Promised Student Loan Forgiveness for Military Members Denied for Over 90% of Borrowers

By Hugh T. Ferguson, NASFAA Staff Reporter 

While the federal government looks toward implementing a host of higher education policies as a means of recovering from the pandemic — ranging from debt forgiveness, to increased postsecondary funding and infrastructure needs — a watchdog report has found that 94% of eligible military service members and civilian employees have been denied loan forgiveness through an existing program.

According to a recent report conducted by the Government Accountability Office (GAO), of the 5,180 service members and civilian employees who were eligible and applied for loan forgiveness through the Public Service Loan Forgiveness (PSLF) program, only 287 borrowers received the benefit, with more service members likely to be eligible.

The long beguiled PSLF program has offered a mere fraction of relief to all eligible borrowers, with GAO finding in 2019 that 99% of all PSLF applications submitted by borrowers have been denied.

The Department of Defense (DOD) is the largest federal provider of student loan repayments, distributing more than $22 million in student loan repayments for 2,775 personnel in the 2018 calendar year.

Of the almost 3 million DOD personnel, roughly 2% (or 67,237) have taken the optional first step toward pursuing forgiveness through PSLF by requesting certification of their employment and loans as eligible, and 61,715 have had their employment and loans certified as of Jan. 31, 2020. Of the personnel that requested certification of employment and loans, about 72% (or 48,227) were DOD civilian employees, and about 28% (or 19,010) were service members, with a majority in active duty and the remaining in the reserves.

While some DOD personnel have taken the optional first step of having their employment and loans certified, many more could potentially benefit from the PSLF program. GAO, using Department of Education (ED) data, found that as of Jan. 23, 2020, there were 176,906 active-duty service members with federal student loans eligible for forgiveness through PSLF or loans that could be consolidated into new qualifying loans.

However, as of Jan. 31, 2020, only about 11% (or 19,010) of these service members had submitted requests to have their employment and loans certified as eligible for PSLF. The remaining approximately 89% (157,896) of service members that have yet to take the first optional step toward loan forgiveness could potentially benefit from the PSLF program if they made enough qualifying payments and met the other eligibility criteria.

Much like the high denial rate for the larger pool of borrowers applying for PSLF forgiveness, the issues with service members appear to stem from a lack of communication and confusion around the requirements for forgiveness. In terms of denials for the 5,180 DOD borrowers, the most common reason among service members was not enough qualifying payments (borrowers must make 120 qualifying loan payments over the course of 10 years of public service employment) and applicants missing information on their form.

This week, President Joe Biden is marking his first 100 days in office and is slated to issue a number of new higher education proposals, which could tee up congressional action on a host of new legislation. Those proposals could make their way through the reconciliation process, which would only require simple majorities in both chambers of Congress, or the annual appropriations cycle.

GAO included a number of policy recommendations aiming to ensure that service members have access to this benefit. Specifically, GAO called on DOD to provide information to its personnel and issue guidance to its officials about the PSLF program, and urged ED and DOD to collaborate to share information about the program.

According to GAO, ED concurred and DOD partially concurred with the recommendations.


Publication Date: 4/27/2021

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