Today Damon Day and I get stupidly silly laughing and complaining about the ridiculousness of the Public Service Loan Forgiveness program that was intended to forgive student loans for firefighters, police officers, teachers, low-income lawyers, military service members, and more.
The PSLF program has turned into a disgrace with more than 98% of people apply for forgiveness being rejected.
But wait, there’s more.
Steve Rhode: [00:00:00] Great. Thanks.[00:00:05] Damon Pinch a Loaf Day: [00:00:05] You got to edit that [00:00:07] Steve Rhode: [00:00:07] Now I’m going to have to edit that out. Thank you very much. Damon pinch, a loaf day, [00:00:13] Damon Pinch a Loaf Day: [00:00:13] That’ll be my next name tomorrow on Saturday. [00:00:15] Steve Rhode: [00:00:15] Damon Pinch a Loaf Day. [00:00:19] Damon Pinch a Loaf Day: [00:00:19] Yeah. Why not? Hey, if it gets people talking about it. It actually has a ring to it. [00:00:30] Steve Rhode: [00:00:30] Damon Pinch a Loaf Day [00:00:33] Damon Pinch a Loaf Day: [00:00:33] Yeah. Can I change it? [00:00:36] Steve Rhode: [00:00:36] now, man, people are going to get quality advice with a K [00:00:41] Damon Pinch a Loaf Day: [00:00:41] Yeah. [00:00:42] Okay. [00:00:43] Steve Rhode: [00:00:43] just leave it alone. What people don’t understand is You’re trying to change your name on the oh great. You did. On the podcast transcript. So thank you very much. I guess it’s worth driving people to see the transcript and see Damon pinch a loaf day. All right. All right. Should we actually talk about debt for crying out loud? [00:01:13] Damon Pinch a Loaf Day: [00:01:13] Sure. Let’s squeeze it out. [00:01:15] Steve Rhode: [00:01:15] I can’t imagine what the summary is going to be for this podcast. Five minutes of talking about Damon pinching a loaf such juveniles. Oh my God. I hope die laughing [00:01:31]Damon Pinch a Loaf Day: [00:01:31] It’s a good segue into today’s topic. [00:01:34]Steve Rhode: [00:01:34] Yeah.
[00:01:34]That’s true. It is. It’s a dumpster fire for sure. A, a port-a-potty that’s what we’ll call it. The port-a-potty cause today’s topic is public service loan forgiveness program, and it’s such a fire. Oh my God. So bad. Okay.
[00:01:52] So let’s lay the framework for people who don’t understand what public service loan forgiveness is.
[00:01:58] It’s a federal. Government student loan program. That was well intentioned. So let’s step back where this all started in 2007. The whole idea was that Congress wanted to significantly improve access to higher education, particularly graduate and professional education for people who would like to have lower paying public service careers, but who were saddled by high education debt.
[00:02:27]It was the plight of many people who wanted to go for example, to law school to help the disadvantaged, but they couldn’t afford it. And so it was determined back in 2007, I believe it was president Bush that signed the act that made this all possible. That public service loan forgiveness was a Valiant and, Good thing for people to take up.
[00:02:51] Because for example, in the case of lawyers who could serve low-income clients, criminal defendants, immigrants, victims of domestic violence, these students needed some help to get the education they needed to help people through like legal aid, public defender programs, and other offices. The idea behind the program was to help all high debt, low income borrowers to pursue public service in many different fields, including teaching good old teachers, social work, military service, nursing, and emergency management.
[00:03:28] Now, that makes perfect sense. Congress even said at the time, what it set out to do was provide relief for high debt. Low-income borrowers. While, providing very substantial student loan repayment relief for those who made the sacrifice of choosing long-term lower income, public service careers.
[00:03:52] Well-intentioned at the beginning, Damon, but how did it turn out? [00:03:56]Damon Pinch a Loaf Day: [00:03:56] As you said, the dumpster fire, but I plan your life around a government promise. What could go wrong? [00:04:04] Steve Rhode: [00:04:04] Yeah. Yeah.
[00:04:05] the problem was so it was basically people were not eligible for the first round of student loan forgiveness until 10 years later, they had to make 120 payments minimum to be eligible for forgiveness. So that would put the first, forgiveness at 2017. In the meantime, political administrations changed department of education changed.
