PSLF Discharge Approval Rates Look Brighter for Borrowers

The media presents statistics about the Public Service Loan Forgiveness (PSLF) program without providing any context. I got a ton of messages in response to the NPR article titled “Why Public Service Loan Forgiveness is So Unforgiving.” ”.

You’re Probably Not Getting that Loan Forgiveness You’re Counting on, Vice warned borrowers after deciding to disregard caution. ”.

No one seems to understand the PSLF program. In fact, the “PSLF Snowball Effect” will cause the PSLF application success rate to rise exponentially over the following few years. ”.

In addition to working, PSLF will soon become America’s most well-liked loan forgiveness program.

Editor’s note: Years after I first published this article, President Biden issued the PSLF Waiver, allowing many loans and repayment plans that ordinarily would not qualify for PSLF to do so. The IDR Waiver is still in force and provides many of the same advantages even though it expired in October 2022. This will speed up the “PSLF snowball” drastically. This waiver should result in the cancellation of tens of billions of loans by 2023.

Among processed applications for Public Service Loan Forgiveness (PSLF), 2.16% have been accepted since November 2020.

Temporary Expanded Public Service Loan Forgiveness (TEPSLF)
Total Claims Approved Total Claims Denied
May 2020 Total Claims Approved 1,931 Total Claims Denied 31,225

Find the latest

Since the vast majority of borrowers don’t meet one or more of the federal government’s eligibility requirements, your chances of receiving student loan forgiveness through existing forgiveness programs have historically been low.

But the odds of getting some kind of forgiveness through broad cancellation action? Pretty much 100%

Borrowers of federal student loans will each receive a discharge of up to $20,000 under sweeping debt cancellation announced by President Joe Biden in August. 24 if it survives legal challenges. This is the first occasion in history where a president has eliminated student loan debt without using an existing program.

Along with modifications to current forgiveness programs like Public Service Loan Forgiveness, income-driven repayment forgiveness, or borrower defense to repayment, this broad cancellation With the modifications made by the Education Department, borrowers now have more time and flexibility to fulfill requirements. The Department of Education estimates that more than $32 billion in loans have been forgiven through current programs since the start of Biden’s term, affecting more than 1 million borrowers. 6 million borrowers.

Keep in mind that only the person who owns your debt (the federal government or your private lender) has the authority to forgive or cancel it. That means, regardless of how legitimate they may seem, no other organization can forgive your debt.

Here are the approval rates for the current federal student loan forgiveness programs (data for some programs is limited):

Public Service Loan Forgiveness stats

After making 10 years’ worth of payments while employed full-time by qualifying employers, borrowers of federal student loans who work in public service may be eligible to have their loans forgiven tax-free. Direct loans and enrollment in an income-driven repayment plan are requirements for borrowers. There is a lot of red tape, and the process is notoriously difficult with a high rejection rate.

Even though payments made on graduated, extended, consolidation standard, or consolidation graduated repayment plans typically do not qualify, they do under the Temporary Expanded Public Service Loan Forgiveness program, or TEPSLF. There is only one application for PSLF and TEPSLF.

A limited waiver for PSLF is also available for borrowers whose payments previously didnt qualify for PSLF. Under the waiver, more loan types and repayment plans are temporarily eligible for PSLF . Borrowers must consolidate their loans into a direct loan and submit a PSLF form before Oct. 31, 2022. Millions of borrowers are also expected to benefit from one-time fixes to income-driven repayment that would retroactively count additional months toward PSLF.

How many borrowers have had their debts forgiven by the PSLF?

• 9. 77% of all PSLF and TEPSLF applications have been approved, according to June 2022 data from the Department of Education (164,555 approved for discharge among 1,684,233 total applications)

• There were a total of 12,523 discharges processed for PSLF and 6,498 for temporary expanded PSLF.

• The PSLF waiver led to the processing of 146,728 discharges and $9 01 billion in debt discharged.

• As of August, $10 billion in debt for more than 175,000 borrowers had been discharged. 23, according to the education department.

Why are so many PSLF applications rejected?

The most common reasons for rejected PSLF applications include:

  • The borrower’s qualifying loans weren’t being repaid for at least a year.
  • Although the borrower had been making payments for a while, they had not worked at an eligible company for long enough.
  • Less than 120 payments met the criteria (qualified payment plan, on time, and for the full amount) despite the borrower having been in repayment for a sufficient amount of time at an eligible employer.

