With a public service loan forgiveness (PSLF) waiver for student loan borrowers set to expire this Oct. 31, the agency charged with consumer financial protection said Friday it will be prioritizing its supervision of student loan servicers in deploying its enforcement and supervision resources in the coming year.
The Consumer Financial Protection Bureau (CFPB), in a release, noted that the PSLF was created by federal statute in 2007 to provide loan cancellation for borrowers working in a qualifying public service job. For public service employees with direct loans, PSLF cancels the remaining balance on those loans after they make 120 loan payments while working for a qualifying employer. The bureau noted that despite one government estimate that 1.3 million borrowers qualify for PSLF, the bureau “has documented how poor servicing practices have impeded many borrowers from making progress toward relief, such as by giving them inaccurate information about how they can become eligible for debt cancellation.”
The PSLF waiver was created last year by the Department of Education to make relief available to borrowers in more programs as well as those who were previously impeded from PSLF. Under the waiver, any past payment on a federal student loan by a borrower working in public service can count toward PSLF, regardless of payment plan, loan type, or whether the payment was made in full or on time. This includes payments made through the Federal Family Education Loan (FFEL) and Federal Perkins Loan Programs, which did not previously count under the old PSLF rules.
To benefit under the waiver, the bureau said, many borrowers will need help from their student loan servicer to take action by consolidating their loans into the direct loan program, filing a PSLF application, or both, before the waiver ends on Oct. 31, 2022.
The bureau said its prioritization of student loan servicer supervision will include a specific focus on monitoring servicers’ engagement with borrowers about PSLF and the PSLF waiver. It said it will pay particular attention to whether:
- Servicers of any federal loan type provide complete and accurate information about the PSLF Waiver when discussing PSLF or loan consolidation in any communications.
- Servicers have adequate policies and procedures to recognize when borrowers are expressing interest in PSLF or the PSLF Waiver, or where their files otherwise demonstrate their eligibility, and to direct those borrowers to appropriate resources.
- Servicers take steps to promote the benefits of the PSLF Waiver to borrowers who express interest or whose files otherwise demonstrate their eligibility.
“To prevent unfair, deceptive, or abusive acts or practices, student loan servicers should consider enhancing their compliance management systems to develop and implement policies and procedures to ensure that all borrowers receive accurate and complete information about the PSLF Waiver and representatives facilitate their enrollment,” the bureau said.
A compliance bulletin – Bulletin 2022-03: Servicer Responsibilities in Public Service Loan Forgiveness Communications – was released with Friday’s announcement and awaits publication in the Federal Register.