July 13, 2022
DFS SUPERINTENDENT ADRIENNE A. HARRIS CALLS ON FEDERAL STUDENT LOAN SERVICERS TO INCREASE AWARENESS AND ENROLLMENT IN PUBLIC SERVICE LOAN FORGIVENESS PROGRAM BEFORE TEMPORARY PROGRAM RULES CHANGE
Waived Rules in Effect Through October 2022 Make It Easier for Eligible Borrowers to Have Their Federal Loans Forgiven
Letter to Federal Student Loan Servicers Calls on Servicers to Proactively Communicate with Borrowers about the Program and Waived Rules
Outlines Corrective Measures Needed to Eliminate Troubling Practices Found in Analysis of Servicer Data
Superintendent of Financial Services Adrienne A. Harris announced today that the New York State Department of Financial Services (DFS) has issued letters to federal student loan servicers (servicers) urging them to adopt best practices to increase awareness and applicants to the Public Service Loan Forgiveness (PSLF) Program before waived rules that make it easier to have loans forgiven expire on October 31, 2022.
“More than 45 million Americans are burdened with student loan debt, in many cases limiting or delaying their ability to reach long term financial goals,” said Superintendent Harris. “As the primary contact for borrowers, student loan servicers are in the best position to ensure eligible individuals are made aware of and apply for the PSLF program, particularly during this critical period when borrowers can receive credit for past periods of repayment under the waived rules.”
Through the federal PSLF Program, full-time government and certain non-profit employees may be eligible to have federal Direct Loans forgiven after making 120 qualifying monthly payments. As a result of the COVID-19 pandemic, President Biden announced certain changes to the PSLF program to make it easier to have their federal loans forgiven. Many borrowers may not know about the opportunity and could miss out on this significant benefit before it expires.
The Department’s letter encourages federal student loan servicers to adopt eight best practices to promote awareness of the potential benefits of the PSLF Program and waived rules in effect. The best practices include enhanced trainings for customer service staff, proactive communications with borrowers, and increased promotion of the PSLF program on servicer websites and on borrower account pages.
In December 2021, the Department issued a request to all federal student loan servicers asking them to describe what steps they have taken to address the waived rules put in effect by the U.S. Department of Education. In an analysis of the submissions, the Department found that some servicers are engaged in troubling practices that must be remediated as soon as possible, such as failing to provide borrowers with information about the PSLF program. As such, the Department’s letter issued today also outlines corrective measures servicers need to take to eliminate these potentially unfair, deceptive, and abusive practices.
Please find a copy of the letter on the DFS website.