This Loan Forgiveness Program Promised To Help Teachers and Police Officers. Then It Denied 99% of Their Applications

Franz Kafka’s classic novel “The Trial,” the protagonist Josef K. has to deal
with a remote and undefined authority, for a nameless offense, and live under a
constant cloud of dread and anxiety, without ever knowing what went wrong or
how to fix it.

Kafka lived in modern-day America, his main character might go by the name of
Kelly Finlaw.

36-year-old Manhattan art teacher was an applicant to the federal Public
Service Loan Forgiveness program, or PSLF. The plan: For those who worked in
the nation’s public sector—teachers or police officers or doctors, for
instance—and made all their student-loan payments for 10 years straight, the
remaining balance would be forgiven.

It first
launched back in 2007, and was even subsequently beefed up with a temporary
expansion and a $700 million budget set aside by Congress. So in theory, after
2017, a lot of grateful public-sector workers should have starting getting
freed from their student debt.

As it
turns out: Not so much.

the Congressional Government Accountability Office (GAO) looked into how the
program was going, what they found was shocking: 99% of all applications were
being rejected.

Not a

makes me really angry,” says Finlaw. “It feels like it was all a big farce—like
it was never meant to actually help people.”

Finlaw’s case, she was told—after years of making every single payment—that
some of her loans didn’t actually qualify for forgiveness. She would have to
consolidate it all into a different loan, and then start over from square one.

It’s enough to make even a mild-mannered middle-school art teacher tear her hair out in rage. As a result Finlaw is one of eight members of the American Federation of Teachers who filed a lawsuit against the Education Secretary, Weingarten v. DeVos ( After government lawyers filed a motion to dismiss, plaintiffs filed their response, both of which are being weighed by the bench before the case proceeds. (The Department of Education declined to comment on pending litigation.)

is hardly alone in feeling she’s been had. In the GAO’s most recent research released
in September, analyzing the temporary expansion of the program, it found only
661 cases had been approved—and a whopping 53,523 were rejected.

found significant management challenges with the program,” says Melissa
Emrey-Arras, a director in the GAO’s Education, Workforce and Income Security
team. “Simple things like producing a manual for how to administer the program,
and making sure payments people made were accurately counted. This is pretty
basic stuff, and absolutely necessary to deliver on the promises of the

what gives? Rather than being one single culprit for the sky-high denial rate,
it seems there is plenty of blame to spread around.

current Department of Education is knocked for a lack of oversight—for
instance, not providing the loan servicer with concrete guidelines that would
help staffers determine who exactly qualifies for loan forgiveness and who

program’s servicer, FedLoan, is slammed for haphazard management that has left
many borrowers confused and despondent about what exactly they are supposed to
do, dishing out different answers at different times from different people. (FedLoan
media relations director Keith New declined to comment, referring the request
to the Department of Education.)  

Previous lawmakers, dating back to the program’s inception, are criticized for a badly-written bill that excludes many well-meaning borrowers. An example: “In 2007, when the program was authorized, 75 percent of borrowers held loans in the Federal Family Education Loan Program (FFELP),” points out Angela Morabito, press secretary for the Department of Education—but those particular loans didn’t actually qualify for forgiveness.

current lawmakers are blamed for passing the buck, and pointing out that they
weren’t the ones who created the current mess. “Some of the very lawmakers
decrying the high denial rate are the same ones who created a program that is
difficult to qualify for,” says Morabito. “The high denial rates are by
Congressional design, not by accident or failed implementation by the

is at fault, the victims are very clear: People like Kelly Finlaw. After 14
years of teaching kids in Washington Heights, and being tantalized with the
prospect of loan forgiveness, she still has another $90,000 to go. With
interest, she calculates that means another $130,000 on top of that, for a
total of $220,000—all on a middle-school teacher’s modest salary.

Department of Education says it is working to make the process more
transparent, with the rollout of online help tools (!/pslf/launch) and weekly emails to denied

But if
the 99% denial rate is any guide, public-service loan forgiveness has a very
long way to go, before it emerges from its hellish bureaucratic maze.

recommendations have not been implemented, and things have not gotten better,”
says Emrey-Arras, who gave testimony to a Congressional education subcommittee
this past September.

program has been around since 2007, so it’s not like there hasn’t been enough
time to manage it properly,” she says. “We first identified major problems in
2018, and it has been more than a year since then. Things need to change—and
they haven’t changed.”

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