Dems demand CFPB investigation of Pa. loan forgiveness program
WASHINGTON — Senate Democrats are calling on the Consumer Financial Protection Bureau to investigate the Pennsylvania Higher Education Assistance Agency’s alleged mismanagement of the public service loan forgiveness program.
In a letter to CFPB Director Kathy Kraninger dated Monday, 23 Senate Democrats said the CFPB should “immediately” open up an enforcement investigation into the agency's management of the loan forgiveness program, saying the firm’s missteps have caused public service workers to be denied loan forgiveness that they earned.
“Tens of thousands of dedicated public service workers and their families are paying the price for PHEAA's incompetence and the CFPB's failure to act,” the senators wrote. “These women and men have served their communities for years, and relied on the government's promise of loan forgiveness to make important life decisions about where to work, when to start a family, and when to buy their first home.”
The letter was signed by all 12 Democrats on the Senate Banking Committee, including ranking member Sherrod Brown of Ohio and Elizabeth Warren of Massachusetts, a presidential candidate.
Under the public service loan forgiveness program, the federal government agrees to forgive the balance of a public service workers’ federal student loans after they make 10 years of qualifying payments. The Pennsylvania agency was awarded an exclusive contract to manage the program in 2012.
But the senators highlighted a 2018 Government Accountability Office report suggesting that public service workers had been “improperly denied” loan forgiveness because of the agency's “inability to properly account for qualifying payments and reliance on inaccurate information.” This year the Department of Education’s inspector general found that PHEAA had a “pattern of noncompliance.”
A GAO report last month said only 661 out of 53,523 applications were approved for loan forgiveness under an expanded public services loan forgiveness program.
The senators blasted the CFPB for failing to use its authority to oversee the Pennsylvania agency.
“Since 2017, the CFPB has refused to exercise its authority to conduct supervisory examinations of PHEAA's servicing practices and its management of the PSLF program,” the senators wrote. “We have repeatedly pressed the CFPB to conduct this critical oversight, but you have provided nothing but excuses for the CFPB's inaction.”
The senators are asking Kraninger to respond to their request to open up an enforcement investigation by Nov. 11. A spokesperson for the CFPB could not immediately be reached for comment.