THE COMMONWEALTH OF MASSACHUSETTS
OFFICE OF THE ATTORNEY GENERAL
ONE ASHBURTON PLACE
BOSTON, MASSACHUSETTS 02108
(617) 727-2200
(617) 727-4765 TTY
www.mass.gov/ago
January 4, 2023
The Honorable Michael D. Hurley, Senate Clerk
Office of the Clerk of the Senate
State House, Room 335
Boston, MA 02133
The Honorable Steven T. James, House Clerk
Office of the Clerk of the House
State House, Room 145
Boston, MA 02133
Re: Fiscal Year 2022 Report of the Massachusetts Attorney General’s Student Loan
Ombudsman Pursuant to G.L. c. 12, § 35
Dear Clerks Hurley and James:
Pursuant to G.L. c. 12, § 35, we hereby submit this report to the General Court on behalf
of the Attorney General’s Office (“AGO”).
Millions of people in Massachusetts and across the nation are stuck in a quagmire of
student loan debt. As of October 2022, student loan debt totaled $1.768 trillion nationwide. 1
Most of this debt is federal. The federal loan program includes over $1.4 trillion in Direct Loans,
nearly $208 billion in loans issued under the Federal Family Education Loan (“FFEL”) Program,
and $3.9 billion in Perkins Loans. 2 Direct Loans are owned by the U.S. Department of
Education, whereas FFEL and Perkins Loans can be owned by either the Department or private
lenders. Over 900,000 Massachusetts borrowers cumulatively carry $31.7 billion in federal
student loan debt. 3 Private loans, which are issued by banks, credit unions, state-sponsored
agencies, and other nonbank lenders, are estimated to total $133 billion nationwide. 4
Federal loan borrowers must navigate a complicated repayment system, often with
inadequate information and support from the private companies hired to service their loans. The
programs that Congress created to help provide an affordable path out of student loan debt,
1
“G19 Consumer Credit Series.” Federal Reserve, http://www.federalreserve.gov/releases/g19/current/default.htm
2
“Federal Student Aid Portfolio Summary.” Office of Federal Student Aid, https://studentaid.gov/data-
center/student/portfolio
3
“Portfolio by Location.” Office of Federal Student Aid, https://studentaid.gov/data-center/student/portfolio
4
Estimate of total private loan debt calculated as the difference between the Federal Reserve’s estimate of total
student loan debt ($1.768 trillion) and the current value of the U.S. Department of Education’s loan portfolio
($1.635 trillion).
including income-driven repayment (“IDR”) and Public Service Loan Forgiveness (“PSLF”),
have proven ineffective due to their complexity, poor design, faulty administration, and the
failure of servicers to provide borrowers with appropriate assistance:
• IDR plans enable borrowers to make payments based on their income and family size
and offer the possibility of loan forgiveness after 20 or 25 years. Servicers have often
steered borrowers into costly forbearances rather than going through the
comparatively time-consuming process of helping borrowers enroll in IDR. Although
IDR has existed for over 25 years, in 2021 the U.S. Department of Education reported
that only 32 borrowers had ever qualified for IDR forgiveness. 5
• The PSLF Program forgives the remaining balance on federal Direct Loans after
borrowers have made 120 qualifying payments under a qualifying repayment plan
while working full-time for the government or certain types of non-profit employers.
Due to the PSLF Program’s complexity and poor servicing, millions of public service
workers have been unable to access loan forgiveness and denial rates have been as
high as 99%. 6
Struggling federal borrowers who cannot access debt relief programs like IDR and PSLF
(or who find the programs unaffordable) are at risk of defaulting on their loans. As of March
2022, over 7.5 million federal loan borrowers were in default. 7 Federal loans default after 270
days of delinquency. The consequences of default are severe, and include wage garnishment, tax
refund interception, and Social Security offset. Compounding this, many federal loan borrowers
also have private loans, for which there are few repayment options.
The Ombudsman’s Student Loan Assistance Unit 8 works on the frontlines of the student
debt crisis, helping borrowers to:
• obtain information about their loans;
• explore repayment options;
• learn about, apply for, maintain, and pursue forgiveness under IDR plans;
• pursue forgiveness under PSLF and Temporary Expanded PSLF (“TEPSLF”);
• consolidate loans made under the FFEL Program into the Direct Loan Program;
• avoid default or get loans out of default;
• end wage garnishments, tax refund interceptions, or Social Security offsets;
• resolve disputes with loan servicers;
• stop harassing debt collection calls; and
• apply in certain circumstances for loan discharges.
5
“Education Department’s Decades-Old Debt Trap: How the Mismanagement of Income-Driven Repayment
Locked Millions in Debt.” National Consumer Law Center and Student Borrower Protection Center, 2021,
https://www.nclc.org/wp-content/uploads/2022/08/IB_IDR-1.pdf
6
“Pre-March 2019 PSLF Report FSA.” Office of Federal Student Aid, https://studentaid.gov/sites/default/files/pslf-
report.xls
7
“Electronic Announcement ID: General 22-43. Office of Federal Student Aid, July 13, 2022,
https://fsapartners.ed.gov/knowledge-center/library/resource-type/Electronic%20Announcements
8
The Student Loan Ombudsman was established within the AGO by Chapter 358 of the Acts of 2020. The position
became effective on July 1, 2021. The AGO’s Student Loan Assistance Unit, created in 2015, operates within the
Insurance and Financial Services Division under the management of the Ombudsman and Deputy Ombudsman.
