Will My Student Loans be Forgiven?
The American student debt crisis has shot past the $1.6 trillion mark and shows no sign of reversing anytime soon. While there likely needs to be something done on a greater policy level, you have to also consider what you can do on a personal level to manage your student debt, should you have it.
The Public Service Loan Forgiveness Program (PSLF) seems to be a good option. In exchange for 10 years working in the public or nonprofit sector, student debt holders can apply to have their debt forgiven, tax free.
The PSLF program was signed into law by President George W. Bush in 2007. To qualify for the program, applicants must have kept up with all of their payments. Additionally, only federal student loans, not private loans, are eligible for forgiveness.
Or rather, those are the loans that are theoretically eligible for forgiveness. In actuality, the standards would appear to be far more restrictive than advertised. Because the program has a 10-year requirement and was only established in 2007, the earliest eligible borrowers could not receive loan forgiveness until 2017. Once applicants started to cash in on the benefit — or at least try –, it quickly became apparent that there was a problem.
Only 206 of 41,000 applicants to the program have received loan forgiveness. Most articles covering the program tend to have a sentence after those numbers assuring the reader that the previous sentence was not a typo, so consider this that sentence.
While the stated reasons for the rejections ranged from lack of qualifications for the program to missing information in the applications, such an overwhelming percentage of rejection could invite speculation that those overseeing the program at the U.S. Department of Education (DOE) do not actually want borrowers to use it. Such speculation could be further supported by the proposed 2020 budget from the White House, which would eliminate the program entirely.
Problem … solved?
In 2018, Congress created the Temporary Expanded Public Service Loan Forgiveness Program in an effort to open the program to more borrowers. In a twist that may not be surprising, the DOE has rejected 99% of applicants under this new expanded program. The U.S. Government Accountability Office has released a report claiming the current process set out by the DOE is “misleading” and “confusing.” For borrowers who might have oriented the last decade of their career around the promise of the PSLF program, this can all be very frustrating.
So is it hopeless?
If you believe that you qualify for PSLF or are close to qualifying, you may as well still try to take advantage of the program. Student loan expert Mark Kantrowitz has created a checklist you can use as a guide when applying for the program to try to maximize your odds of being accepted. OppU also has a guide with downloadable worksheets on how to pay off student loan debt.
While there is only so much you can do personally to manage your own student loan debt, you might as well try to use whatever means you can to limit the amount of personal loan debt you have in your name.