The U.S. Government May Rescind Some Student Loan Forgiveness Letters


Student loan debt is a major issue in America and becoming more and more important politically with each passing day. That might become more so as the Education Department is laying the groundwork to rescind student loan forgiveness letters.

For those unfamiliar with the program, public sector employees are eligible for student loan relief from federal loans, or even a total forgiveness of their debt to the government, if they work in public service for ten years and, in most cases, make 120 payments on their debt. The program was launched in the Bush administration in 2007, which means the first of 550,000 letters sent out informing people they could have their loans forgiven are coming due.

According to the New York Times, however, the Education Department is now essentially telling people that the letters they’ve received can’t be trusted:

In a legal filing submitted last week, the Education Department suggested that borrowers could not rely on the program’s administrator to say accurately whether they qualify for debt forgiveness. The thousands of approval letters that have been sent by the administrator, FedLoan Servicing, are not binding and can be rescinded at any time, the agency said.

The program has had transparency problems well before the Trump administration came along, and in fact this legal filing was over a lawsuit from people who’d been told they were certified “in error,” but had no appeals process or even an explanation of what happened. Still, it’s now the Trump administration’s problem to solve, and everyone with a student loan will be watching closely. If those working in public service in part to pay off their debt find themselves faced with a government going back on its promise, it might have serious consequences for both student loan debt and the administration itself.

(via the New York Times)

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