[00:04:29] Everyone changed. Everyone, made a big promise. They just didn’t deliver on it. Damon, listen, they didn’t deliver on it. Not like a little bit. They screwed this up so badly. The department of education has found 98% of borrowers are still being rejected.
[00:04:51] And, this program was designed to help people who were in the military, for example.
[00:04:55]They found that 287 department of defense personnel had received loan forgiveness as of January 2020 sounds admirable 287,
[00:05:07] but here’s the kicker, 5,200 or 94% of the military borrowers. We’re denied public service, loan, forgiveness. I’m sure you’ve seen it. I know you’ve seen it because we bitch about it all the time. [00:05:22]Damon Pinch a Loaf Day: [00:05:22] Yeah. And the idea, it, it makes sense. It’s a good idea. It encourages people to go into service sacrifice take a little bit lower pay at the beginning of your career, blah, blah, blah. The problem is it’s something it’s a promise a politician can make.
[00:05:37] That doesn’t have to be met for at least 10 years, by the time that politicians probably gone, and that’s the problem that, I don’t think the show will be all doom and gloom because the, you could still save it. The structure of it is there. You just have to get somebody in charge of it that can, put together.
[00:05:57]A, a group of people that can actually, get this thing administered and streamline this process. All the stuff is there. It just, it’s gonna take some effort to get it done, but right now it’s just a cluster. [00:06:08] Steve Rhode: [00:06:08] Yeah. The program is there and little tiny steps are being made under the previous administration. Betsy Devoss, who I have. I don’t really don’t hate anybody. I just have a lot of anger against the policies that she enacted that really stranded these students just deny them all seem to be the basic policy.
[00:06:29] But last year, the current administration changed its previous policy and graciously. They’re touting this as a benefit graciously now counts lump sum payments, and prepayments as qualifying towards loan forgiveness. Like those shouldn’t have been all along. It’s ridiculous. When I hear from consumers and they say they won’t count my payment because I made the payment.
[00:06:55] That was on the statement that I got. But they’re saying it’s 50 cents too low. . [00:06:59]Damon Pinch a Loaf Day: [00:06:59] The problem is that the devil’s always in the details, right? So you have this great program, but then when it comes down to how do you qualify for it? There’s really no. Central place, a consumer can go and say, okay, here’s my specific situation. Exactly. What do I need to do?
[00:07:12] What steps do I need to take? What kind of payment plan do I need to be on? How much does my payment need to be? Does it matter if I’m single or married or have kids or whatever? And the problem is because this program is not really applied for until after you supposedly qualify for it.
[00:07:28] There’s a huge opportunity for people to not have all their I’s dotted. And T’s crossed during the 10 years where they mistakenly think they might be, doing all the things they need to do to qualify for it. Only to find out 10 years later that, oh you missed this. Or like you said, your payment was 50 cents too high.
[00:07:47] And we can’t check this box, on our form. So therefore you don’t qualify and you’re going to get rejected. And what that did was that left this huge opportunity and huge window for all these. And I’m doing my air quotes debt relief, your student loan forgiveness pro I still get texts from clients every week.
[00:08:04] Oh, Damon, I got some listen to this voicemail. I’m eligible for forgiveness they send the voicemails to me or the letters every time it’s some damn sales guy leaving a message and oh, great news. We have your student loan here and it qualifies for full forgiveness, but you have to call now and blah, blah, blah.
[00:08:24]It’s just so cringe-worthy these people try to make it seem like they’re part of the department of education or something like that. And it’s just these debt relief guys calling, doing a bait and switch, and it’s you are eligible for loan forgiveness. And then all they’re going to do is try to sign you up for a PSLF or put you on IBR.
[00:08:43] And I don’t know if we’re going to get into it on this show, but most of the time, these programs will lie on your forms in order to get your payment lower than it should be for your situation. And when you go down the road 10 years, when the government, somebody at the government actually looks at your application and it says you have 15 dependents at some point, when you had maybe one kid [00:09:05] Steve Rhode: [00:09:05] and he’s not exaggerating. [00:09:06] Damon Pinch a Loaf Day: [00:09:06] it.
[00:09:06] And [00:09:07] Steve Rhode: [00:09:07] That is, that’s a true [00:09:08] Damon Pinch a Loaf Day: [00:09:08] no I’ve seen.