According to the department, borrowers who have loans from the Federal Family Education Loan Program and have been in repayment for at least 120 months are included in the statistics that represent the majority of those who were turned down. These borrowers “were made to start over on a brand-new clock” when they consolidated their FFELP loans into direct loans because they were not given any credit for prior loan payments made while working in a qualifying position.

Income-driven repayment forgiveness stats

Income-driven repayment plans allow borrowers to extend their repayment period to 20 or 25 years while setting their payments at a portion of their income. The remaining balance is waived once repayment is complete.

According to a March 2022 report by the Government Accountability Office, only 157 of potentially millions of borrowers had debt cancellation through income-driven repayment forgiveness as of June 1, 2021.

Income-contingent repayment, the first income-driven repayment option, was made available to borrowers in 1995 and increased the repayment period to 25 years. As a result, the cancellation for the initial group of plan participants should have happened in 2020.

Due to a number of factors, such as borrowers’ improper loan types or their refusal to consolidate into the direct loan program, forgiveness rates are low. Additionally, the education department claims that instead of income-driven repayment, where borrowers could have been moving toward forgiveness, forbearance programs were frequently recommended to borrowers.

However, it’s crucial to remember that until Revised Pay As You Earn (REPAYE) became available to all borrowers regardless of income in 2015, the majority of borrowers were unable to enroll in most income-driven plans. In 2035, the first group of REPAYE borrowers will begin to have their debts forgiven.

The American Rescue Plan Act, which Biden signed in March 2021, will forgive all student loan debt from December 2020 through December 31, 2025, will be considered tax-free. Normally, any debt forgiveness achieved through income-driven repayment would be subject to income tax.

The income-driven repayment forgiveness program will undergo a fresh, one-time review in April 2022, the education department announced. The department estimates the newest one-time review should result in:

  • At least 40,000 borrowers who are currently enrolled in the Public Service Loan Forgiveness program will have their debts immediately cancelled.
  • There will be income-driven repayment forgiveness for thousands of borrowers with older loans.
  • More than 3. At least three years will pass before 6 million borrowers reach income-driven repayment forgiveness.

Student loan forgiveness for teachers stats

After five years of continuous employment as full-time employees in low-income public elementary or secondary schools, teachers are eligible for tax-free loan forgiveness for up to $17,500 in federal direct loans borrowed after Oct. 1, 1998.

According to federal data updated in February 2022, a total of 433,500 borrowers with federal loans have had their balances forgiven under the Teacher Loan Forgiveness Program since fiscal year 2009. The total debt forgiven: $3. 67 billion.

Borrower defense to repayment and closed school discharge stats

Student loan borrowers who were defrauded by their schools may be exempt from paying back their loans in full. For federal loans, borrowers must submit a claim; however, this does not apply to private loans or out-of-pocket expenses. Their educational institutions must have deliberately misled them about their course of study or broken certain state laws governing loans or educational services.

Discharge from a closed school is possible without paying taxes if your school closed while you were still enrolled but before you finished your program, or if it did so within 120 days of your withdrawal without receiving a diploma. Although it happens automatically, borrowers who feel they were forgotten about should contact their servicers.

As of Aug. 16 According to federal data, the education department has discharged $13 billion for 1 million borrowers via borrower defense and closed closed school discharge claims.

Total and permanent disability discharge stats

Borrowers who are totally and permanently disabled and unable to work due to a physical or mental impairment may discharge their debts tax-free. You must demonstrate your inability to work by submitting annual earnings records for three straight years following discharge.

As of Aug. Through a new regulation that automatically discharges debt for borrowers identified through an existing data match with the Social Security Administration, $9 billion in debt has been forgiven for more than 425,000 borrowers with total and permanent disabilities. The new regulation went into effect in August 2021.

Anna Helhoski is a writer and an expert on student loans for NerdWallets. The Associated Press, The New York Times, The Washington Post, and USA Today have all published her articles. Read more.

Pslf Acceptance Rate

PSLF Waiver Case Study: To Consolidate or Not?


How many people denied PSLF?

At that time, when borrowers first started applying for forgiveness, we found that the PSLF program had denial rates upwards of 99% Borrowers were informed, among other reasons for denial, that they did not qualify because they were enrolled in the incorrect loan program or had the incorrect repayment strategy.

Is it hard to qualify for PSLF?

Failure to submit your Employment Certification Form (ECF) annually is one of the biggest PSLF errors that results in loan forgiveness denial. Making mistakes on your ECF. Not consolidating your ineligible loans. Not being in an income-driven repayment (IDR) plan.

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