises made must be promises kept, which is why we are, once again, calling on the Department of Education to immediately fix the Public Service Loan Forgiveness program and ensure that they make good on their commitment to help those who keep our country moving every day. Student debt has spiraled out of control and the economic impact of the pandemic has only made it harder for New Yorkers, as well as borrowers from all over the nation, to pay their bills. Now is the time for us to take bold action to end the student loan crisis and provide borrowers with the tools they need to move forward.”

In 2007, a bipartisan Congress created the PSLF program to encourage student loan borrowers to enter public service jobs in return for forgiving the remaining balance of their federal student loans after 10 years of on-time loan payments. When the first wave of borrowers applied for loan forgiveness in 2017, the Department of Education denied applicants at the alarming rate of 99 percent. In 2018, a bipartisan Congress gave the agency a second chance to deliver on the PSLF’s critical promise by creating the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program. Despite this emergency fix, relief continues to be out of reach for nearly all who apply. To date, the Department of Education has denied 96 percent of all TEPSLF applications.

Drastic action by the Department of Education is required to make the promise of PSLF forgiveness a reality for the nation’s dedicated public servants. State attorneys general have a unique perspective on how to improve administration of the PSLF/TEPSLF resulting from their experience investigating and holding student loan servicers accountable for violating the law, including misadministration of the PSLF/TEPSLF program. In today’s comment letter, the attorneys general urge the Department of Education to:

  • Provide immediate relief to borrowers who have been harmed by the misadministration of the PSLF/TEPSLF program;
  • Improve servicer oversight and accountability by carefully selecting a new servicer that will be responsive to borrowers and creating new incentives and operating procedures that put borrowers first;
  • Extend the pause on payments on student loans that started in response to the coronavirus disease 2019 (COVID-19) pandemic;
  • Conduct broad outreach to all borrowers potentially interested in forgiveness, including those who have yet to apply and those who have already received denials; and
  • Affirmatively correct errors discovered for all affected borrowers.

Separately, but related to her work fighting to help student borrowers with the PSLF program, in October 2019, Attorney General James sued the Pennsylvania Higher Education Assistance Agency (PHEAA) — one of the nation’s largest student loan servicers and the exclusive administrator of the PSLF program — for failing to properly administer the PSLF program.

Additionally, in August 2019, Attorney General James sent a letter to then U.S. Secretary of Education Betsy DeVos urging the Department of Education to provide data to help states address the ongoing problems with the PSLF program.

Joining Attorney General James in sending today’s letter to the Department of Education are the attorneys general of California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington, and the District of Columbia.