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Education Dept. questioned about 99% loan forgiveness rejection rate

By Nicholas Sakelaris
Education Dept. questioned about 99% loan forgiveness rejection rate
Education Secretary Betsy DeVos speaks with attendees at the National Historically Black Colleges and Universities Week Conference, in Washington, D.C., on September 10. Photo by Kevin Dietsch/UPI | License Photo

Sept. 20 (UPI) -- Federal lawmakers are asking the Education Department for answers after an official told a House hearing Thursday a loan forgiveness program has a 99 percent rejection rate -- a statistic that's drawn at least one lawsuit.

The Public Service Loan Forgiveness program was established to erase student debt for Americans in the law enforcement, teaching and military fields. As of last year, just 1 percent of applicants had been approved.

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Lawmakers on the House education, labor and pensions committee on questioned government officials about the matter -- particularly because it allocated $700 million to the Education Department to wipe out student debt for needy Americans.

Frustration over the program prompted a New York teacher to sue the department and Education Secretary Betsy Devos.

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Jeff Appel, director of policy liaison and implementation in the Office of Federal Student Aid, said few people were approved because the program is complicated and requires 10 years of repayments before students are eligible. Only direct federal loans are covered by the program.

"Naturally, as time progresses, more borrowers will have a real opportunity to meet the criteria," Appel said.

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Appel said the department agrees with a Government Accountability Office recommendation to better explain the rules to applicants and loan officers.

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Virginia Rep. Bobby Scott said the rate shows the program has failed.

"These aren't puzzles or contests, these are programs you're supposed to benefit from," Scott said.

The American Federation of Teachers sued the department for "gross mismanagement." Plaintiffs said many teachers initially believed they were making repayments correctly, but later learned they hadn't

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"[I]nstead of working with lawmakers to improve the program that millions of teachers, firefighters, nurses and first responders deserve, DeVos has vandalized it," American Federation of Teachers President Randi Weingarten said in July.

Middle school teacher Kelly Finlaw said she never went into her field expecting the government to forgive her debt.

"I have to resign myself that I'm going to die with this debt. That's my reality," Finlaw, a plaintiff in the AFT suit, told the panel. "However, if a program were designed to protect me, I have to protect myself. I was lied to several times. Directly lied to."

Finlaw also expressed disappointment, saying she believed the forgiveness program would help validate the work educators do.

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"If the PSLF program wasn't meant for me -- a teacher who loves her job, pays her bills and comes from a family where loans were her only option -- who was it meant for?" she asked.

Those who have successfully erased their debt said it takes constant vigilance -- as well as time and energy for paperwork.

Pennsylvania Higher Education Assistance Agency CEO James Steeley was scheduled to testify before the committee, but did not appear. His organization is paid by the federal government to process all U.S. loan forgiveness applications.

"We have and will continue to collaborate with Congress and the department, seeking substantive improvements on behalf of borrowers," an agency spokesman told MarketWatch.

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