Student Loan Forgiveness Program for Military Borrowers Slowly Improving

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Jodie Parks works full-time as an occupational therapist at a Michigan state psychiatric hospital. But since October, she has had a second job: spending four hours a week, she estimates, making calls and searching for papers to prove she has served in the military.

She needs that proof cancel student loans as part of the federal government’s Civil Service Loan Forgiveness Program, created by a 2007 law that pledged to write off student debt if they took lower-paying but essential jobs with nonprofit organizations profit and government.

It’s a promise that, for most borrowers, has yet to pay off. Less than 2 percent of applicants were approved between 2017, when the first borrowers became eligible, and the onset of the coronavirus pandemic. And among the vast number of applications rejected or lost in the bureaucracy were many Americans who were perhaps performing the ultimate public service: joining the armed forces.

“I’m another veteran who was told there was a service for veterans, and then when you try to get through the paperwork, it’s too difficult,” said Parks, who was in the Air Force from 2009 to 2015 and later earned a degree in occupational therapy. “So you kind of give up.”

Ninety-two percent of military borrowers who applied for loan forgiveness before the pandemic were denied by the Ministry of Education, according to the United States Government Accountability Officedue to confusing and narrow rules regarding eligible loan types and repayment plans that made it difficult to qualify.

“The law promised people that if they accepted government jobs, their loans would be cancelled. And a lot of people went to school based on that,” said Christopher Madaio, vice president of legal affairs at Veteran Education Successwho defends the military.

US could have canceled thousands of student loans but never told borrowers

In October, the Biden administration temporarily relaxed program rules for a year to give more borrowers the chance to qualify. Most of the strict guidelines that have hampered applicants have been lifted. It has helped more indebted service members: About 1,500 have had their loans canceled under the waiver since October, a US Department of Education spokesperson said in an email.

But there are nearly 177,000 active duty members whose federal loans are or could be eligible for forgiveness, according to the GAO. And that larger number doesn’t include the thousands, like Parks, who are no longer on active duty. She and other veterans said they spent months trapped in a bureaucratic maze that could make it harder for them than non-military borrowers to get forgiveness.

Thousands of dollars are at stake. About half of active duty personnel with federal student loans have balances over $13,000, according to the GAO.

The stakes are also high for the armed forces. In an all-volunteer system, he struggles to find people to fill critical positions, including doctors and information technology specialists, for whom the pardon program could be an effective recruitment tool, noted the GAO. In a survey of legal officers, 94% said they would be more likely to leave the service if the program was scrapped.

For Parks and other veterans, the biggest hurdle to getting loan forgiveness was proving to the Department of Education that they served — an odd problem, because another federal agency, the Ministry of Defence, has this information.

Parks, 39, has about $48,000 in student loans, and when she heard about the temporary waiver in October, she got to work putting together her pardon application. A key part of this is a form that applicants must have signed by current or former employers — government agencies or nonprofit organizations — certifying the dates pardon applicants worked there.

For Parks, getting that employment certification form signed by the state of Michigan, his current employer, couldn’t have been easier.

She thought it would be the same with the Air Force. Instead, she spent weeks making calls to find out who in the bureaucracy could sign. Finally, given the number of someone who told her she could do it, she tried it every day for a month and never got a response.

Biden administration gives more borrowers the chance to cancel their debt

Then she contacted Veterans Affairs, getting redirected repeatedly until she reached an official who matched her: it would be next to impossible to get a VA signature because no one was designated to do so. provide one. He suggested she go to a military base and have someone sign the form or contact a commander she knew. But most of her commanders had retired in the six years since she had served.

All of this would have been avoided if its loan manager, an Education Department contractor called FedLoan Servicing, had accepted as proof a standard official document veterans receive when they leave the military: their discharge certificate. or release, better known as Form DD 214. It shows veterans’ service dates and is used as proof for benefits, including VA home loans.

But, Parks said, FedLoan told him that wasn’t enough.

Other veterans and service members have experienced similar frustrations.

To qualify for public service loan forgiveness, a person must not only work full-time in a public or nonprofit organization, but also make 120 payments on their loans, usually over 10 years. Navy veteran Stacy Hunter, 46, submitted her DD 214 with her pardon application in October, but was told in a letter from FedLoan and the Department of Education that her seven years of service, during which his loan payments were deferred, did not count towards his 120 payments.

This is despite the ministry announcement in October, months spent on active duty count towards the PSLF even if the service member’s loan repayments were deferred.

Mike Smiley, 42, also spent many hours obtaining military approval and seeking answers about the loan forgiveness he believed he had earned. He served 14 years in the navy as a medic. Today, he is a pediatric pulmonologist in Saint-Louis. With $50,000 in student loans and four children, he would be greatly helped in getting out of that debt, he said.

FedLoan did not accept his DD 214 and even rejected a letter from Navy Personnel Command verifying his service, Smiley said. But former Navy colleagues put him in touch with the human resources department of his former command, and the department signed his hiring form. He submitted his pardon application in December.

Having heard nothing for several weeks, Smiley filed a complaint with the Ministry of Education and then approached the ministry’s ombudsman. He started calling FedLoan every two to three weeks, spending at least an hour on hold during his lunch hour. During a call in early March, he discovered that his application was blocked because he had saved it as a PDF file.

Finally, on March 22, his loan forgiveness was approved.

“I would really like them to come up with a process to take care of people, not just myself, but other people who are in my shoes who may not be as persistent,” he said. he declares.

What to know about the latest student loan forgiveness waiver

After the announcement of the waiver in October, the number of pardon applications increased by 40%, said a spokeswoman for the Ministry of Education who spoke on condition of anonymity because she was not authorized to speak on behalf of the department on this subject. “The loan management system had not been completely reconfigured to be able to send the type of automated communications that correspond to the terms of the waiver and the benefits offered. … It’s not a perfect process,” she said.

If a pardon application is otherwise in order, the spokesperson said, DD 214 is “usually sufficient” to prove military service. When asked in which cases this would not be enough, she replied that she did not know. As for FedLoan, spokesman Keith New said via email that DD 214 forms are acceptable if submitted with other information and “reviewed on a case-by-case basis.”

Madaio of Veterans Education Success credits the Biden administration for using its authority to temporarily waive the program’s narrow rules, a step for which advocates for military borrowers had I called. “The administration is doing everything possible,” Madaio said.

The Department of Education is now working with the Department of Defense to automatically match data between the two agencies, a department spokesperson said – which could end borrowers’ struggle to secure signatures. And he’s working with advocates for permanent regulations that could help more borrowers qualify after the waiver expires in October.

For her part, Parks feels lucky that her work schedule allows her to keep up with her request for forgiveness.

“If I wasn’t at a job with an afternoon shift, there’s no way I would have done all of this,” she said.

This article on military veterans and student loans was produced by the Hechinger report, an independent, nonprofit news organization focused on inequality and innovation in education. Subscribe to our higher education newsletter.

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