Now consider that nearly every borrower who could be eligible for cancellation under IDR in the next few years has had their accounts transferred at least once, when the federal government transitioned from one loan servicer to many. In fact, earlier versions of the EA27 didn't even include payment counts for certain IDR plans. Borrowers' information is transferred via what's known as an EA27 file, and every time a file is transferred, data and context can be lost, and mistakes made. Transferring borrowers between servicers is a game of telephone.Īccording to the documents obtained by NPR, moving borrower accounts is incredibly fraught. Not adequately tracking those payments could delay or derail millions of the lowest-income borrowers on their way to loan cancellation. Nearly half of all IDR borrowers are making $0 monthly payments, according to a 2019 analysis by the Center for American Progress (CAP). But in the same 2016 review, officials warned, "zero ($0.00) IDR payments that qualify for forgiveness are not adequately tracked." Under IDR, a monthly payment of $0 for a borrower earning less than 150% of the federal poverty line should still count toward loan cancellation. Mismanagement of IDR is especially harmful for borrowers with the lowest incomes. Many students and families decide that some type of student loan is necessary to help finance a college education. This means some servicers didn't know if borrowers qualified for cancellation unless they were asked, by borrowers, to do a labor-intensive records review.
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It's the servicer's job to count how many payments a borrower has made and then notify them when they qualify for loan cancellation.īut a previously unreleased 2016 review of servicers, conducted by the Education Department's office of Federal Student Aid, found that three servicers – PHEAA, CornerStone and MOHELA – did "not have an IDR forgiveness payment counter" to track borrowers' progress toward cancellation.īorrowers with accounts at PHEAA, for example, would have had to request a manual count of past payments to gauge their eligibility for cancellation. IDR plans offer borrowers a manageable monthly payment (as low as $0) as well as loan cancellation after 20-25 years of qualifying payments. Some servicers had no idea when borrowers qualified for forgiveness. “ Avoiding Student Aid Scams.”Ĭonsumer Financial Protection Bureau.Here are three takeaways from NPR's investigation, which you can read in its entirety here: 1. " COVID-19 Emergency Relief and Federal Student Aid."įederal Student Aid. " Statement by President Biden Extending the Pause on Student Loan Repayment Through August 31st, 2022."įederal Student Aid. " H.R.1319 - American Rescue Plan Act of 2021."
" False Certification Discharge."įederal Student Aid. " Closed School Discharge."įederal Student Aid. " Discharge Due to Death."įederal Student Aid. " Total and Permanent Disability Discharge."įederal Student Aid. " Public Service Loan Forgiveness (PSLF)."įederal Student Aid. " Perkins Loan Cancellation and Discharge."įederal Student Aid. " Teacher Loan Forgiveness."įederal Student Aid. " If Someone Dies Owing a Debt, Does the Debt Go Away When They Die?"įederal Student Aid. " Direct Consolidation Loan Application."Ĭonsumer Financial Protection Bureau. CornerStone previously serviced about 0.8 of all U.S. As a result, CornerStone has begun the process of transferring loans to other loan servicers, such as Fedloan.
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" IRS Free File: Do Your Taxes for Free."įederal Student Aid. CornerStone Education Loan Services recently announced that it will no longer be servicing federal student loans. " Income-Driven Repayment (IDR) Plan Request." " Attorney General Josh Shapiro Announces $1.85 Billion Landmark Settlement With Student Loan Servicer Navient."įederal Student Aid. " CFPB Sues Nation's Largest Student Loan Company Navient for Failing Borrowers at Every Stage of Repayment."Ĭommonwealth of Pennsylvania Office of Attorney General. " AG Ferguson: Judge Rules National Student Loan Servicer Navient Broke the Law in Servicing Student Loan Debt."Ĭonsumer Financial Protection Bureau. Washington State Office of the Attorney General.
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