[00:09:13] Yeah, that’s the gonna be the next cluster it’s coming down. The pike is even if you get the administrative part all squared away so people can submit their applications of real human could look at it. They can decide you’re going to have hundreds of thousands of applications, poor people, these poor people that signed up in these debt relief.
[00:09:30] You’ll get your student loans down to $0 a month. You just pay us whatever 50 bucks a month for 10 years or 20 years or whatever it is. And these people lie on the form, not every time, but I’ve seen a lot of it in order to fit what they’re trying to sell you, which is no payments or really low payments.
[00:09:47] They’ll exaggerate the number of people you’re supporting and nobody looks. During the program. There’s no mechanism in place right now for a real person to say, oh, this person wants to qualify for loan forgiveness in 10 years. Okay. Send in your application, which is what they should do. They should actually do some kind of enrollment process at the very beginning.
[00:10:08] Somebody checks the boxes and says, okay, you want it? Let’s see if you have qualifying employment, here’s all the rules. Here’s what you need to do. Here’s the payment plan. That’s what they need to do to eliminate all this confusion. And that would eliminate. Scammy guys that are able to submit this stuff and say, oh yeah, they take care of 15 people.
[00:10:26] And that’s why their payments should be zero. They don’t ask for any names of those 15 people. They don’t ask for social security number. They don’t ask for anything. You can put any number on that form and manipulate your payment and nobody will know or catch it until the end. And then that debt relief company probably won’t even be in business.
[00:10:43] When you get the news that I know you thought your loans were going to be forgiven, but you have 10 more years because you didn’t do it. [00:10:48]Steve Rhode: [00:10:48] This is amazing to me that people don’t re enroll in the program until afterwards, but while they’re making their payments, they can’t even go online and see Yep.
[00:10:59] The payment. Yes, that payment counts. They have no idea. And here’s what the current department of education. This is the bright light that just went off.
[00:11:09] Cause they’re saying federal student loan borrowers have planned their careers and lives around this program. Trusting that if they work in public service for a decade, while repaying their student loans, they would see the remainder of their debt forgiven. Yeah.
[00:11:25] That is what people believe. That is not what is happening, honestly, Damon, I think they just need to approve all the applications say that was a good intent, but we can’t screw all these people that bought into the promise that they would work as teachers and firefighters and correction officers and police officers, military, and screw all those people.
[00:11:49] That’s not right. [00:11:51] Damon Pinch a Loaf Day: [00:11:51] Yeah. As much pet projects as the government has. They’ll throw money at anything. It seems you see all these crazy stories of $10 million for this and $20 million for that. There’s absolutely no way they can’t create some kind of a task force or an administrative force or whatever.
[00:12:07] Draw a line in the sand on the PSLF and say, We need to take everybody that is, cause when you consolidate your loans into direct loans, it asks you, are you do you work in public service law? Do you work in public service? Are you trying to go for loan forgiveness so they know who.
[00:12:21]Thinks they’re trying to get public service. They can have some actual people just stop everything and look at it and do what you’re talking about. Okay, this, here’s, you have four years in. Everything’s good. Everything looks good. Now they do have something like that now.
[00:12:37] That, and you can speak more to, this is going to just completely blow up by the end of the year, but they do have a servicer that’s supposed to be in charge of checking every year. When people recertify their income and then they [00:12:52] Steve Rhode: [00:12:52] Oh, my [00:12:52] Damon Pinch a Loaf Day: [00:12:52] their employment and this comp the servicer is supposed to check.
[00:12:56] And so you can find out how many months of qualification you supposedly have by asking. Fed loan servicing and asked him, how many months do you have now if they’re, if their number is different than your number, you don’t really have much recourse. [00:13:11] Steve Rhode: [00:13:11] But wait, it gets better. it, gets [00:13:13] Damon Pinch a Loaf Day: [00:13:13] here you go. [00:13:15] Steve Rhode: [00:13:15] because the loan servicing was the one agency that was responsible for administrating this program. And they would issue letters saying, yes, your employment complies. You’ve made all the payments you’re eligible for public service loan forgiveness. There.
