The Consumer Financial Protection Bureau has launched another flare into the night sky, this time warning student loan servicers about making sure they are not making misrepresentations or making deceptive statements with respect to the Public Service Loan Forgiveness program, which offers individuals the opportunity to have their student loan debts forgiven if they meet certain criteria and work in an eligible public service job.
Last October, the Department of Education announced major changes to the PSLF program, making 22,000 individuals immediately eligible to have their loans forgiven while also moving an additional 550,000 individuals closer to that finish line via a waiver. Under the waiver, any past payment on a federal student loan by a borrower working in public service counts toward PSLF eligibility, regardless of the payment plan, loan type, or whether the payment was made in full or on-time.
Estimates have pegged the number of individuals eligible for loan forgiveness under the PSLF program at 1.3 million, but more than 98% of applicants have been rejected, largely because the individuals had student loans that were not eligible to be forgiven.
In announcing that it is going to “prioritize student loan servicing oversight” in the coming year, the CFPB said it would be paying particular attention to the following areas:
- Servicers of any federal loan type provide complete and accurate information about the PSLF Waiver when discussing PSLF or loan consolidation in any communications.
- Servicers have adequate policies and procedures to recognize when borrowers are expressing interest in PSLF or the PSLF Waiver, or where their files otherwise demonstrate their eligibility, and to direct those borrowers to appropriate resources.
- Servicers take steps to promote the benefits of the PSLF Waiver to borrowers who express interest or whose files otherwise demonstrate their eligibility.
“Illegal conduct by a student loan servicer can be ruinous for borrowers who miss out on the opportunity for debt cancellation,” said CFPB Director Rohit Chopra, in a statement. “We will be working closely with the U.S. Department of Education to ensure that loan cancellation promises for public service are honored.”
