“Thank YOU,” writes Cara Christensen, a first-grade teacher in Washington state who read NPR’s deep dive into the troubled Public Service Loan Forgiveness program (PSLF). The reporting, she says, “made me feel not so alone.”
We received dozens of emails, tweets and Facebook comments from aggrieved borrowers responding to news that, over the past year, 99 percent of applications for the popular loan-forgiveness program have been denied.
PSLF offers the promise of loan forgiveness to nurses, teachers, first-responders and other student borrowers who work in public service for 10 years while keeping up with their loan payments. But it has been plagued by poor communication from the U.S. Department of Education and mismanaged by servicing companies the department pays to run its trillion-dollar student loan portfolio.
The U.S. Department of Education (Department) has launched a process for federal student loan borrowers to be reconsidered for loan forgiveness under a temporary expansion of the Public Service Loan Forgiveness (PSLF) Program.
This limited opportunity—which the Department is referring to as Temporary Expanded PSLF (TEPSLF)—was made possible by a $350-million appropriation through the Consolidated Appropriations Act, 2018. The law provides additional conditions under which borrowers may become eligible for loan forgiveness if some or all of their payments made on William D. Ford Federal Direct Loan (Direct Loan) Program loans were made on a nonqualifying repayment plan for the PSLF Program. This opportunity is only available on a first-come, first-served basis until the $350 million has been allocated or other criteria are met.
The Department will reconsider eligibility for the TEPSLF opportunity using an expanded list of qualifying repayment plans, which includes the Graduated Repayment Plan, Extended Repayment Plan, Consolidated Standard Repayment Plan, and Consolidated Graduated Repayment Plan. Funds for this opportunity are limited, and borrowers will be considered on a first come, first serve basis. Once funds under this opportunity are depleted or other criteria are met, the program will end.
The saddest stories among those who owe some of the $1.3 trillion in student loan debt are those of college dropouts. They took out loans to go to school, hoping for a better life. But without college degrees, many don’t find good jobs to help pay back these loans. It not only ruins their lives, it’s terrible for the nation’s budget. The loans are financed by the federal government, ultimately leaving taxpayers on the hook.
Which schools are leaving taxpayers and students in the lurch most often? I ran some calculations, using the latest data, released in September.
The U.S. Department of Education’s College Scorecard tracks the number of students who dropped out with debt for each college and university in the nation. My figures show a total of 3.9 million undergraduates with federal student loan debt dropped out during fiscal years 2015 and 2016 (from mid-2014 through mid-2016). I found that more than 900,000 of these students dropped out of for-profit universities. That’s 23 percent of all the indebted dropouts, even though only 10 percent of all undergraduate students attend for-profit schools. Many more indebted dropouts, almost 2.5 million of them, had attended public institutions, such as two-year community colleges and four-year state schools. But the public sector’s share of dropouts exactly matches its share of the student population: 64 percent. As a whole, private nonprofit colleges seem to be doing a better job, accounting for 13 percent of the dropouts while educating a quarter of all U.S. undergraduates. However, the size of the debts of dropouts is the largest at private nonprofit colleges, with each person owing almost $10,000 on average.
The U.S. Department of Education today released the FY 2014 three-year federal student loan cohort default rate. The rate increased slightly from 11.3 percent to 11.5 percent for students who entered repayment between fiscal years 2013 and 2014.
During the tracking period for the FY 2014 borrower cohort (Oct. 1, 2013 to Sept. 30, 2016), more than five million borrowers entered repayment, and 580,671 of them—or 11.5 percent—defaulted on their loans. Those borrowers attended 6,173 postsecondary institutions across the nation.
Over the past five years, the rate has decreased 3.2 percentage points from a high of 14.7 percent to 11.5 percent today.
The FY 2014 cohort default rate is the percentage of a school’s borrowers who entered repayment on Federal Family Education Loan (FFEL) Program or William D. Ford Federal Direct Loan (Direct Loan) Program loans between Oct. 1, 2013 and Sept. 30, 2014 and subsequently defaulted prior to Sept. 30, 2016.
Beginning today, the U.S. Department of Education will inform colleges accredited by the Accrediting Council on Independent Colleges and Schools (ACICS) of additional operating conditions required for continued participation in the federal student aid programs. These new provisions will apply to ACICS-accredited institutions and follow U.S. Secretary of Education John B. King Jr.’s final decision to withdraw federal recognition of the accrediting agency.
