(844) 845-4219 » There’s No Forgiving the Federal Government’s Student Loan Forgiveness Program

There’s No Forgiving the Federal Government’s Student Loan Forgiveness Program



Last Sunday, I watched 60 Minutes eviscerate the Public Service Loan Forgiveness Program. Unfortunately, I wasn’t outraged. I was, however, happy that the cat’s out of the bag.

The PSLF is supposed to forgive student loans for those in the military and public-service employees like police and teachers. Yet 60 Minutes found only 124 active-duty members with federal student loans actually got them forgiven – even though 180,000 of them qualify. Throughout the history of the program – which has been around for nearly a decade – only 5,500 individuals from all public service professions have actually had their loans forgiven.

Less than 72 hours after the 60 Minutes report, the Biden administration suddenly announced changes to the PSLF that are supposed to streamline the byzantine application process. On the one hand, I’m glad media reports are forcing the government into action. On the other hand, what took so darn long?

Big problems are old news

The PSLF’s problems might have been news to 60 Minutes and Joe Biden, but not to me and anyone else who has followed this ridiculously complicated program. Applying for student loan forgiveness is like doing your income taxes at the same time you’re reviewing YOUR mortgage contract and buying a new car.

Think I’m exaggerating?

For its report, 60 Minutes focused just on the military. Said correspondent Lesley Stahl: “We talked with a group you’d assume could figure it out: JAGs – lawyers who work for the military.”

If you don’t remember the ‘90s drama, JAG stands for Judge Advocate General, and they’ve all passed their state’s Bar exams and know the law. Yet they couldn’t figure out how to get their student loans forgiven.

“They all say they were walked through a bureaucratic maze that tripped them up,” Stahl announced in that slow, calm 60 Minutes drawl.

The JAGs she interviewed had between $90,000 and $150,000 in loans they were eligible to have forgiven. Among the arcane problems, one JAG told Stahl, “Nobody ever explained that some of your loans are coded one way. Some of them are coded the other.”

Any slip-up, and you lose out. I’ve known this for years, and I’ve tried to raise the alarm. So have many other financial experts. It took 60 Minutes, however, to get the Biden administration’s attention. Not that they’ll ever admit it, though.

Coincidental streaming?

Last Friday, NPR broke the news of “a significant overhaul” coming to the PSLF. You can bet the Biden administration knew about the 60 Minutes report, because only hours before it aired, Education Secretary Miguel Cardona tweeted

To build back better we must fix the systems that have been broken for too long. I’m excited that next week we’ll be announcing a major overhaul of the Public Service Loan Program to finally deliver the relief our public servants were promised.

Yet the Biden administration never admitted that 60 Minutes provoked them into action. I don’t care who takes credit for the fix, but it’s a bad sign when a “broken” system only gets a “major overhaul” when national media humiliates the people in charge. They shouldn’t need outside motivation to fix problems – especially one that has been well known since the PSLF’s inception in 2007.

(Ironically, its creation was part of the “College Cost Reduction and Access Act,” even though it’s done little to reduce any costs and 60 Minutes showed just how hard it is to access.)

The solution is destruction

Remember the Reagan-esque expression, “Government is the problem, not the solution”? Obviously, that’s not true in all instances, but it might be here. Federal officials can’t fix the PSLF because, frankly, they’re the problem. After all, they designed this system in the first place.

So what’s a better way? Instead of overhaul, plagiarize.

There’s already a system in place for eliminating credit card debt and other forms of personal debt. The federal government oversees a network of nonprofit credit counseling agencies that work directly with lenders.

It might be possible, easier, and more productive to duplicate that structure for student loan forgiveness. As a CPA and debt counselor for nearly three decades – and a founder of one of the largest credit counseling agencies in the world – I know it won’t be simple. However, it’s certainly worth exploring.

Otherwise, we can just wait for the next 60 Minutes report.

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