Bad Advice Sparks Confusion Over Student Loan Forgiveness Eligibility
New Yorkers with student loans might work in jobs that can knock off part of the debt. But bad advice about the Public Service Loan Forgiveness Program is leaving people left out and facing heftier payments than they planned.
Kelly Jaszka studied psychology in college, then got a Master’s degree in school psychology. When she used that education in Buffalo City Schools she found out about the forgiveness programs that would eliminate some of her student loan debt. They help people after they’ve made one hundred twenty payments.
“And so I called and just said how many payments do I have left I just want to kind of calculate and at that time they said I don’t have the correct type of loan, so I am not eligible,” Jaszka said. “Now when I consolidated nobody said get this specific type of loan and they had been advising me all along that I was on track for forgiveness.”
And that’s a growing problem where people are getting conflicting and confusing information. Jane Azia is consumer Fraud Bureau Chief for the state Attorney General. She’s finding the misinformation is pretty widespread.
“It’s been confusing to the people paying back the student loans, in part because there’s been miscommunications about who is eligible,” Azia said. “There have been borrowers who have been told they are eligible by their servicer and then later told that their not eligible because they work for an organization, a private organization.”
Azia explains the forgiveness is generally available to people who work for government, many type of non-profits that do public good, schools and the like.
“Government employees, employees of not-for-profits that are 501c3 corporations qualify after making the 120 payments. Private organizations, if you work for private organizations you may qualify but this is where it has been a little bit trickier, the primary purpose of the private organization has to be to provide direct services to the public,” Azia said.
People have to make the first 120 payments, often on income-based terms. They also have to have federally-supported loans, or refinance into such loans, but not all federal loan programs. Azia warns third-parties who call promising some kind of loan forgiveness or reduced payments are almost always either deceitful, or outright scams. For Kelly Jaszka, the chaos derailed her financial plans.
“My kids are going to be graduating high school by the time my loans are payed off. So it’s completely shifted where I’m headed in my life as far as my lifestyle and the direction and what I can do for my kids,” Jaszka said. “It’s definitely significantly impacted the quality of life I can give my kids and the lifestyle I live myself.”
The Attorney General’s Bureau of consumer frauds and protection can help and if you’re getting calls or emails with forgiveness offers or payment deals that sound too good to be true, the office wants to hear about those potential scams.
On September 26, New York Attorney General Eric Schneiderman, along with twenty other attorneys general, signed a letter to Education Secretary Betsy DeVos calling for a stop to the Department of Education’s rollback of protections for those taking out student loans.