Despite the uncertain future of the Public Service Loan Forgiveness program, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray partnered with North Carolina’s Attorney General Josh Stein to roll out a new campaign focused on how student loan servicers should address borrowers applying for, and currently enrolled in, the Public Service Loan Forgiveness program (PSLF program). The 2018 White House budget currently calls for the elimination of the PSLF program for students taking out loans on or after July 1, 2018. Although Education Department officials have stated that the approximately 552,931 individuals currently enrolled in PSLF will not be impacted, the budget does not expressly provide that those they will be grandfathered into forgiveness.
Nonetheless, neither Cordray nor Stein made any mention of an uncertain future for the PSLF program at a hearing at North Carolina State University in Raleigh, North Carolina today. Stein and Cordray expressed an increased focus on correcting purported problems in student loan servicing at the state level and through the CFPB complaint process. The CFPB campaign, called “Certify Your Service,” emphasizes several steps borrowers can take to ensure compliance with the PSLF program, but Stein and Cordray’s public remarks placed the responsibility for keeping borrowers on track squarely on student loan servicers.
Cordray emphasized that the CFPB is updating its exam procedures to scrutinize how servicers apply payments and evaluate borrowers for loan forgiveness. The announcement comes at a time when complaints to the CFPB regarding student loan servicers are purportedly rampant. Cordray specifically highlighted processing errors which prevented borrowers’ payments from counting as qualifying payments towards forgiveness and the lack of clarity in the information student loan servicers provide to borrowers about the availability of modified payment plans as two major problem areas. Borrowers in public service careers gave first-hand testimonials at the morning event, speaking to attendees about their experiences with “sloppy servicing” which allegedly cost them money and indicated that borrowers “could not trust” their student loan servicers. Stein closed out the hearing by emphasizing that, “[f]or this program to work, the servicers have to pay a critical role in helping the people ensure they get the benefits that they are entitled to under the law.”
Student loan servicers have relationships with a large number of consumers across the country, and thus should take the comments by Director Cordray–but even more so Attorney General Stein–seriously in light of the recent role states have taken in regulating student loan servicers. In North Carolina alone, Stein noted that more than 60 percent of students graduating from college have student loan debt. He indicated that he will continue to enforce state consumer protection laws against student loan servicers and for-profit universities doing business in North Carolina and “aggressively” investigate companies charging what Stein called “illegal fees.” Stay tuned for updates on how this campaign by the CFPB and state initiatives nationwide play out.
