The day had finally come when Kyra Hahn watched her student loan account every day until the number finally turned: zero. The principal was zero. There was no interest. There was no amount due.
There was some skepticism in the Kansas librarian.
Having fought for debt cancellation on behalf of public servants for years, Hahn, 48, became weary of fighting.
Despite seeing a zero balance, Hannah didn’t take it in until she got an email confirmation from her loan servicer and saw that the balance she owned had indeed changed to zero at the Education Department’s site.
“Wow, what a beautiful Thanksgiving blessing,” Hahn said after receiving more than $50,000 in federal loan forgiveness.
“I’m grateful for myself and for many others who have fought for this moment.”
Public servants hold federal student loans for 10 years before the forgiveness.
Hahn is part of the first wave of people to take advantage of the temporary expansion of the Public Service Loan Forgiveness Program.
The Education Department estimates more than 30,000 borrowers will receive debt relief in this initial round, which is valued at $2 billion.
A minimum of 10,000 people among that group have already seen their balance canceled, and the rest will be able to see theirs canceled too in the coming weeks.
Earlier in October, the department announced that borrowers with eligible loans would be able to count their payments toward student loan forgiveness.
Participants can receive debt relief without following rigid program rules until October 31, 2022, however.
It said the payment count will increase for 965,000 borrowers who are working towards forgiveness.
This is about 75 percent of the people who submitted their employment verification forms and suggested that they would be interested in the program.
As a result of the program’s design and execution, there were few success stories before now.
The program was created by Congress in 2007 to encourage college graduates to pursue careers in teaching, law enforcement, and government -which are traditionally low-paying public service fields.
Guidance has been minimal but the rules are complex.
Applicants must have made 120 on-time monthly payments over 10 years to be eligible for a cancellation of the remaining loan balance.
They must work for a government organization or a nonprofit organization. They must receive direct loans from the federal government.
A specific repayment plan must also be enrolled, mainly one that caps monthly loan payments at a certain percentage of income.
Wrong Loan Acquisition
In the past, the Education Department didn’t offer much assistance to people navigating the program. Rather than helping borrowers, the agency relied instead on student loan servicers to guide borrowers.
In spite of this, many complained that loan servicers gave them bad advice, leading them to believe they adhered to program rules when they didn’t.
Congress Democrats responded to the revelations in 2018 by creating a temporary fix to assist public servants at risk of missing out on forgiveness because their loan repayment plans were misclassified or wrong.
Scores of borrowers faced difficulties because of confusing terms during a recent Government Accountability Office audit (GAO) audit of the short-lived fix.
Some borrowers, such as Hahn, did reach the point of forgiveness thanks to the program. Hahn now has debt cancellation, huge thanks to the program again.
Under the guidance of her loan servicers, Hahn had believed she had become more successful in the program.
After countless phone calls and three years, she finally learned the truth. Aside from being in the wrong plan, she also had consolidated bad loans from a long-since defunct bank-based lending program. The progress she thought she had made was wiped out in an instance.
Hahn later became an advocate in response to her frustration.
In 2017, she founded a Facebook group for librarians to offer advice and encouragement based on the public service program.
“We were all struggling with how to get through this process, and we were supposed to be information guides and information professionals,” Hahn stated.
“I’m sorry, but if we’re struggling, then there’s a problem with this program.”
Loans degenerating Lives
Hahn’s professional and personal lives have been significantly affected by Public Service Loan Forgiveness.
Hahn scrambled to find a job that would qualify for the program when she lost her job during the pandemic last year.
She accepted a job in Denver, which was to last two months. The risk was too great. After all, she had already come so far.
Hahn and her husband decided that taking a permanent job six hours away from home. This would be the best choice even if though it means they would be separated.
“It’s been hard to be away from family,” Hahn said. “I’m out here on my own. I took the job because I wasn’t certain how long the loan forgiveness process would take.”
Hahn had surpassed the 120 payment requirement of the program by the as of July, had filled out the application for forgiveness, and waited for a response.
FedLoan Servicing, responsible for administering the program for the government, had been behind in updating accounts and processing applications.
In response to the waiver announcement, Hahn received notification from the company that the number of payments she has been receiving has increased.
According to Hahn, the notice confused her and made her wonder if it would interfere with her forgiveness efforts.
In anticipation of the waiver, eager and anxious borrowers have asked many questions to loan servicers whose answers they have so far been unable to provide as they wait for the Education Department.
In the last month, the federal agency released additional details and acknowledged that some guidelines are still being underwork.
The head of the department’s Federal Student Aid Office, Richard Cordray, reached out to borrowers in a letter earlier this month to reassure them that the agency is committed to the program and urged them to be patient.
“Please understand that complex changes of this magnitude are hard to process and execute. They require large-scale data and processing work, which takes time,” Cordray said.
“We are working as quickly as possible to update your account and give you clear and accurate information. This may take several months. We may not be able to answer specific questions right away. But we will get the changes made.”
A rulemaking committee was convened by the Education Department last month to discuss changes to the public service program, many of that participated in the temporary waiver.
Over 48,000 comments were received from the public regarding how the program could be improved, according to the agency.
After having her debt canceled, Hahn intends to keep advocating for an easier journey for others even as her journey ends.
At a rulemaking session last month, Hahn was one of a few people who were given the chance to share their experiences and suggest good recommendations for the program.
She now plans to help her husband pay off his debt with the burden lifted from her shoulders.