2
 Based on this work, we have concluded that the student loan system is fundamentally
broken and taking a devastating toll on millions of Americans. It is a system that has enabled
for-profit schools to deceive and defraud vulnerable students who were seeking a better life. It is
a system that disproportionately burdens women and minorities. It is a system that has recklessly
saddled parent borrowers with loans they cannot possibly repay. It is a system that has failed to
deliver on the programs that Congress created to provide a more affordable path out of student
loan debt. And it is a system that has hollowed out the futures of millions of young people and
left them with a lifetime of insurmountable debt.
To address this crisis, the Biden-Harris Administration has created historic debt relief
opportunities for federal loan borrowers. In addition to $10,000-$20,000 in One-Time Student
Loan Debt Relief, which is now paused due to legal challenges, the Administration has
announced several remedial programs to address long standing servicing failures and the
inability of borrowers to access vital programs like IDR and PSLF. These remedial programs
include the One-Time Adjustment, the Limited PSLF Waiver, and the Fresh Start initiative.
• The One-Time Adjustment will give borrowers with U.S. Department of Education-
owned loans qualifying months toward loan forgiveness under IDR plans—even if
they have never enrolled in IDR. Through the adjustment, borrowers can receive
credit toward IDR loan forgiveness for all the months their loans have been in
repayment since 1994 and for certain forbearance and deferment periods. 9 If
borrowers have loans that are not owned by the U.S. Department of Education, they
must consolidate those loans into the Direct Loan Program by May 1, 2023 to receive
the adjustment. The One-Time Adjustment will also provide public service workers
with credit toward PSLF if they consolidate non-Direct Loans into the Direct Loan
Program by May 1, 2023 and certify their employment.
• The Limited PSLF Waiver temporarily relaxed the PSLF Program’s rules and enabled
borrowers to get credit toward forgiveness for past repayment periods that would not
otherwise qualify for PSLF. However, to benefit, borrowers needed to take specific
actions by October 31, 2022, including consolidating non-Direct Loans into the
Direct Loan Program and filing employment certifications. Although the Limited
PSLF Waiver has ended, many of its benefits are continuing through the One-Time
Adjustment.
• The Fresh Start initiative will enable borrowers with defaulted loans to reenter
repayment in good standing and permanently eliminate the credit impact of
delinquency and default. Borrowers will need to opt into Fresh Start in 2023.
Some borrowers will have their balances forgiven through the Biden-Harris
Administration’s debt relief initiatives. Others will need to engage with the complex federal loan
repayment system and enroll in IDR to continue working toward forgiveness after the federal
portfolio resumes repayment, which is expected to occur in 2023. Many borrowers will be doing
so with a new servicer given the large number of recent servicing transfers.
9
Borrowers will be able to see how many credits they have accrued toward IDR loan forgiveness through the One-
Time Adjustment in their federal student aid accounts starting in July 2023.
3
 Certain borrowers are at risk of missing out on debt relief opportunities entirely. For
example, privately owned FFEL and Perkins Loans, which are presently locked out of the
$10,000-$20,000 in One-Time Student Loan Debt Relief, are also at risk of missing out on the
Administration’s remedial programs if they are not consolidated into the Direct Loan Program
within the coming months. Meanwhile, many of the companies that service these privately
owned federal loans are disincentivized to instruct borrowers to consolidate.
Further, the interplay between certain debt relief initiatives is quite complex. For
example, although consolidation into the Direct Loan Program is necessary for the Limited PSLF
Waiver and One-Time Adjustment, consolidating privately owned loans and federally owned
loans together can result in disqualification for the $10,000-$20,000 in One-Time Student Loan
Debt Relief.
There are also significant hurdles to accessing relief. For example, most borrowers are
unaware of what types of federal loans they have or who owns them, and some do not understand
whether they have federal or private loans. Obtaining this information is not simple. Borrowers’
personal information must be verified through a multiday process before they can gain access to
their federal student aid accounts. Once logged in, they must navigate to separate screens to
identify their loan types and loan ownership. 10 If borrowers identify that they have loans that
need to be consolidated to access debt relief, some are reluctant to do so as the benefits of
programs like the Limited PSLF Waiver and One-Time Adjustment are not easily quantifiable.
Many are concerned that consolidation will change their interest rates, extend their loan terms, or
cause them to lose qualifying months toward PSLF or IDR. 11 Additionally, the loan repayment
estimator that borrowers see as part of the consolidation process doesn’t take the recent debt
relief programs into consideration and provides inaccurate estimates of total time in repayment,
projected forgiveness amounts, and total loan costs. Even when borrowers decide to move
forward with consolidation, married borrowers must go through the added step of getting their
spouses to set up federal student aid accounts to consent to the release of joint tax returns for
IDR enrollment. Adding to these difficulties, the federal student aid website has been plagued
by technological glitches that often require borrowers to repeatedly restart these time-consuming
processes.
