People who worked 10 years for student loan forgiveness get shafted

Nearly 30,000 people have applied to have their student loans forgiven under a government program that rewards those who work in public service for at least 10 years while keeping their payments for their loans up to date.

Only 96 actually had their loans forgiven, CNBC reports today.

The program was signed into law in 2007 so last year was the first year the Education Department could begin forgiving the loans.

A quarter of American workers were supposed to have access to the program, but CNBC says the companies that service the loans are denying people access to the program.

Here are the requirements:

  • Your loans must be federal direct loans.
  • Your employer must be a government organization at any level, a 501(c)(3) not-for-profit organization or some other type of not-for-profit organization that provides public service. (MPR, for example)
  • By the end, you need to have made 120 qualifying, on-time payments in an income-driven repayment plan or the standard repayment plan.


But CNBC says people with student loans, who met all the qualifications, are being told after 10 years they have the wrong type of student loan.

“I almost threw up,” said Debbie Baker, a music teacher in Oklahoma. “I’ve been teaching 18 years and I still don’t make $40,000 — and now I have to start all over.”

A Federal Family Education Loan (FFEL) and a Perkins Loan do not qualify for loan forgiveness.

“To have a student loan system where to receive the benefits of it you have to be perfect is not a reasonable expectation to set up for 43 million borrowers,” said Persis Yu, director of the Student Loan Borrower Assistance Project at the National Consumer Law Center, a nonprofit advocacy group.