[00:13:34] Department of education’s contractor. And then the department of education would deny the application because they would say whatever fed loan servicing says doesn’t matter. And as you alluded, Damon FedLoan servicing has said we have had enough. By the end of 2021, we are done servicing student loans.
[00:13:56] Oh my God, where this goes next. I don’t know, but for all the teachers, I really don’t have an answer for people who say I have been a teacher in a low income school for 10 years, and I have just found out that none of my payments qualify me. It’s tragedy. [00:14:13]Damon Pinch a Loaf Day: [00:14:13] Th the answer is actually simple and complicated at the same time, whoever this administration has in charge of public service, loan, forgiveness needs to fix it. It’s simple. It’s really not that hard and all this stuff. You need to say, okay, we’ve got these millions of people that are on this program.
[00:14:29] We made these promises, whatever personnel I need, whatever money we need to do it, we need to sit down and we need to figure out who’s actually qualified. Who’s not get everybody on the same page and let people know, okay, you’re qualified. You’re not qualified. You got three more years, let’s do this.
[00:14:45] Let’s, they, that’s all they need to do. And just communicate with people that would close the door on most of these. Student loan relief, scammy companies. If you could actually call your servicer and get that kind of straightforward information and be able to rely on it, you wouldn’t need some rando on the phone saying, oh, you just qualified for forgiveness.
[00:15:04] That’s what I heard yesterday was like, but it’s limited time. So you have to call right now and it’s like such bullshit. It’s a sales. [00:15:12]Steve Rhode: [00:15:12] I know the funny thing is we have seen the new Obama student loan forgiveness program, the new Trump student loan forgiveness program. And now we have the new Biden student loan forgiveness program. It’s the same stuff, but Damon, I am [00:15:27] Damon Pinch a Loaf Day: [00:15:27] programs haven’t changed. [00:15:29] Steve Rhode: [00:15:29] No, it’s the same thing. It’s the same thing.
[00:15:32] Just new marketing. I’m not the freshest cracker in the box. And a, you might not be the sharpest tack in the drawer, but at least we have a clue what’s going on with this program or not going on the department of education. I have to read this because it is just so incredible. Send out a press release .
[00:15:49] And here’s what they said. You haven’t heard this, so I can’t wait to hear what you have to say. We want to hear from the people who rely on this program about what is working and more importantly, what isn’t working. We want to hear from experts across the nation about the challenges, public service workers face, and the ideas they have about how.
[00:16:14] PSLF program can work better. And most importantly, we want to hear how we can fulfill the promise of this program to ensure that student debt does not prevent individuals from pursuing or staying in public service. [00:16:28]Damon Pinch a Loaf Day: [00:16:28] Just send them in to show we already solved it for them. It’s simple. Just do what you promise to do and have a big enough staff to do it and communicate with the people
[00:16:41] from the beginning. Get them enrolled. Okay. You’re in. You’re good. Let’s start counting months. Don’t wait until the end and be like, oh, you screwed up.
[00:16:48] Sorry. Keep paying. [00:16:50]Steve Rhode: [00:16:50] Whoever thought in the beginning that the way this program works is you work for an employer. You take your best guess, that you’re going to qualify with that employer. And then you make 10 years of payments. You pay the amount is on your statement and then after all of that, then we’ll figure out whether or not you qualify.
[00:17:10] It’s just [00:17:11] Damon Pinch a Loaf Day: [00:17:11] Yeah, then we’ll look at it and see if you messed up. But you know why? Because here’s what happened. It was a good idea. Somebody had the Bush or whoever, they asked do this. This sounds really good, but maybe we don’t have the funding or the approval or the staffing or anything to really administer it.
[00:17:26] So we’re not going to really do anything. We’re just going to put it out there. And really, they didn’t invest anything into doing it because they’re like, we’ll deal with that in 10 years. And then it was like three or four years before they even officially named FedLoan servicing as the official servicer.
[00:17:41] Cause in the beginning, any servicer could handle public service, loan forgiveness, because you didn’t submit anything. You’re just like, yeah, I want that. And they’re like, okay, there’s nothing to submit and say, Hey, do I qualify? It took three to four years before FedLoan servicing was even granted that role.
[00:17:59] And then they at least had something where you submit, you’re, now they’re starting to check your employer and they look and they say, oh yeah, this qualifies. Of course, then like you said, the department of education has come out and said even a fed loan servicing says your employer qualifies.
