Candidly Releases Automated Public Service Loan Forgiveness Tool

The tool reduces complexity for borrowers and lowers the administrative burden for employers by automating several steps of the application process.

Candidly, the student debt management platform, has announced the release of its automated Public Service Loan Forgiveness tool.

According to the firm, the adoption of this new tool reduces complexity for borrowers, lowers the administrative burden on resource-strapped employers and ensures error-free applications for review by the U.S. Department of Education and associated student loan servicers. 

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

PSLF is the most generous loan forgiveness program offered by the DOE; unfortunately, it is also significantly underutilized, says a Candidly press release about the new service. The forgiveness program was created for borrowers who work in the public interest—teachers, hospital workers, government workers and those working for nonprofits are all likely to qualify for PSLF. Yet student debt continues to cause high stress and churn among the people in these roles.

For example, 50% of nurses see student debt as their largest and most important financial concern. The issues arise in determining eligibility and a complicated application process. Borrowers must confirm if they work for a qualifying employer, if their employment status grants them program eligibility and which of their student loans are eligible for the program. Then they must identify and educate the necessary HR administrator so that the administrator can certify the application before borrowers send it to their loan servicer and the DOE. As a result, only 6.7% of those eligible for PSLF have even applied for the program and only 2.1% of those who have applied have been approved.

Candidly’s PSLF tool seeks to address these problems. For borrowers, checking whether or not they are eligible for PSLF requires a straightforward process of connecting their loans to the platform. The tool handles all of the PSLF eligibility checks on the borrower’s behalf—including the new expanded-access PSLF waiver requirements—to simplify the application so that it only takes borrowers an average of 90 seconds to submit their application. Candidly’s service provides guidance and immediate actions that borrowers can take to maximize loan forgiveness in the long term.

This guidance—such as consolidating loans and/or switching to a different repayment plan—is context-aware and incorporates the temporary PSLF expansions, according to the firm. Employees can also track their eligibility status and payment history, request important certification forms digitally and receive automated reminders for annual recertification.

For employers, Candidly has digitized and automated key elements of the PSLF application process, reducing operational overhead. In addition to providing employees and HR administrators with a  knowledge center to learn about PSLF, Candidly has created an HR administrator portal.

Excessive Fee ERISA Complaint Targets Cook Group

The large medical-device-manufacturing organization is facing familiar fiduciary breach allegations in federal court in Indiana.

A new Employee Retirement Income Security Act lawsuit has been filed in the U.S. District Court for the Southern District of Indiana, naming the Cook Group Inc. and its profit-sharing plan advisory committee as defendants.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

The plaintiffs in the case put forward substantially similar allegations to numerous other lawsuits filed against employers for alleged fiduciary breaches in the operation of their defined contribution retirement plans. Here, the plaintiffs allege that, instead of using the plan’s bargaining power to benefit participants and beneficiaries, the Cook Group defendants selected and retained high-cost investments and agreed to excessively high compensation for recordkeeping, administration and other fees compared to available alternatives.

The complaint suggests this caused the plan, and hence participants, to pay unreasonable expenses and costs.

“These objectively unreasonable RK&A fees, share-class selections and high-cost investments cannot be justified,” the complaint states. “Defendants’ failures breached the fiduciary duties they owed to plaintiff, plan participants and beneficiaries.”

The complaint states that prudent fiduciaries of 401(k) plans are required to “continuously monitor” fees against applicable benchmarks and peer groups to identify objectively unreasonable and unjustifiable fees.

“Upon information and belief, defendants engaged in a flawed and imprudent decisionmaking and selection process by not subjecting its recordkeeper, Fidelity Investments, to a competitive, recordkeeper bidding process during the class period and by maintaining objectively unreasonable share classes and funds in their investment portfolio when cheaper share classes and funds with comparable or even materially identical portfolio management and investments were readily available,” the complaint states.

The complaint includes significant analysis and argumentation pertaining to the plan’s alleged use of revenue sharing. Similar to other lawsuits that have met with mixed results, the complaint seeks to paint the use of revenue sharing, by which recordkeeping costs are defrayed by investment fees, as being generally imprudent. The basic argument is that the use of revenue sharing to pay plan recordkeeping and administrative fees can inappropriately motivate plan fiduciaries to offer higher-cost versions of available investments.

“A plan fiduciary is required to fully understand all sources of revenue received by its RK&A service provider/recordkeeper,” the complaint continues. “A plan fiduciary must regularly monitor that revenue to ensure that the compensation received by the recordkeeper is and remains reasonable for the services provided.”

The complaint goes on to suggest that the defendants have not adequately monitored the fees and expenses paid by the plan and that they have not conducted a prudent number of requests for proposal. It also suggests the plan fiduciaries have failed to investigate non-mutual fund investment options, such as collective investment trusts, at least in part because of the preferences for paying plan fees via revenue sharing.

“A hypothetical plan fiduciary must remain informed about overall trends in the marketplace regarding the fees being paid by other plans, as well as the recordkeeping rates that are available,” the complaint states. “This will generally include conducting a request for proposal process at reasonable intervals, and immediately if the plan’s recordkeeping expenses have grown significantly or appear high in relation to the general marketplace. More specifically, an RFP should happen at least every three years as a matter of course, and more frequently if the plans experience an increase in recordkeeping costs or fee benchmarking reveals the recordkeeper’s compensation to exceed levels found in other, similar plans.”

Cook Group has not yet responded to a request for comment about the litigation.

«