Wisconsin program informs college employees about loan forgiveness

When President Biden again extended the pause on student loan repayments last week, he renewed debate over the federal civil service loan forgiveness program, in addition to complaints about inefficiencies in how the PSLF is administered and insufficient efforts to notify eligible persons.

Rectifying past failures to approve applications and clarify who is eligible for the program was part of the president’s plan for previous and current reimbursement extensions — and part of that failure was because faculty, staff and others College employees were unaware they were eligible, and considered civil service workers, and not being informed of their eligibility by their universities.

Despite the extended pause on repayments, student loan advocates continued to push for bigger and more meaningful changes to the program.

“Where we were before was not a consistent place,” said Persis Yu, director of policy at the Student Borrower Protection Center, in a Twitter Spaces chat on the day the Biden administration announced the pause in loan repayments. Yu added that even if borrowers were added to the PSLF program late, the most vulnerable people — often people of color from low-income backgrounds who now work in low-paying jobs — would still get only limited help. She said the best solution is full debt forgiveness.

“There are a lot of borrowers in the system who just shouldn’t be there anymore,” she said.

The Wisconsin Department of Financial Institutions has been working since last August to make sure residents and eligible state employees know how to get their student loans forgiven. State officials estimate that between 750,000 and 800,000 Wisconsin residents have student loan debt, which collectively totals $24.2 billion. They say the department’s programs and outreach have shaken widespread mistrust and skepticism of the PSLF, led borrowers to financial freedom, and educated people who didn’t even know the program existed.

Cheryl Rapp, finance manager for the department’s college investment program, recalled a recent conversation with the director of financial aid at a state college as an example of the extent of misinterpretations and misunderstandings. – including among those responsible for administering the program – on the operation of the PSLF.

“I said, ‘Hey, you should talk to your employees and let them know they’re going to qualify because they’re working at a college in the UW system,'” Rapp said. “He said, ‘We’re not really qualified.’ I said, “You are in education, you are a civil servant, you are in fact eligible and your employees are eligible. He did not feel the need to inform his employees of the cancellation of the civil service loans. public.

She said it took time to convince the director of financial aid that the program was designed for people like him and his employees.

“It blew my mind – really, they were getting financial aid and they didn’t understand what it was about,” she said.

The disconnect may have been surprising, but it was not unusual. The US Department of Education announced in October that it would improve its methods of finding and informing people who are eligible for the PSLF and processing their applications, but the department was still struggling to develop a strategy to do so as soon as possible. december. Even now, its efforts to contact potential loan forgiveness applicants have been slow, with the total number of recipients nationwide still standing at just 100,000 in March.

Wisconsin is one of the few states that has a dedicated process for notifying employees working in the higher education sector that they are eligible for the PSLF program, not just those at four-year colleges and universities.

“We encompass everything – technical, two years, learning, whatever,” Rapp said.

Dave Mancl, director of financial literacy at the Wisconsin Department of Financial Institutions, said those eligible also include “school district personnel, university personnel — they’re not teaching, they’re not professors, but they are public employees, so they are eligible. School counselor, caretaker. Everyone.”

Rapp, Mancl and others in the department have held informational webinars, targeting 260,000 public employees and 215,000 retired public employees, since last August as part of the Fort Wisconsin financial education program. The department has partnered with Savi, a technology company, to create a tool for borrowers to determine their eligibility for loan relief or consolidation programs. Mancl said the webinars and other outreach activities led to 1,114 people signing up with Savi for advice on programs such as PSLF as of April 7. He said registered users received an average of $21,294 in loan forgiveness.

the troubled history of the federal programwhich had rejected about 98% of applicants before the Biden administration committed to overhauling the system, drove away a significant number of potential loan forgiveness recipients.

Mancl said many people simply don’t believe the program will help them or that their application will be accepted. “So we really need to sound the alarm bells,” he said.

Washington state last week enacted a plan similar to the one in Wisconsin which will create and fund agencies and assign staff and advocates to promote the PSLF program and provide more information to potentially eligible public service workers. Some 767,000 Washington residents have student loan debt, according to state estimates.

“This program is a great way to help those who have decided to serve our state, and I look forward to more people benefiting from it now that this bill has been signed into law,” said State Senator Marko Liias, who introduced the bill. , said in a statement.

While such efforts by states are likely to help more eligible people apply for and receive loan forgiveness, U.S. Senator Patty Murray, who represents Washington state, said the Biden administration should dramatically change its approach to to reach more people, including by “​creating a new Civil Service Loan Cancellation Program that works for our civil servants,” she said in a statement. “That’s not asking too much: so I continue to urge the Biden administration to keep its promises for student borrowers — and I continue to push the administration to extend the pause until 2023 to ensure everything is done before payments resume.

The rewards for those who learn from webinars that they are eligible are huge and emotional, Mancl said. Borrowers are often surprised when they go to the US Department of Education website to track how much they owe and find that their government job has suddenly wiped out all of their debt.

“While we were on a webinar,” Mancl said, “people were looking for things on the Department of Education site or their direct lending sites and found, ‘I’m getting $17,000 waiver. So, I’m done. It’s huge money.

Rapp recalled a webinar attendee who said she checked her balance in the morning and saw it was $120,000, and after asking for forgiveness the same day, she then checked again and her balance went up. been erased. “She freaked out – she said, ‘Oh my God, it was forgiven today. Now it says my loan is 100% paid off, forgiven. So that’s really cool.

The department plans to continue hosting webinars throughout the loan repayment pause period because the need is so great and the information is so lacking. When the pause is finally lifted and payments resume, Rapp and Mancl noted, borrowers who have not had to repay their loan for the past two years due to pandemic-induced repayment pauses will need to understand how much they actually owe and whether all or part of their balances can be cleared through the PSLF program.

“This is a call to action for all universities,” Mancl said, “because they can help their own employees have money in their pockets. Part of our job is that it’s dollars that can come back to Wisconsin, and if you miss it, you miss it. And that would be a shame. »

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