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When a school shuts down, student-loan borrowers are often entitled to debt forgiveness.
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But a new GAO report found issues with communicating that relief to borrowers.
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For example, notices of discharges have had grammatical errors, appearing like a scam.
When a school shuts its doors, the students who took out loans are often entitled to get that debt erased. But poorly-written notices from loan companies might make borrowers think that relief is a scam.
On Wednesday, the Government Accountability Office (GAO) released a report analyzing closed-school discharges, or debt relief following a school closure for borrowers who do not complete their education elsewhere. It found a host of issues with actually letting the borrower know they could get their dept wiped out.
For example, the GAO found the Education Department is often slow in identifying school closures, meaning it might take a long time for borrowers to know they qualify for relief, and there’s a lack of outreach toward those at risk of default, presenting an extra risk to those borrowers.
But another problem arises with the notice of debt relief itself. Not only will loan companies fail to describe eligibility for relief or relevance of the notice to borrowers — the notices will often include “grammatical errors and incomplete sentences,” the report said. The…
