Student Debt Forgiveness Program Continues to Flounder, GAO Reports – Rolling Stone
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Report: Trump Administration Rejects 99% of Student Debt Forgiveness Applicants

A plan to fix the broken federal debt forgiveness program is failing miserably.

Betsy DeVos

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In 2007, the U.S. government made a bold promise: Graduates who chose to dedicate a decade of their lives to public service rather than chase more lucrative job opportunities would, at the end of those ten years, have the remainder of their student debt wiped away. But in 2018, when the first crop of teachers, nurses, police officers and other public service workers completed the term and began asking for the debt forgiveness they’d been promised, 99 percent of them had their applications denied.

In an attempt to fix the problem, Congress in 2018 appropriated $700 million to fund a temporary expansion of the program to include more borrowers. This week, a new report from the Government Accountability Office found that Congress’ fix failed as well: 99 percent of graduates who applied between May of 2018 and May of 2019 were denied. And of the $700 million appropriated last year to expand the program, only $27 million has been disbursed. 

According to the report, 54,184 people applied, and only 661 were approved. More than 70 percent of denials were due to the fact because the borrower had not submitted an application for the original program — a program they are technically ineligible for. The whole process, the watchdog found, is made even more confusing by the fact the Education Department doesn’t include any information about the new program on its online help tool or require federal loan servicers to include information about it on their own websites. 

The GAO report made four recommendations, including a suggestion that the Department of Education integrate the two applications, require all loan servicers to include information about the new program on their websites, and include information in the department’s own online help section. The DOE did not respond to a request for comment on the report, but according to GAO, the department agreed with all of the recommendations.

Student debt has ballooned to $1.5 trillion this year, debt held by approximately 45 million Americans. A number of Democratic candidates for president have floated ideas to help solve the crisis. Sen. Bernie Sanders’ plan would cancel outstanding student loans by levying a tax on stock, bond and derivatives transactions. Sen. Elizabeth Warren, who has called student debt a “drag” on the economy, has introduced legislation that would wipe out some $640 billion in loans.

Sen. Tim Kaine, the Virginia Democratic senator who spearheaded the effort to get the extension approved by Congress in 2018, lay the blame squarely at the feet of Education Secretary Betsy DeVos. “We created a fix to this program and provided the Trump administration with hundreds of millions of dollars to give borrowers the loan relief they were promised, but instead they’ve left public servants in the lurch again,” the Virginia senator said in a statement. “It’s outrageous that they still can’t get this right. The Trump administration’s failure to implement this program is placing a huge financial burden on countless families.

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