94% of these student loan borrowers were rejected for student loan forgiveness.
Here’s what you need to know.
Here’s a statistic for you: only 124 servicemembers got student loan cancellation through the Public Service Loan Forgiveness program. Ever. That’s not a typo. It’s not last month’s numbers. It’s not 1,240 or 12,400 or 124,000. It’s the total amount of U.S. servicemembers who got student loan forgiveness since the program’s inception in 2007 and eligibility for student loan cancellation beginning in 2017.
A new report on student loans from the Government Accountability Office shows that as of January 31, 2020:
- 124 servicemembers got student loan forgiveness through the Public Service Loan Forgiveness program;
- 163 civilian employees within the U.S. Department of Defense got student loan forgiveness; and
- 94% of applications for student loan forgiveness were denied.
The U.S. Department of Defense, with three million employees, is the largest employer in America and the largest federal provider of student loan repayments. However, a remarkably low number of personnel got their student loans cancelled. These statistics are another reminder of the challenges that public servants face when trying to get student loan forgiveness under an already-established federal program. If these numbers appear shocking, the overall denial rate for public service loan forgiveness is 98%.
This news comes after student loan forgiveness faced another major setback.
Public service loan forgiveness: the requirements
More information and increased transparency are paramount to help public servants understand the many requirements for the Public Service Loan Forgiveness program. The Public Service Loan Forgiveness is a federal program created by Congress to help federal student loan borrowers who work for an eligible public service or non-profit employer get student loan forgiveness of their federal student loans. Importantly, student loan forgiveness isn’t automatic. Borrowers must meet several requirements, including, but not limited to:
- work full-time (at least 30 hours a week)
- work for an eligible public service or non-profit employer (use this Employer Verification tool to check if your employer qualifies)
- make 120 monthly payments in full and on-time
- be enrolled in an eligible income-driven repayment plan
- make a majority of your monthly student loan payments while enrolled in an eligible income-driven repayment plan
- have Direct Loans, or consolidate your non-Direct Loans, if necessary, into a Direct Consolidation Loan
Importantly, during the Covid-19 pandemic, while federal student loan payments have been paused, borrowers have received “credit” toward their 120 monthly student loan payment requirement even if they didn’t make any student loan payments during this time. Some common reasons for denial of student loan forgiveness include missing or incomplete paperwork, ineligible student loans, and an ineligible student loan payment plan, among others.
Student loan forgiveness: next steps
To get approved for public service loan forgiveness, it’s not as simple as saying you work in public service. For many student loan borrowers, simply thinking about the requirements may cause a headache. The 94% rejection rate, while lower than the overall rejection rate for the program, is another reminder that student loan borrowers either aren’t aware of the requirements, or perhaps the requirements are too complex. Increased transparency and information sharing between the U.S. Departments of Education and Defense are initial first steps that could lead to a higher approval rate of student loan forgiveness. The Education Department has a helpful website on public service loan forgiveness. However, so long as Congress continues to support the program, student loan forgiveness should be more accessible and easier to apply for. President Joe Biden has proposed that all federal student loan borrowers should automatically be enrolled in income-driven repayment plans. That would be a helpful first step, and perhaps the automatic enrollment should be extended to servicemembers for the Public Service Loan Forgiveness program to make the process easier. Biden wants student loan forgiveness three ways. For example, Biden has also proposed simplifying public service loan forgiveness, and granting $50,000 of student loan forgiveness after five years of service, rather than waiting for 10 years of student loan repayment. Some advocates have proposed that student loan forgiveness should be automatic after 10 years of public service, even if student loan borrowers don’t meet any requirements.
This Public Service Loan Forgiveness calculator helps you understand how much student loan forgiveness you can get.
These student loan calculators can help with student loan repayment, student loan refinancing, and income-driven repayment plans.
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