A decade ago, the U.S. Department of Education unveiled two innovative programs, a Federal TEACH Grant and Public Service Loan Forgiveness, aimed at relieving the debt burden for certain federal student loan borrowers. Unfortunately, both programs have faced increasing criticism in the press for being unwieldy to navigate once borrowers are in repayment and for not living up to their missions of reducing federal loan indebtedness for enrollees in either program. I’m happy to report that recent actions taken by the department should assist in rectifying some of these issues.
At Hollins, the Federal TEACH Grant has been offered to qualifying M.A.T. candidates for several years. In order to remain a grant and not convert into an unsubsidized direct loan, recipients must teach full time for four academic years in a high-need field at a low-income school within eight years of receiving the award. If reading that last sentence was confusing enough, imagine the hoops recipients had to jump through annually to prove that they met all qualifications to avoid losing their grant status. According to a National Public Radio report broadcast in March 2018, the Government Accountability Office (GAO) determined that more than 2,250 TEACH recipients had their grants converted to loans by their servicer in error. The GAO finding was published in early 2015, so it was already three years old by the time it was mentioned in NPR’s story, which strongly indicates that today’s figure is even larger. Additionally, if a grantee’s forms were submitted even one day late or were incomplete, he or she was out of luck. Accounts of these unfortunate incidents have been reported on by NPR as well.
Beginning in 2019, the U.S. Department of Education will be standardizing its annual certification due date to land on October 31 and, more important, is introducing a reconsideration process for those caught in the grant-to-loan conversion process. This reconsideration request will allow teachers to have their grant status re-examined. The appeal process can be self-initiated, so if you or someone you know had a Federal TEACH Grant that is now a loan, read more at https://StudentAid.gov/teach-reconsideration.
Public Service Loan Forgiveness (PSLF) allows borrowers enrolled in an income-based repayment plan to request to have their remaining loan balance forgiven after 10 years of on-time payments. Enrollees must work full time (or equivalent to full time if working at more than one job) for nonprofit institutions and make 120 qualifying payments. The goal of creating this forgiveness plan was to encourage those who felt called to work with a nonprofit agency to pursue their goals without choosing another path strictly due to worries about how they’d afford their loan payments. One example would be an attorney who wanted to work as a public defender but might reconsider that decision due to the higher income potential available to those working for large, private law firms. In theory, this plan should benefit doctors, nurses, teachers, social workers, and other professionals who choose to work for a nonprofit.
Borrowers in repayment who enrolled in PSLF have been voicing their displeasure at both the rejection rate and the complicated annual income-based certification process they have had to navigate. The New York Times has written several stories about frustration with this complicated program. In a May 2018 article, the Times stated, “While the Consumer Financial Protection Bureau has estimated that one-quarter of the United States work force could potentially qualify for the forgiveness program, only 139 people had made at least 97 qualifying payments toward their goal of 120 as of 2016, according to figures that the Department of Education presented at a conference” (Lieber, 2018).
To combat this frustration and confusion, the Department of Education released in early December 2018 an online help tool to assist borrowers who have questions about their eligibility, whether their employer qualifies for PSLF, and which required forms to submit. To access this tool, log into your https://studentloans.gov account and choose the Public Service Loan Forgiveness Help Tool located under the Repayment & Consolidation tab.
Mary Jean Sullivan is Hollins’ director of scholarships & financial assistance.
Arnold, C., & Turner, C. (2018, December 9). Exclusive: Ed Department to erase debts of teachers, fix troubled grant program. Retrieved from National Public Radio: https://www.npr.org/2018/12/09/664317114/exclusive-ed-department-to-erase-debts-of-teachers-fix-troubled-grant-program
Lieber, R. (2018, May 4). Public servants do get student loan forgiveness. Meet one of the first. Retrieved from The New York Times: https://www.nytimes.com/2018/05/04/your-money/student-loan-forgiveness.html
Turner, C., & Arnold, C. (2018, March 28). Department of Education fail: Teachers lose grants, forced to repay thousands in loans. Retrieved from National Public Radio: https://www.npr.org/sections/ed/2018/03/28/596162853/dept-of-education-fail-teachers-lose-grants-forced-to-repay-thousands-in-loans
United States Government Accountability Office. (2015, February). Better management of federal grant and loan forgiveness programs for teachers needed to improve participant outcomes. Retrieved from GAO Report to Congressional Requesters: https://www.gao.gov/assets/670/668634.pdf