[00:18:14] That doesn’t mean it actually qualifies. We’ll tell you later. [00:18:18] Steve Rhode: [00:18:18] Wait, it got better because the department of education not only said that, but they also said, we know that you’re supposed to make only 120 payments. And even if your, all of your payments qualify you have to continually work for that employer until we finally decide your application. And they were dragging their feet like a year.
[00:18:40] Processing these things only to deny them. So they left people stranded in jobs. They weren’t going to be qualified for forgiveness. It’s just stupid. [00:18:48] Damon Pinch a Loaf Day: [00:18:48] Or people even through maybe through no fault of their own lost those jobs or whatever, after they qualified. And they’re like, oh, you don’t work there anymore. You went and worked for the private sector. Sorry. Okay. [00:19:02] Steve Rhode: [00:19:02] Yeah. Oh my God. I, that drives me crazy. I’m the liberal in this podcast and I’m incensed. This is just a public benefit. Gone. Totally wrong. [00:19:13]Damon Pinch a Loaf Day: [00:19:13] and this does always cause me a genuine dilemma if you will, because I’m more of the right side of this podcast. But even I was very disappointed in the way the public service loan forgiveness and the Corinthian college fiasco. The borrower defense to repayment, and pretty much everything that had to do with administering forgiveness to student loans that was already promised.
[00:19:37] I was pretty much cringing on how all of that rolled out under the previous administration, unfortunately.
[00:19:43] [00:19:43] Really dropped the ball. And that’s hard for me to say, [00:19:46] Steve Rhode: [00:19:46] It throughout the ball didn’t even bounce. It just landed flat. But here’s [00:19:50] Damon Pinch a Loaf Day: [00:19:50] maybe I don’t even think they ever had the ball. Honestly, they had no ball. [00:19:53] Steve Rhode: [00:19:53] they lost. They lost the ball. We don’t know where the ball is. Somebody got the [00:19:57] Damon Pinch a Loaf Day: [00:19:57] and ball’s gone. Sorry, [00:19:59] Steve Rhode: [00:19:59] So here’s the thing drives me crazy too, is we have all these people now that are in the 20 or 25 year student loan forgiveness programs. They’re paying minimum payments, their balances are going up and guess what?
[00:20:11] The government has promised you at the end of that period, that all that debt will be forgiven. And hopefully by then you’ll be forgiven tax free. We don’t know. [00:20:22] Damon Pinch a Loaf Day: [00:20:22] Right now that crap is taxable. [00:20:24] Steve Rhode: [00:20:24] yeah. Until the end of 2025. And then right now it’s not. I know, but [00:20:29] Damon Pinch a Loaf Day: [00:20:29] on who’s qualifying for IBR forgiveness right now. [00:20:32]Steve Rhode: [00:20:32] So here’s the thing. We have a dysfunctional, broken program in the septic tank [00:20:39] Damon Pinch a Loaf Day: [00:20:39] that’s what, that’s why you need Damon Pinch a Loaf Day. I’m an expert at this stuff. See how I circled it. [00:20:47]Steve Rhode: [00:20:47] This is, the show really did go down the toilet. But my point is that you got PSLF, which is four. It’s supposed to be a benefit for teachers, firefighters, police, officers, military people that we call heroes that have been totally screwed over by this program. Do you honestly think that in 20 or 25 years, when all these income-based repayment programs are supposed to be forgiven, that it’s going to work out any better? [00:21:15]Damon Pinch a Loaf Day: [00:21:15] No, it’s going to be worse because it’s going to be an over, over even a larger number of different administrations with different ideas and policies. But it’s a it’s, it’s typical government stuff. [00:21:29] Steve Rhode: [00:21:29] Unfortunately, [00:21:29] Damon Pinch a Loaf Day: [00:21:29] what are you going to say? [00:21:31] Steve Rhode: [00:21:31] while you said earlier, if you’re making [00:21:33] Damon Pinch a Loaf Day: [00:21:33] today that won’t deliver tomorrow. [00:21:35] Steve Rhode: [00:21:35] for making decisions based on a government program. Look, if it’s something that you can qualify for and then get the benefit. Okay. But a future promise for something as big as student loans. It’s it just makes no sense. [00:21:53]Damon Pinch a Loaf Day: [00:21:53] Wait, are you sure? You’re the liberal side of this? [00:21:55]Steve Rhode: [00:21:55] I am the frustrated side [00:21:57] Damon Pinch a Loaf Day: [00:21:57] Are you sure [00:21:58] Steve Rhode: [00:21:58] this program sucks. [00:22:00]Damon Pinch a Loaf Day: [00:22:00] Where does that leave the program? Both sides of the aisle. Say sucks, nobody’s happy, not happy out there. [00:22:10]Steve Rhode: [00:22:10] Damon Pinch a Loaf Day. Thank you for pushing out another show. [00:22:16] Damon Pinch a Loaf Day: [00:22:16] My pleasure, [00:22:19] Steve Rhode: [00:22:19] I wonder if this will get demonetized. Oh my God. All right. But let’s say need [00:22:25] Damon Pinch a Loaf Day: [00:22:25] person laugh. [00:22:27] Steve Rhode: [00:22:27] to, we made you and me laugh.
