"Look for the helpers," says Mr. Rogers.
Since the student loan waiver was announced, I have come to accept that only a small percentage of people will take advantage of the significant financial benefit the limited waiver will offer for Public Service Loan Forgiveness (PSLF). Recall previous Save Yourself columns discussing the promise of the waiver and how to take advantage of it. We aren't talking about $500 off MSRP or saving 15% on car insurance. In many cases, we are talking about the equivalent of an entire annual salary's worth of loans going away (tax free).
PSLF is a program that forgives the remaining balance on federal Direct Loans after 120 payments made concurrent with employment in public service. The program was created to promote employment in public service but has done no such thing. As my partner Tim loves to quip, "The government created PSLF to reward public sector employment but somehow forgot to tell public sector employers." By most measures, and for the reason the limited PSLF waiver was even created, it's been a failure.
In 2018, more than 97% of people who should have been eligible were denied forgiveness, mostly because they weren't doing it right.
What does this look like on the ground? In March, an attorney got assistance on her $80,000 in student loans. She was in the cohort denied forgiveness even though she worked in public service and never missed a payment in 15 years, 5 years beyond the 10-year requirement for PSLF. What was she doing wrong?
Well, it all stemmed from a teeny-tiny little bureaucratic fact that is meaningless to the borrower but for some reason critically important to the government. Her loan classification was Family Federal Education Loan Program (FFELP) and not a Direct Loan.
In 20 minutes she consolidated her FFELP loan into a Direct Loan and then re-certified all her public service employment.
Here was her reaction the morning she found out the waiver applied and wiped out her loans. "It's done!!!! My loans have been forgiven!!!!! I don't even know how to react still......I have cried, just stared at it, and then cried some more..."
This woman, an attorney, received a life-altering benefit from the waiver. The counter-factual? Well, with FFELP loans, in normal post-waiver times assuming she eventually "fixed" her loans to a Direct Loan, her payment count would have started at $0.00. In the end, she would have paid for about 25 years and at that point would have paid all or most of that remaining balance. The Student Borrower Protection Center estimates that out of the total 40 million borrowers with federal debt, 9 million would be eligible for PSLF. With the waiver deadline rapidly approaching in October, only about 15% are on track for PSLF and benefit from the waiver.
Enter helpers stage left.
Meet Christina Ceballos, a fly-under-the-radar, mid-level city employee in Austin, Texas, working in procurement as her day job. Her friends see her public persona as a pretty normal woman doing her job, hanging with her husband and dogs and going to an occasional happy hour. What they don't see is a heroic effort happening on her evenings and weekends. In their spare time, Ceballos and a team of 17 folks are supporting a student loan forum on Facebook of student loan borrowers, all helping themselves and each other navigate the nuances and complexities of PSLF. They can troubleshoot in ways that loan servicers can't or won't. And they are doing it for free.
The Public Service Loan Forgiveness Program Support (PSLF) group, a brainchild of Ceballos and a co-founder who has since left, is there to shepherd people through basic education on PSLF, connecting them with over 100,000 members seeking or who have achieved loan forgiveness. Group members are uniquely able to dispel misinformation, and make sure that members have the support and confidence to take the right action and understand and follow every tedious rule.
As this waiver began to take shape, this group began growing at a rate that is best described as overwhelming for Ceballos and her team. As membership grew from 40,000 to 80,000 to 100,000 to where it is now, 123,000, this small volunteer team has had to log more hours to monitor conversations, looking for and weeding out bad information. They must constantly evaluate posts by members with questions for approval. For example, they won't approve the same question already asked several times in the previous week.
For Ceballos, it's personal, and her experience with student loans should give us pause on our societal acceptance of the structure and magnitude of them. After two years in the Peace Corps in Mali, she attended graduate school to jumpstart a lifetime career in public service closer to home, taking on a heavy student loan burden.
Like many, Ceballos has mixed feelings about those student loans. They look a lot less like a good investment on the back end, when one is faced with the payments and time invested on staying eligible for and up-to-date with PSLF. While she values the things learned while studying for her master's degree, Ceballos believes she could have likely achieved the same job advancement and salary through natural promotions without the debt hanging over her.
Importantly, Ceballos was careful. In 2007, she learned about the Public Service Loan Forgiveness program and instantly realized this was for her. She had FFELP loans, which for the first few years actually qualified for PSLF until the government decided to change that, seeming to forget to clue FFELP borrowers in on that little fact.
As a government procurement employee, Ceballos had particularly expertise to see the program was not functioning as promised, after she received information she knew was incorrect from her servicer. Remember, she is a fine print reading pro. This prompted her to reach out to financial groups to see if they could host a forum for public servants with student loans to share information and help each other. When none agreed to, she realized that it had to be her.
In 2018, she started a support group on Facebook, and reports of crushing PSLF denials only fueled the group to work harder and smarter. Ceballos noticed members who frequently responded to other member questions giving smart and well-researched comments and approached them about volunteering as administrators and moderators to formalize their role. They agreed.
But then some good news started trickling in. Ceballos remembers its being maybe once a month at first. A member would post a screenshot of a $0.00 loan balance, and the whole group would erupt in excitement. That excitement would be fuel for members to persevere. Members learned from each other that to succeed in PSLF they had to become paranoid and obsessed about their student loan situation.
Today, the success stories of loan forgiveness are spaced out by hours, not months. They could be $50,000 or $100,000 or their record to date of $563,000. But Ceballos and her team aren't celebrating. They worry about those who desperately need this relief who won't get it.
One of the most gratifying outcomes for the team is seeing people stay in the group even after their loans are forgiven. Members understand the power of this service and stick around to help where they can, including many of the group's administrators and moderators.
Those are the helpers. If you know people with student loans who work in public service, they need to take advantage of any employer-sponsored PSLF education or, in the absence of that, request to join Ceballos's group. To find them on Facebook, search for "Public Service Loan Forgiveness Program Support (PSLF)." Even if you don't have student loans or know people with them, isn't it great to know there are people like Ceballos and her team who are out there, with no agenda, who just want to help?
Sarah Catherine Gutierrez is founder, partner and CEO of Aptus Financial in Little Rock. She is also author of the book "But First, Save 10: The One Simple Money Move That Will Change Your Life," published by Et Alia Press. Contact her at sc@aptusfinancial.com.