Don’t Panic Yet if Your Public Student Loan Forgiveness Petition Was Denied

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The Department of Education released a report this month that detailed results from the first group of applicants to the federal Public Service Loan Forgiveness Program (PSLF).

The program was established in 2007 to offer student loan relief to public servants; the first “class” of eligible borrowers was able to apply for forgiveness in October 2017. According to the report:

  • The department received nearly 33,000 applications from over 28,000 borrowers as of June 30, 2018.
  • Of those, more than 20,500 applications were denied because borrowers did not meet the program’s requirements.
  • Another 8,100 applications were rejected because they were missing information.

Only 289 applications were approved for forgiveness by the end of June, according to the department’s data report and press release, “resulting in $5.52 million in processed discharges for 96 unique borrowers.”

Again, for the folks in the back: More than 28,000 people submitted applications to have their loans forgiven, but only 96 were successful.

Is the PSLF Program Doomed?

The Department of Education release explained that borrowers whose applications were denied for eligibility reasons have been contacted to see if they qualify for the “temporary expanded” public service loan forgiveness (TEPSLF) program, which may cover borrowers who followed a payment plan that didn’t qualify for standard PSLF.

TEPSLF was created in May 2018 as a second-chance pool for applicants who had direct loans and worked for qualifying employers but were on the wrong payment plan for part of the repayment period. Borrowers who made payments under a graduated repayment plan, extended repayment plan, consolidated standard repayment plan or consolidated graduated repayment plan may be able to qualify for TEPSLF. The $350 million fund is dispersed on a first-come, first-served basis.

Slate’s Jordan Weissmann struggled to get details from the Department of Education about why PSLF applications were denied.

But student loan attorney Adam Minsky wrote on his blog that it’s not time for borrowers to panic.

“So many people were not meeting all of the eligibility requirements back in 2007-2008, as the program was not well-publicized then and [income-based repayment] didn’t even exist,” Minsky wrote. “I would expect the approval rate to go up steadily during the next few years.”

He also noted that it’s possible the 28% of applications that were rejected for errors will be approved once they’re resubmitted.

“Borrowers presently on track for PSLF should continue to keep up with the annual requirements and maintain very good records of their payments and employment histories,” he advised.

Lisa Rowan is a senior writer at The Penny Hoarder.