Student loan servicers have mishandled the process for many borrowers
Nurses, teachers and other public-sector workers expecting their outstanding student loans to soon disappear under a U.S. debt-forgiveness program could be in for a surprise, with a government report on Thursday showing loan servicers may have mishandled the process for many borrowers.
President Donald Trump has called for eliminating the Public Service Loan Forgiveness program, where the loans of borrowers working for government, non-profits or the military are wiped out after 10 years of consistent payments. The program started in 2007, making this the first year of forgiveness for many loans.
The report from the Consumer Financial Protection Bureau (CFPB) found cases where servicers did not provide information or gave wrong or confusing information, leading borrowers to believe they would receive forgiveness when in truth they were not eligible.
Some borrowers were not told their loans were not part of the program, their repayment plans were wrong, or their employers were not considered a public service, according to the CFPB. Also, some servicers under-recorded qualifying payments or did not tell borrowers that loan consolidations wipe out payment histories, pushing forgiveness farther into the future…