October 28, 2021

NEW Report: Fight for Forgiveness: Massachusetts’ Public Servants Struggle to Navigate Public Service Loan Forgiveness

Warren, Markey, Pressley call for reforming Public Service Loan Forgiveness and canceling up to $50,000 in federal student debt to deliver relief to borrowers crushed by student debt

Report Text (PDF)

Washington, D.C. - United States Senator Elizabeth Warren (D-Mass.), Senator Edward J. Markey (D-Mass.), and Congresswoman Ayanna Pressley (D-Mass.) today released a new staff report, “Fight for Forgiveness: Massachusetts’ Public Servants Struggle to Navigate Public Service Loan Forgiveness.”  This new report contains the results of a summer 2021 survey of 1,122 Massachusetts public servants, examining the effects of the ongoing failures of the Public Service Loan Forgiveness (PSLF) program. The Biden administration recently announced a program overhaul, and the findings of the report provide a roadmap for implementation of the proposed reforms - while illustrating the need for cancellation of up to $50,000 of student debt.  

“Instead of granting hard earned student debt forgiveness for public servants after ten years, our findings show that the Public Service Loan Forgiveness Program has been nothing short of a disaster for hundreds of Massachusetts public service workers and that our student loan system is utterly broken,” said lawmakers in a joint statement about the new report. “After ten years of bureaucratic torture, miscounted payments, and servicer misconduct, it is long past time to deliver relief to borrowers crushed by student loan debt. The best way to do this is by canceling their debt immediately, and we’re calling on President Biden to act accordingly.”

In 2007, Congress created the PSLF program to encourage students to enter public service and help relieve the burden of their student debt. Under the PSLF program, public sector workers that meet program requirements can receive forgiveness on the remaining balance of their loans after ten years. But, more than a decade after the program was created, it is clear that PSLF has major structural flaws: 98% of applications for forgiveness under the program have been denied. 

Report Highlights:

  • Current rules serve as barriers to qualified individuals. Overall, nearly nine of ten borrowers (87%) reported at least one circumstance that could lead to problems with qualifying for PSLF. These included periods of deferral or forbearance, overpayments, advance payments, or enrollment in the wrong type of repayment plan. Each of these factors can delay qualifying for forgiveness under current program rules. 
  • Loan servicers’ failures delay forgiveness. A significant number of borrowers reported problems and long delays with employer certifications, enrollment processes, and correcting errors. And many borrowers are confused about which loans and repayment plans qualify for PSLF and lack clear instructions from their loan servicers. These findings are consistent with the long track record of the Pennsylvania Higher Education Assistance Agency (PHEAA), the specialty loan servicer for the PSLF program, miscounting payments and delaying processing times. Other loan servicers, such as Navient, also have a track record of failure.  
  • Borrowers of color are less likely to know about the program and to seek PSLF loan relief. People of color were nearly twice as likely as their white counterparts to be unaware of PSLF: 12% of people of color reported that they had not heard of the PSLF program, compared to 7% of white respondents. And while 31% of white respondents indicated that they had not started the PSLF process, nearly half – 45% – of people of color had not taken any steps to seek loan relief. 
  • PSLF’s low forgiveness rates may dissuade borrowers from entering public service. A majority of survey respondents reported that they are losing faith in the PSLF program. More than half of respondents indicated that they never expected to receive forgiveness. Because of these program failures, talented workers may leave public service in pursuit of higher-paying work in the private sector which would allow them to pay off their debt more quickly, and future generations of workers may be less likely to choose careers in public service. The problem of attracting young and talented minds into public service due to the failures of the PSLF program will deepen the disparity in access to vital resources experienced by underserved communities.

The Biden administration recently announced a major overhaul of the PSLF program that will address many of these issues by allowing more payments to count toward forgiveness, creating an appeals process for borrowers, and streamlining communication. While these changes will help to make the PSLF program work better for future public servants, they are unlikely to restore the faith of those who have been repaying their loans for decades and are still stuck with massive student debts. For these borrowers, broad-based debt cancellation is needed to right the wrongs they have experienced in this broken system. Canceling $50,000 of student loan debt is the single most powerful executive action that President Biden could take to help to narrow the racial wealth gap among borrowers, strengthen our economy, and lift a heavy burden off America’s working families and public servants.