[00:22:29] That was it. [00:22:30] Damon Pinch a Loaf Day: [00:22:30] Yeah. Even me [00:22:31]Steve Rhode: [00:22:31] Right now somebody is like going down the road or laying down in bed, listening to the podcast and a spouse is walking in or a friend going, what the hell are you listening? [00:22:41]Damon Pinch a Loaf Day: [00:22:41] We should actually share the idea behind the show when we w you know, w when we wanted to do it, it was your wife that said you guys should just record your phone sessions that you do all the time. And that’s funny enough. [00:22:54] Steve Rhode: [00:22:54] that’s true. But they’re more [00:22:56] Damon Pinch a Loaf Day: [00:22:56] what it turned out to me. It’s just us ranting about stuff and laughing. [00:23:03] Steve Rhode: [00:23:03] without all the F-bomb. [00:23:07] Damon Pinch a Loaf Day: [00:23:07] Yeah, I’ve been trying to tone it down a little bit, but it does give you a little bit on the editing side. [00:23:12] Steve Rhode: [00:23:12] Oh, thank God. Yeah. Okay. Listen, let’s end this sucker. Let’s swirl this thing around the bowl. You’ve been listening to the, get out of debt guy show with myself Steve Rhode and Damon Day. You can find Damon if you want to at DamonDay.com. And he’ll be happy to give you moments of his wisdom. Damon, any final words? [00:23:41] Damon Pinch a Loaf Day: [00:23:41] And just real quick to wrap up because I don’t want millions of people freaking out cause millions of people listened to the show. As Steve alluded to, there are reasons why you need to look at, public service, loan, forgiveness, and there are situations where if there’s just no way to pay off the loans and you qualify.
[00:23:56] It’s not going to hurt you necessarily to get on it. It’s just, you need to be vigilant about what it is and come to it with a an understanding of what it might not be and plan accordingly. So the best thing to do is have a plan and Steve, who can they call for a plan?
[00:24:11]That’s right. Yeah. [00:24:15] Steve Rhode: [00:24:15] don’t call me. I’ve had [00:24:16] Damon Pinch a Loaf Day: [00:24:16] Damon pinch, a loaf day. [00:24:18] Steve Rhode: [00:24:18] They the infants? No. I’ve had enough of this damn program. All [00:24:22] Damon Pinch a Loaf Day: [00:24:22] gotta get pinch a loaf.com. [00:24:24]Steve Rhode: [00:24:24] Wait. [00:24:25] Damon Pinch a Loaf Day: [00:24:25] I’m looking at it too. I’m like, wait before you air the show. [00:24:32] Steve Rhode: [00:24:32] I love the Oh, the poop is your master. [00:24:40] Damon Pinch a Loaf Day: [00:24:40] Somebody beat me to that million dollar idea. [00:24:43] Steve Rhode: [00:24:43] And then if you click on it, it says contact the poop master [00:24:48] Damon Pinch a Loaf Day: [00:24:48] oh, here it is. Yeah. The poop. It’s your master contact, the poop master. Somebody took a great domain and just ruined it. There’s nothing there. I hate domain parkers. [00:25:01] Steve Rhode: [00:25:01] All right, bye.