PHEAA facing legal challenges regarding Federal Student Loan Forgiveness program

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(WBRE/WYOU) — The Pennsylvania Higher Education Assistance Agency, or PHEAA, is facing two legal challenges over its handling of a student loan forgiveness program.

Now Pennsylvania’s top attorney says he will not be representing them if they go to court. Attorney General Josh Shapiro announced that he is declining to represent PHEAA as they fight challenges from the attorneys general of New York and Massachusetts.

The lawsuits are over PHEAA’s role in the Federal Student Loan Forgiveness program. The program excuses borrowers who work in public service for 10 years from repaying their loans. PHEAA is the sole servicer of the program, which as of 2018, only approved one percent of applicants.

“We see a 99 percent denial rate. Congress stepped in to try to create a fix to that program. The fix has a 97 percent denial rate,” Seth Frotman said.

New York’s attorney general says the agency has saddled borrowers with debt for long periods of time by being too slow to process applications, mishandling payments, and steering borrowers toward less beneficial repayment options.

At this time, PHEAA has not commented.

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