Student loan payments were scheduled to resume Oct. 1 after a long hiatus that started with the economic chaos brought about by the COVID-19 pandemic in March 2020.
The federal government suspended the payments, as well as interest on the loans, giving many a respite from the burden of the debt. But that breather is ending and, for many, it means the return of the financial stress of student loans.
Some employers in Arkansas are doing what they can to help ease that concern. Chad Aduddell, the CEO of the CHI St. Vincent medical system in Little Rock, said taking care of employees is as important to the hospital’s mission as is taking care of the physical and mental health of patients.
So when Aduddell learned of an improved federal loan forgiveness program, he immediately went to work researching how CHI St. Vincent could help. The system has partnered with Aptus Financial of Little Rock to help CHI St. Vincent employees qualify for the benefits of the federal government’s Public Service Loan Forgiveness (PSLF) program.
“We felt like this was a way to take a real stressor, a real burden, and help people deal with that stress that may be lording over them, ‘How am I going to make this loan payment that I haven’t had to make for a few years?’” Aduddell said. “Once we figured it out, yes, it was an investment paying for the experts’ time, but it was really a no-brainer for us.”
CHI St. Vincent isn’t the only central Arkansas hospital system getting in on the PSLF act. Baptist Health, following the lead of Chief Financial Officer Brent Beaulieu, has also partnered with Aptus to help its student loan-carrying employees.
“We got involved as a way to help our employees,” Beaulieu said. “Our mission is to meet the health needs of Arkansans, and we want to do that with Christian compassion. Doing that mission requires a pretty large and diverse team. One of the things we really care about is their long-term wellness because our mission is long term.”
PSLF Reform
The PSLF program, created in 2007, isn’t new, but, until recently, it was not well-received by those it was meant to help because of its inefficiency, complicated application process and high rate of rejection. The program was originally designed to erase an individual’s federal student loan debt after 120 monthly payments.
To be eligible, borrowers must work for the government or a qualifying nonprofit — such as CHI St. Vincent and Baptist Health — and participate in a qualifying repayment plan. If that sounds convoluted, the actual application and approval process could be even more so.
The tight restrictions of the original program led to few qualifying applicants. The 2020 rule waiver made it easier to qualify or get non-qualifying circumstances converted to approved ones.
The U.S. Department of Education reported that, as of June 2023, the original program had discharged 12,509 borrowers’ debt valued at about $1.2 billion. The number discharged through the waiver program amounted to more than 482,000 loans valued at nearly $33 billion.
“That’s really crazy, right?” said Sarah Catherine Gutierrez, the founder of Aptus Financial. “I think it is crazy that the government’s program is so complicated that even though it is there and for the taking, 98% of people have been denied.”
The original PSLF waiver expired in October 2022, but Gutierrez said there is still time for borrowers to take advantage of the more accessible PSLF program. But time is of the essence.
“What is happening is these people have been in the wrong repayment plan, and the government has a deadline of December of this year,” Gutierrez said.
“If the people fix their loans, they will literally be able to apply for forgiveness if they have been in public service for 10 years. It’s literally like Oprah: ‘You get a car. You get a car.’”
Investment Expense
Aduddell said CHI St. Vincent has a three-year partnership with Aptus Financial to administer the program for the hospital system’s employees.
The cost to the system isn’t insignificant — Aduddell said it was in the five- to six-figure range — but it is worth it to the hospital to make sure any employee who could get debt relief gets it.
Both CHI St. Vincent and Baptist Health call their PSLF initiatives “Project 120” after the number of monthly payments a borrower has to make before the student loan debt is forgiven.
Aduddell said more than 400 employees have signed up for the PSLF program; their average debt load is more than $60,000.
“We have already had several who have received notification that their student loans have been forgiven; this is exciting,” Aduddell said. “That is life-changing for that coworker. That program has been out there; it’s not new news. If you were to get online and research and try to figure this out, what our coworkers have told us is that it is very complicated to figure out.”
Beaulieu said much of what Baptist Health does is facilitation and education, acting as a matchmaker between interested employee borrowers and Aptus Financial.
The hospital announced Tuesday that its employees have had $1.7 million in loan debt discharged through its Project 120, and another $49 million in employees’ student loans were accepted by the PSLF program.
“One of the keys to this, any time you talk to someone about free financial education or loan forgiveness there is a natural and healthy level of skepticism that starts off,” Beaulieu said. “It has been important to us that our team members understand we are not here to sell them anything. That communication has been a key part of the success.”
But financial health has long been a pet project for Beaulieu. Eliminating debt is part of having healthy finances.
“It was easy for me personally,” Beaulieu said of deciding to start Project 120. “If we can help support our team through that path, that’s a good thing for our community and a good thing for our team members.
“Yes, we had to work it into our budget. It’s hard to quantify the exact return, but in my gut, I’m confident it is the right thing to do. It was a pretty easy decision, and other people in our organization got behind it quickly as well.”
School of Thought
Nonprofit hospital employees aren’t the only ones eligible for debt relief because of their public service.
Public education teachers can qualify as well. Megan Godfrey, a former state representative, is the project coordinator for the Save10 project of the Women’s Foundation of Arkansas. The foundation received a three-year grant from the state’s Department of Education to promote financial literacy in the state’s school districts.
The project’s first focus in 2022 was educating teachers about the PSLF benefits. In two years, Godfrey’s team has met with more than 6,000 educators in 11 school districts.
“We know that debt and student loans in particular are one of the biggest barriers in people’s way to be able to save,” Godfrey said. “The ADE was interested in getting information out. So many folks were eligible, and so many folks had no idea they were eligible.”
Searcy School District Superintendent Bobby Hart said members of his staff and faculty signed up for debt relief after hearing the pitch. Hart said PSLF information was the first thing on the district’s agenda at its kickoff professional development meeting in August.
“One of the best ways to plan for and save for retirement is to make sure you’re out of debt as soon as you possibly can be,” Hart said. The Save10 program is “making teachers aware of it and walking them through the process. Because it is a federal process, it is sometimes cumbersome.
“A lot of teachers get into the profession because they are called to do it, and they’re doing a lot of good but they have to take out student loans to do it. They find themselves in some pretty substantial debt amounts, especially if they go on to continue their education with an advanced degree.”
Hart said several teachers have told him since that their debt had been discharged after signing up for PSLF through Save10.
One family of teachers, Hart said, had more than $100,000 in debt forgiven.
“It has been a good partnership, and it has been a benefit to our teachers; more than anybody it has helped our teachers,” Hart said. “That is pretty powerful.
“The only skin we have in the game as a school district is facilitating the conversation. We don’t pay anybody; nobody pays us. It is a service to our teachers to try to give them every opportunity to be financially stable and secure.”
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