My FFEL Loans Were Garnished by Ascendium and I Could Not Get PSLF Forgiveness

Question:

Dear Steve,

I am a Federal Family Education Loan recipient. I had a 63,000 loan in the nineties and consolidated it. I went into default, and Ascendium Education Group garnished my wages at the public defender’s office for 12 years. I worked there for 14 years.

They garnished over $180,000. I recently received a statement that said my balance is now $210,000. The garnished funds only got applied to fees and interests, and I got absolutely 0 credit for the payments I could make.

About 3 years before I left the PD’s office, a coworker told me about forgiveness, and I applied. I was told because I was in default, I couldn’t do anything….but pay $5 per month and rehabilitate the loan.

Then consolidate into a new loan, but no credit for 10 years I had in public service. Now I no longer work in public service.

What can I do?

Sean

Answer:

Dear Sean,

You raise a fascinating situation.

First, the student loan servicer appears to have given you some incomplete information when your loan originally went into default. They should have told you about rehabilitating your loan back then and your $5 monthly payments would have even counted towards the required monthly payments under the Public Service Loan Forgiveness (PSLF) program.

I’m intrigued that the current Temporary Expanded Public Service Loan Forgiveness (TEPSLF) might not be an answer to your situation. Under the temporary program must have “only been ineligible for PSLF because some or all of your payments were not made under a qualifying repayment plan for PSLF.” That sure sounds like your situation. – Source

There is an online tool help complete your Public  Service Loan Forgiveness  (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application (PSLF form).

The Full Requirements under TEPSLF

To qualify for loan forgiveness under the TEPSLF opportunity, you must have

  • only been ineligible for PSLF because some or all of your payments were not made under a qualifying repayment plan for PSLF;
  • had at least 10 years of full-time employment certified by a qualifying employer;
  • met the TEPSLF requirement for the amount you paid 12 months prior to applying for TEPSLF and the last payment you made before applying for TEPSLF to be at least as much as you would have paid under an income-driven repayment plan; and
  • made 120 qualifying payments under the new requirements for TEPSLF while working full-time for your qualifying employer or employers.
      Note: At a minimum, a qualifying monthly payment is a payment that you made after Oct. 1, 2007

    • for the full amount due as shown on your bill;
    • no later than 15 days after your due date; and
    • while employed full-time by a qualifying employer.
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Borrowers who have only Federal Family Education Loan (FFEL) Program, Federal Perkins Loan (Perkins Loan) Program, nonfederal, and/or private loans are not eligible for the TEPSLF opportunity.

But it is not clear what you consolidated it into all those years ago so you might be eligible.

But there is this interesting development as well. Read Biden Department of Education Halts FFEL Loan Collections.

“The Department of Education announces that it will expand the 0% interest rate and pause of collections activity to 1.14 million borrowers who defaulted on a privately-held FFEL Program loan. This action will protect more than 800,000 borrowers at risk of having their federal tax refunds seized to repay a defaulted loan. This relief will be made retroactive to March 13, 2020, starting the COVID-19 national emergency.

The Department will work to automatically return any tax refunds seized or wages garnished over the past year.”

I think it might be in your best interest to pursue this issue with the Department of Education. Your situation is unique and if a reasonable person at Education could review your situation it appears there is an answer in there.

Sincerly,


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

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Steve Rhode

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