Borrowers have also struggled to get the help and information they need to access the
recent debt relief initiatives from their loan servicers. If borrowers do find out that consolidation
is necessary to access relief, their servicers generally do not help them to complete the process.
PSLF borrowers have reported experiencing call hold times exceeding two hours in trying to
speak with PSLF servicers. In fact, during the Limited PSLF Waiver, the U.S. Department of
Education asked borrowers to limit their calls to the Department: “Please let us focus on helping
you. Give us time and try not to flood our phone lines.” 12 PSLF borrowers have also
experienced significant servicer delays in processing consolidations and employment
certifications. Further, in some cases, servicers have provided borrowers with false or
misleading information. This includes informing borrowers that consolidation will restart the
10
Instructions can be found at www.mass.gov/ago/aremyloansdirect and www.mass.gov/ago/whoownsmyloans.
11
While traditionally, consolidation would restart the clock on loan forgiveness for both IDR and PSLF, under the
remedial programs, consolidation is often necessary and will not result in the loss of credit toward forgiveness.
12
Letter from Richard Cordray, Chief Operating Operator, U.S. Department of Education, February 7, 2022,
https://studentaid.gov/sites/default/files/pslf-coo-message-2022-02-07.pdf
4
clock on loan forgiveness and misleading borrowers into believing that they cannot access debt
relief programs.
Given the challenges associated with understanding and accessing the debt relief
initiatives, many borrowers will need individualized guidance and assistance from government
agencies and non-profit advocates to avoid missing out on these historic opportunities. The
Ombudsman’s Student Loan Assistance Unit is endeavoring to meet these demands and ensure
that Massachusetts borrowers can both access and maximize debt relief.
Massachusetts borrowers can contact the Ombudsman to file a complaint or help request
at www.mass.gov/ago/studentloans. 13 This website also provides information and resources on
topics including PSLF and the Limited PSLF Waiver, IDR plans, the One-Time Adjustment,
how to identify federal loan types, the ongoing federal loan payment pause and eventual return to
repayment, the Fresh Start initiative, student loan “debt relief” scams, and the AGO’s settlements
with student loan servicers. The Ombudsman’s Limited PSLF Waiver webpage, which includes
a video tutorial, has been visited nearly 10,000 times. The page maintained on the AGO’s
settlement with Navient Corporation (“Navient”) received over 150,000 visits.
The work of the Student Loan Assistance Unit not only helps individual borrowers but
also informs the AGO’s investigations and advocacy on policy issues. Further, working directly
with borrowers enables the Ombudsman to identify important issues that may not be as readily
apparent to policy makers at the U.S. Department of Education. The Ombudsman regularly
provides the Department with valued input on its implementation of debt relief initiatives. In
collaboration with other state Attorneys General and Ombudspersons, the Ombudsman also
authors and contributes to multistate letters on student loan matters.
1. Complaint and Help Request Volume
Since March 13, 2020, most federal loans have been subject to a pandemic payment
pause and 0% interest rate. Notwithstanding this pause, the Ombudsman received an
unprecedented number of complaints and help requests in the past fiscal year. Between July 1,
2021 and June 30, 2022, Massachusetts student loan borrowers filed a total of 1,207 complaints
and/or help requests, 14 which are categorized as follows:
Complaints
• 480 against student loan servicers
• 136 relating to for-profit schools and associated debt
• 34 relating to non-profit and/or public colleges and universities
• 23 against student loan “debt relief” companies
Help Requests
• 444 borrowers sought help exploring student loan repayment options
• 423 borrowers sought help getting information on their student loans
13
Pursuant to regulations promulgated by the Massachusetts Division of Banks, which became effective in
September 2021, contact information for the Massachusetts Ombudsman is listed on all bills and notices sent to
Massachusetts student loan borrowers.
14
In some cases, borrowers had multiple complaints and/or requested multiple types of help.
5
 • 210 borrowers sought help getting out of default and avoiding wage garnishment and
tax refund interception
• 107 borrowers sought help applying for a total and permanent disability discharge
2. Student Loan Servicing Complaints
Navient was subject to the largest number of complaints, followed by The Pennsylvania
Higher Education Assistance Agency (“PHEAA”), and SLM Corporation (“Sallie Mae”).
Both Navient and PHEAA have withdrawn from servicing loans owned by the U.S.
Department of Education. 15 Along with the exit of two smaller servicers, these withdrawals have
required the largest transfer of student loans in the history of the federal loan portfolio. Navient
and PHEAA both continue to service privately owned loans made under the FFEL Program as
well as private loans. Sallie Mae, which received the third largest number of complaints, almost
exclusively services private loans.
COMPLAINTS BY SERVICER Navient
54%
Other
6%