Welcome to Student Loan News, a weekly summary of developments and events affecting college debt in the U.S. Join us each Friday for a look at goings-on that could impact your own student loan situation.
Judge rules in favor of PSLF applicants
It’s hardly news that Public Service Loan Forgiveness is difficult to get. Data out late last year showed just 206 borrowers had their loan forgiven through PSLF out of a total of 41,000 applicants as of September 2018.
But hope for the program’s success isn’t entirely dead, all the more so after a federal district court judge determined last Friday that the U.S. Department of Education had been unfairly moving the PSLF goal posts. The case involved a 2016 lawsuit by a group of lawyers who had thought they were in line for PSLF, only to be told their employment no longer qualified for student loan discharge.
“These changes were arbitrary and capricious,” The Washington Post quoted Judge Timothy Kelly as writing in his ruling. “The individual plaintiffs structured their careers and their long-term financial plans around their eligibility” for PSLF.
According to The Post’s report, the judge’s ruling gives three of the plaintiffs grounds to request to be reinstated into the program and have their loan forgiveness reconsidered, although the final decision may still rest with the Education Department.
The report also quoted an attorney for the firm representing the PSLF applicants as saying, “The decision provides a ray of hope for individuals working towards, or who have been denied public service loan forgiveness.”
However, a separate MarketWatch account cited a representative with the American Bar Association — which also joined the suit — as saying it’s still “not clear on what the ultimate remedy would be” in this case.
How it affects YOU: The extreme difficulty (so far at least) of obtaining student loan forgiveness through PSLF has many borrowers wondering if the program is even worth it. Still, the ruling is the latest in a series of small-but-important signs of hope for PSLF. For instance, the Education Department last May expanded the number of repayment plans that qualify under PSLF, at least temporarily.
If you do some sort of public service or other nonprofit work and are keen on PSLF, make sure first and foremost that you qualify and are in an eligible payment plan. It’s also worth looking through Federal Student Aid’s FAQ page on the program. And if you’ve been turned down or have questions about eligibility, contact FedLoan Servicing at 855-265-4038.
Also, don’t forget that there are other programs offering student loan forgiveness. You can get the rundown in our comprehensive guide.
Also in the news …
- A new study from Guardian Life Insurance takes a look at the state of student loans in the U.S. Among the findings: The cost of college has risen fivefold since 1990, and women hold nearly two-thirds of all college debt despite making up just 56% of university students nationwide. You can read the entire study here.
- FedLoan Servicing, run by the Pennsylvania Higher Education Assistance Agency (PHEAA), has seen its profit plunge by 90% over the past four years and “could soon start to lose money,” according to a report from Philly.com. Part of this, the report said, is “because its servicing business has gotten so much harder, with new Congress-mandated loan options requiring more attention over the phone.”
- It’s worth noting that student debt isn’t just a U.S. problem, as the proliferation of college loans has spread across much of the globe. Just for some perspective, consider this report from Malawi’s Maravi Post about corruption at the small developing nation’s board in charge of handing out student loans.
News can be useful, but if you want some deeper advice, take a moment to sign up for the Student Loan Hero weekly digest email and get valuable financial knowledge sent straight to your inbox … for free!
Interested in refinancing student loans?
Here are the top 6 lenders of 2019!
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.