Student Loan Forgiveness Program Disaster; If We Want To Expand Gov’t, It Must Function Better Than This

As noted in a prior post, whenever the government proposes a policy to support a specific population, the policy typically comes with dizzying requirements, supposedly to ensure that only the intended beneficiaries receive the benefit. But in so doing they construct an elaborate approval process that confuses potential beneficiaries and generates complicated structures littered with complex forms, time-intensive review processes fraught with lengthy delays in generating payments, and beneficiary errors in complying with complex forms and processes. Bureaucratic logjams and unnecessarily complex procedures plague the federal loan forgiveness program, leaving millions of Americans frustrated with government’s inability to address their needs.

Loan Forgiveness Disaster, Just One Manifestation of the Consequences of an Intentionally Undermined Government

It is vital to understand that none of the government failings outlined below are by chance. They are the consequence of decades of systematic and intentional defunding and dismantling of public institutions. For more on this dynamic, I recommend three prior posts. The first outlines the methodical undermining of our faith in government by Ronald Reagan, Fox News, the Koch brothers, and their allied think tanks. The other two posts outline the extraordinary benefits to our lives and environment if government were not shackled by the political right’s ceaseless capacity to weaken government and thus undermine public confidence, to the vast benefit and profit for the private sector.

Let’s start today’s focus with a quote from U.S.A Today:

The promise of the Public Service Loan Forgiveness program was supposed to be simple. 

If college graduates were willing to forgo the private sector’s lucrative pay and work instead as a teacher, police officer or government worker, any federal student debt they had after 10 years of payments would be forgiven. 

The program has proved anything but forgiving. More than a decade after its inception in 2007, thousands upon thousands of borrowers have applied for forgiveness. The federal government has rejected nearly all of them.

Borrowers seeking forgiveness must work in a job the government deems public service, and they have to make 120 payments through the appropriate income-based repayment plan. And only borrowers with loans made by the federal government, known as direct loans, qualify for relief. 

Tens of thousands of people thought they qualified but messed up one of those criteria – by paying on the wrong type of loan, by not enrolling in an income-based repayment plan before making payments, or by working in a job they later discovered didn’t qualify for forgiveness – and found themselves out of luck.

From USA Today: “Student loan forgiveness: Half a million people to benefit from overhaul, some immediately”

The paragraphs above dryly describe a failed bureaucratic process, but the user end of this logjam of failed policy is anything but dry. The clip below from CBS News examines just one case study for one teacher let down by the loan forgiveness program. I tried to locate last Sunday’s 60 Minutes episode about the experiences of 5 servicemen and women who complied with the regulations for 10 years, only to be denied forgiveness. Applicant after applicant described how they had complied meticulously with the regulations, only to be denied because the Dept. of Education determined that the amounts they had paid each month were off by one cent or they had checked the wrong box. Service personnel claimed that they had not erred in the payment process, and the fact that 99% of program participants also failed to comply suggests a problem with the system. If you can find the full 60 Minute video, it is astonishing, showing something seriously deficient in the system, and Lesley Stahl’s jaw dropping in disbelief. Well over a million teachers, nurses, firefighters and soldiers are being harmed by the government’s inability to manage the process efficiently.

I did locate a YouTube video that provides a brief but compelling snippet from 60 Minutes, along with a CBS Report that covers the larger issue and does so very well, but then shifts to focus on one case study, a teacher. After listening to the CBS report below, I know where I’d place my bets as to whose fault it is that these essential workers are being disserved. Just look at the pile of paperwork on this teacher’s table and listen to her sad tale.

Multiply this teacher’s experience to hundreds of thousands of police officers, firefighters, nurses, and teachers confronting the same government failure. Imagine the frustration of someone dutifully paying their loans for 10 years, with a government promise to forgive the remaining debt, only to be denied for technicalities and in many instances saddled with more debt than when they started making payments. In most instances, these service members had sought confirmation with loan officers throughout the process, and in each instance officers confirmed that they were on track, as had been the experience of the teacher in the video above. These servicemen and woman had complied with all the rules, served their country, risking their lives, only to have government fail them.

The point to this post is not to highlight the dilemma of those seeking debt forgiveness, but to shine the light on the larger problem of government dysfunction and an inability to implement clear public policy efficiently and effectively. This failure can be seen everywhere on a national and state level:

These are but two examples. There are many more. Here in NM, as reported in The New Mexican, hundreds of people have applied for COVID relief unemployment benefits but didn’t see the cash for weeks or months, if ever.

Unable to reach anyone on the state’s telephone hotline, they’ve been left in financial turmoil, sometimes facing hunger or eviction without the public assistance they’d been promised. Sometimes their accounts are locked because of a simple spelling error or an incorrect birthdate. In many cases, applicants have no idea why the payments aren’t coming through. Meanwhile, the department reports rising hostility toward employees.