Although ACICS is no longer a federally recognized accrediting agency, the Department may provisionally certify ACICS-accredited institutions for continued participation in the federal student aid programs for up to 18 months from the date of the Secretary’s final decision. This 18-month provisional certification period allows institutions to seek accreditation from another federally recognized accrediting agency.& During this period of provisional certification, the Department will require the ACICS-accredited institutions to comply with additional conditions that are designed to protect students and safeguard taxpayer dollars. These conditions include additional monitoring, transparency, oversight and accountability measures. Only ACICS-accredited institutions that agree to these conditions may continue to offer Federal Loans and Pell Grants.
The U.S. Department of Education today announced an important step forward in the Obama Administration’s efforts to strengthen the student loan servicing experience for borrowers. Federal Student Aid issued the next phase of its procurement to acquire a single servicing platform to support the management of loan repayment for the more than 30 million Americans with student loan debt serviced by the Department of Education. The solicitation details the specific requirements the selected contractor must fulfill when developing the servicing platform.
“Borrowers deserve access to the right information from their servicers as they make important decisions about managing loan repayment, ultimately paying off their debt and climbing the economic ladder,” said U.S. Secretary of Education John B. King Jr.“Today’s announcement builds on our ongoing effort to simplify and improve the borrower experience.”
The U.S. Department of Education today announced that the three-year federal student loan cohort default rate dropped from 11.8 percent to 11.3 percent for students who entered repayment between fiscal years 2012 and 2013. The trend has moved downward since FY 2010, when the cohort default rate stood at 14.7 percent. It’s the third straight year that the overall rate has fallen.
From FY 2012 to FY 2013, cohort default rates fell for public and proprietary institutions while rising slightly among borrowers who attended private and foreign schools.
“The Obama Administration has taken unprecedented measures to provide borrowers more options to avoid default, manage their student debt and stay on track to repayment, and to hold institutions accountable for improving student outcomes,” said U.S. Secretary of Education John B. King Jr. “Even with progress, however, we know considerable work remains ahead.”
As part of a continued effort to implement a new vision for student loan servicing that ensures the more than 40 million Americans with student loan debt get high-quality customer service and fair treatment as they repay their loans, the U.S. Department of Education today outlined a series of enhanced protections and customer service standards that will guide the future of federal student loan servicing practices. The policies were outlined in a memorandum from U.S. Under Secretary of Education Ted Mitchell to Federal Student Aid (FSA), which will implement the policy directives to strengthen student loan servicing during the ongoing procurement process. These policies were developed in consultation with the U.S. Department of the Treasury (Treasury) and the Consumer Financial Protection Bureau (CFPB).
“Today’s policy directive is a big win for tens of millions of borrowers,” said U.S. Secretary of Education John B. King Jr. “It will help ensure that student loan borrowers get the service they deserve.” While the majority of federal student loan borrowers continue to successfully repay their student loans, there are still too many borrowers who are struggling, or who may be at risk of defaulting on their loans. Since taking office, President Obama and his Administration have worked hard to keep college affordable and help student loan borrowers manage their debt. In March 2015, as part of that effort, the President unveiled a Student Aid Bill of Rightsdirecting federal agencies to work together on a series of actions to help borrowers manage their student debt.
The U.S. Department of Education’s Federal Student Aid Office (FSA) today posted a series of updates to its data center, a collection of key performance data on the federal student aid portfolio. The updates, which continue the Department’s commitment to greater transparency on the federal student loan portfolio and other key financial aid metrics, include school district-level Free Application for Federal Student Aid (FAFSA) completion rates and the total fiscal year-to-date dollar amount recovered in defaulted student loans by guaranty agency and collection type.
“Though students ultimately make the choice to attend college, no one makes the journey to college alone,” said U.S. Secretary of Education John B. King Jr. “It is up to all of us to make the dream of a college education more accessible for more families by removing roadblocks to college and giving borrowers options to help manage their debt. The latest updates to the FSA Data Center, which for the first time offer district-level FAFSA completion data and state-level maps, serve as additional tools for schools and families to help students go to college.”
The U.S. Department of Education today released its Quarterly Student Aid Report, a collection of key performance data on the federal student loan portfolio, revealing continued increases in income-driven repayment enrollment with notable decreases in defaults and delinquencies.
Within the report, the Department’s office of Federal Student Aid unveiled new, expanded data on the $357 billion Federal Family Education Loan (FFEL) program, which typically consists of federal student loans originated by banks.
The quarterly update includes three new reports to shed light on the FFEL portfolio owned by the Department—showing loan status, repayment plan and delinquency level.
“Today’s analysis suggests that the Administration’s efforts to help struggling borrowers are having a positive impact,” said U.S. Secretary of Education John B. King Jr. “We will continue to make more data available to shed light on student debt in America. As President Obama has said, ‘Government should be transparent. Transparency promotes accountability and provides information for citizens about what their government is doing.'”