Education Department Releases New Data on Public Service Loan Forgiveness Program
By Hunter B. Martin, NASFAA Staff Reporter
As Congress continues to debate the reauthorization of the Higher Education Act (HEA), the national student debt and loan forgiveness programs continue to present other challenges. New data released from the Department of Education (ED) shows that still just a fraction of applications have been approved under the Public Service Loan Forgiveness (PSLF) program.
According to the report, released last week, over 110,000 applications have been submitted for PSLF as of the end of June, but only 1,216 (or about 1.1%) have been approved, resulting in an overall loan discharge of about $52 million. The average amount of loan forgiveness per borrower was $61,592. Of those approved, 76% work for the government and the remaining 24% work in the nonprofit 501(c)(3) sector.
Over half of the applications were rejected due to a lack of qualifying payments. Another quarter were rejected for missing information and 15% were denied for not having eligible loans. To receive PSLF, borrowers need to be on an income-driven repayment (IDR) plan and make 120 qualifying payments.
Seeking to solve that issue, the Temporary Expanded PSLF (TEPSLF) program created by Congress expanded the list of qualifying repayment plans to include the Graduated Repayment Plan, Extended Repayment Plan, Consolidated Standard Repayment Plan and Consolidated Graduated Repayment Plan. Of the borrowers whose TEPSLF applications were approved, approximately 37% achieved loan forgiveness due to the expanded allowance for other repayment plans.
Yet, according to ED, there have been just 726 approved TEPSLF applications and 16,740 rejected applications. The program has awarded just over $28 million in loan forgiveness; the average per borrower was $41,368.
A House education subcommittee recently held a hearing that focused on challenges with implementing PSLF. Partisan debate revealed frustrations on both sides over the complex nature of the program and difficulties for borrowers to meet all of the qualifications in order to even be eligible for loan forgiveness.
House Democrats also recently sent a letter to ED, expressing concern from a recent Government Accountability Office (GAO) report that identified issues with both the PSLF and TEPSLF programs, requesting a response by October 21.
“It was never Congress’s intent to make these programs functionally inaccessible, which the Department has ensured by erecting a series of barriers throughout the application and approval processes,” the lawmakers wrote. “We hope the Department will be reminded of the guiding tenet that drove Congress’s creation of the TEPSLF and PSLF programs: that dedicating yourself to making this country better … is an honorable and deeply-needed service. These borrowers have earned relief from their student loan debt, and we will continue conducting close oversight until your Department fulfills our nation’s promise to them.”
Publication Date: 10/9/2019
Karen M | 10/9/2019 1:25:43 PM
Public Service Loan Forgiveness was signed into law in October 2007. Prior to July 2009, the only eligible income driven repayment plan available was Income-Contingent. A student trying to minimize or lower a monthly payment most likely would not have selected ICR. With the start of IBR in July 2009, more students entered into a qualifying repayment plan. I will watching to see if the approval numbers increase beginning this November, as long as those borrowers consolidated any FFEL loans to a Direct Loan, which is another reason for the big decline in PSLF approvals.
Jose E | 10/9/2019 12:23:19 PM
I wish the sensationalism and reporting would change. The fact that we have 1% who have qualified for PSLF is more than anyone would have thought at this point, given that we are at the 10-year mark from its implementation. All of the opportunists that applied and have been denied is warranted. I foresee 50% of those who apply in 2024 to be eligible for PSLF, without question. For any expectations to see more than 1% received PSLF at this point is totally unrealistic. Heck, who in the spring of 2009 would have even mentioned PSLF to those graduating in May 2009. It was not until May 2010 that I even started promoting PSLF to graduates then.
Timothy S | 10/9/2019 11:5:45 AM
The biggest problem was no one could answer any questions the first few years of the program. Another issue that should be changed is counting payments that were made at the full rate; not in a IBR program.
Ben R | 10/9/2019 9:43:08 AM
I do not think congress intended that 25 percent of the workforce would qualify (with new categories of employment being proposed regularly) and that it would come without any caps. As it currently stands, this program presents a moral hazard. If a student's intention is to rely on this program, there is no incentive to limit borrowing in any way. It is good to see that NASFAA has proposed a cap.
James H | 10/9/2019 9:8:04 AM
As a old timer when we had bank loans and they would reduce the interest rate if a student made 3 years of on-time payments the percentage of student that actually got and qualified for this was around 1%. Many questioned it and were surprised.
Now we are looking at Public Loan Forgiveness and we are surprised we see around 1% qualify. Ten years is a long time and many life changing events take place that side track the best intentions where students are aiming for it. Many realize they can make more money not working at a employer that qualifies, many have life events such as marriage and children where they need to move to a repayment plan where they pay less.
We have vastly overestimated how many students will qualify. I am sure there has been some confusion and misinformation. We are making assumptions about students after they graduate and live their lives. I can see some rise in the percent of students that qualify but really do not think it will ever be more then 10%.
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