Santa Fe New Mexican: “New Mexico unemployment office struggles to answer millions of calls” By Ike Swetlitz and Ed Williams Searchlight New Mexico

In his resignation statement, Bill McCamley, former head of Workforce Solutions and one of the most decent public servants I’ve had the pleasure to know, spoke of threats to him and even his mother, threats coming from frustrated relief applicants unable to access their benefits. This is what happens when desperate people turn to a dysfunctional government for help. But those government institutions have been starved of funding for decades, eroding institutional capacity to implement policies, precisely what happened in NM. An underfunded and understaffed Workforce Solutions department was tasked with processing tens of thousands of relief applications with no funding to build out the staff needed to do the work. But the end user doesn’t understand or care. They are desperate and the state is failing them. Their frustration translates into hostile phone exchanges, vitriolic social media posts and, yes, threats to Bill McCamley’s mom. And the frustrations manifest themselves in a myriad of other consequences:

  • Voter and legislator cynicism about government’s capacity to manage any new program, even when it has proven its worth in other countries or states — e.g., universal healthcare, establishing public banks, or implementing bold infrastructure programs — causing these ideas to face steep uphill battles to be considered or to be adopted;
  • In more extreme cases, threats of violence, such as those experienced by Bill McCamley;
  • Still worse, legions of frustrated voters checking the box next to Donald Trump’s name (or any fill-in-the blank GOP candidate promising to stop government in its tracks because s/he claims to hear the people’s voices and promises to act on their behalf and make America great again);
  • Yet another consequence is an erosion of public faith in government and the public bestowing that faith in the private sector, as expressed in the quote below, commenting on the CBS report on the failure of the loan forgiveness program.

After reviewing the program, I realized that hardly anyone would qualify and left for the private sector.

Comment from Alexis Jankowski responding to above CBS report

This is the reaction of many Americans when government fails them; let the private sector do it, precisely the reaction sought by the neoliberal oligarchs who need some level of public support for their plans to privatize the world, so they can run it — at their immense profit.

Taken together, there are mountains of research pointing to the immense public benefit to be derived from initiatives like public banking, universal healthcare, radical transformation of our tax system, and publicly funded childcare and early childhood education. But garnering the support of the public and pressuring legislators to realize these policies requires faith that government can deliver on these programs. And Republicans are only too eager to point to each government failure as justification for saying no. Indeed, Republican and moderate Democrat reluctance to fully fund government services is their way of ensuring government dysfunction, creating a self-fulfilling cycle of underfunded government services, thereby ensuring faulty performance that then justifies future funding cuts.

All of this has been done since the Reagan era in a Wizard of Oz-like setting with the Koch brothers and their ally neoliberal think tanks operating behind the curtain, pulling the levers of power that ensure the continued erosion of funding for public institutions, and growing lack of confidence in government, essentially planting the seeds for privatization (charter schools, prisons, post office and military) and the resulting enrichment of those controlling the levers… all at our collective expense.

I think you get the picture. I am not optimistic about Retake’s capacity to influence the national policy debate. But here in NM, there are at least three game-changing initiatives that could deliver health justice, environmental justice, and economic justice to New Mexicans:

  • Health Security Act
  • Public Bank
  • Public Power

Implementation of these policies would not only create great benefit to New Mexicans, it would also serve as evidence to the nation that bold, progressive policy can be passed and implemented effectively. As luck would have it, I’ve recorded radio shows with leadership from the first two on this list in just the past two weeks. You can listen to my interview of Angela Merkert (public banking) on Saturday at 8:30am on KSFR, 101.1 FM or streaming live from ksfr.org. And interviews with leadership for all three initiatives can be found by clicking here to get to our Retake Conversations page. They are the top three conversations listed.

We have opportunities here in NM to achieve great things, and it begins with your getting in the game. Retake offers two ways to help you do that:

  • Sign up for our Legislative Alerts to get information about the bills we will support in 2022 and receive alerts whenever one of those bills is being considered in the Roundhouse. We tell you how you can raise your voice before and during hearings, either remotely or in person. Plus we provide bill summaries and speaking points, along with contact info for your legislators.
  • If you want to get more involved, go to NM Legislation in the top menu bar of the website and sign up to be part of our weekly strategy huddles every Friday afternoon when we debrief on the week’s action and prepare for the next weeks. On this sign-up page you can also indicate if you want to be involved in constituent-legislator Zoom conversations to let your legislator(s) know which bills you support and to seek their commitment to support those bills.

That’s all for today. Back soon.

In solidarity and hope,

Paul & Roxanne



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1 reply

  1. Excellent! Thank you for this!

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