An Education Department official acknowledged Thursday that a loan forgiveness program with a 99% rejection rate “presents numerous obstacles to borrowers.”

Some critics contend that’s because the agency isn’t running the program correctly and is letting loans servicers give borrowers the runaround with bad information.

The Public Service Loan Forgiveness Program is meant to wipe away student-loan debt for people who work in public-service jobs including law enforcement, teaching and the military. As of 2018, just 1% of borrowers who applied for the program had been accepted.

At a Congressional hearing, Jeff Appel, director of policy liaison and implementation in the department’s Office of Federal Student Aid, said the low approval rate was because of the program’s complexity — not to mention the fact that about 80% of forgiveness applicants still haven’t made the required 10 years of repayments to become eligible.

“Naturally, as time progresses, more borrowers will have a real opportunity to meet the criteria,” he said.

To get their balance wiped away in the Public Service Loan Forgiveness Program, borrowers need to make 120 repayments and show they have been working are in an eligible public sector profession during that time. Nonprofit employees and nurses are some of the people who, technically at least, get clean slates.

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It all “seems simple,” Appel said. But there are twists. Only one sort of federal loan, a Direct Loan, being available for discharge. About two-thirds of borrowers had different types of loans when lawmakers enacted the program in 2007, he noted.

As of June, 1,526 borrowers have wiped away their debts for a total $80.2 million under the program and a supplemental program, according to him. That’s out of more than 100,000 who applied.

Appel said the department agreed with Government Accountability Office (GAO) recommendations to better explain the rules to applicants and loan servicers. The watchdog office made the recommendations last year. The Education Department hasn’t put them fully into effect, according to the GAO.

“ The Education Department can do ‘a better job of explaining those complicated requirements to borrowers.’ ” — —Jeff Appel, Education Department official

The Education Department can’t re-write eligibility rules, Appel said. But it can do “a better job of explaining those complicated requirements to borrowers,” he said. The department posted a loan forgiveness help tool late last year, which has now been used over 200,000 times.

Appel — and many Republican lawmakers at the hearing — said slim discharge rates boiled down to faithfully following the letter of a complex law.

Democrats and advocates see it differently. A 99% rejection showed a failing program, said Rep. Bobby Scott, a Democrat from Virginia. “These aren’t puzzles or contests, these are programs you’re supposed to benefit from,” he said.

Two months before Appel’s remarks, the American Federation of Teachers sued the Department of Education, alleging “gross mismanagement.” The federal lawsuit listed examples of teachers who talked to their servicers and thought they were making all the right payments for 10 years — but were then rejected and told to start all over again.

“ ‘I have to resign myself that I’m going to die with this debt. That’s my reality. That’s what I accept. However, if a program was designed to protect me, I have to protect myself.’ ” — —Kelly Finlaw, a middle school art teacher owing almost $100,000 in student loans

Kelly Finlaw, one of the lawsuit’s plaintiffs, testified Thursday. The New York City middle school art teacher with an almost $100,000 balance said she never went into education hoping the government would pay her loans.

“I have to resign myself that I’m going to die with this debt. That’s my reality. That’s what I accept. However, if a program was designed to protect me, I have to protect myself,” she said.

She didn’t buy the idea the 99% rate was all because of complexity. “I was lied to several times, Directly lied to,” she said.

Like a crusade

Some of the lucky few borrowers who have wiped away their debts in the program said they needed plenty of time and energy for calls and paperwork. One successful applicant previously told MarketWatch that working on her forgiveness claim became a personal “crusade.”

On Thursday, Matthew Chingos, the Urban Institute’s vice president for education data and policy, said the largest benefits aren’t going to the applicants who need them the most, but the borrowers with the time and savvy “to navigate the system.”

One loan servicer skipped the hearing

The Pennsylvania Higher Education Assistance Agency processes all public service loan forgiveness applications through its FedLoan servicing operation. The organization is fighting off lawsuits alleging it botched the program, including one case filed by the Massachusetts Attorney General’s office.

Pennsylvania Higher Education Assistance Agency’s CEO declined an invitation to testify, according to a “disappointed” Rep. Susan Davis, a Democrat from California. The federal government has paid Pennsylvania Higher Education Assistance Agency $1.3 billion for its contract to handle the applications, she noted.

Rep. Lloyd Smucker, a Republican from Pennsylvania, noted the Democrats invited a lawyer from the Massachusetts Attorney General’s to testify. The Democrats “shamefully decided to make a spectacle,” he claimed.

A Pennsylvania Higher Education Assistance Agency (PHEAA) spokesman told MarketWatch the organization only received an invitation a week ago.

“However, PHEAA’s very limited ability to speak on behalf of the U.S. Department of Education, which administers and controls the PSLF Program, prevented the agency from participating,” he said.

“As a public service organization, PHEAA is committed to quality servicing and successful outcomes for all borrowers. We have and will continue to collaborate with Congress and the Department, seeking substantive improvements on behalf of borrowers. A thoughtful, solution-based conversation among all parties is what we seek and is what all borrowers deserve,” the spokesman said.