94% of these student loan borrowers were turned down for a student loan forgiveness.
Here’s what you need to know.
Here’s a statistic for you: Only 124 military personnel have had their student loans canceled under the Public Service Loan Forgiveness Program. Already. It is not a typo. These are not the numbers from last month. It’s not 1,240, 12,400, or 124,000. It is the total number of US military personnel who have received student loan forgiveness since the program’s inception in 2007 and eligibility for student loan cancellation at from 2017.
A new report on student loans from the Government Accountability Office shows that as of January 31, 2020:
- 124 military personnel received a student loan forgiveness under the public service loan forgiveness program;
- 163 civilian employees of the US Department of Defense obtained a forgiveness of their student loan; and
- 94% of student loan exemption requests were refused.
The US Department of Defense, with three million employees, is the largest employer in the United States and the largest federal provider of student loan repayments. However, a remarkably small number of staff have had their student loans canceled. These statistics are yet another reminder of the challenges public servants face when trying to get a student loan forgiveness under an already established federal program. If these numbers sound shocking, the overall refusal rate of cancellation of public service loans is 98%.
The news comes after the cancellation of the student loan suffered another major setback.
Cancellation of public service loan: the requirements
More information and increased transparency are essential to help public servants understand the many requirements of the public service loan forgiveness program. Public Service Loan Forgiveness is a federal program created by Congress to help federal student loan borrowers who work for a qualifying public service or non-profit employer obtain forgiveness on their federal student loans. It is important to note that student loan cancellation is not automatic. Borrowers must meet several requirements, including, but not limited to:
- work full time (at least 30 hours per week)
- work for an eligible public service or non-profit employer (use this employer verification tool to verify if your employer qualifies)
- make 120 full and one-off monthly payments
- be enrolled in a qualifying income-based repayment plan
- make the majority of your monthly student loan payments while enrolled in a qualifying income-tested repayment plan
- have direct loans, or consolidate your non-direct loans, if necessary, into a direct consolidation loan
It is important to note that during the Covid-19 pandemic, when federal student loan payments were suspended, borrowers received “credit” for their monthly payment requirement of 120 student loans, even though they did not. ‘made no student loan payments during this period. Some common reasons for student loan cancellation denial include missing or incomplete documents, ineligible student loans, and ineligible student loan payment plan, among others.
Student loan cancellation: next steps
Getting approved for a civil service loan forgiveness is not as simple as saying you work in the public service. For many student loan borrowers, just thinking about the requirements can cause a headache. The 94% rejection rate, although lower than the program’s overall rejection rate, is another reminder that student loan borrowers are unaware of the requirements, or perhaps the requirements are too complex. Increased transparency and information sharing between the U.S. departments of Education and Defense are the first initial steps that could lead to a higher approval rate for student loan cancellations. The Department of Education has a useful website on civil service loan cancellation. However, as long as Congress continues to support the program, student loan cancellation should be more accessible and easier to apply for. President Joe Biden has proposed that all federal student loan borrowers be automatically enrolled in income-based repayment plans. That would be a useful first step, and perhaps automatic enrollment should be extended to the military for the public service loan forgiveness program to make the process easier. Biden wants a student loan forgiveness in three ways. For example, Biden also proposed to streamline public service loan forgiveness and provide $ 50,000 in student loan forgiveness after five years of service, rather than waiting 10 years for student loan repayment. Some advocates have proposed that the cancellation of the student loan be automatic after 10 years of public service, even if student loan borrowers do not meet any requirements.
This public service loan forgiveness calculator helps you understand the amount of student loan forgiveness you can get.
These student loan calculators can help you with student loan repayment, student loan refinancing, and income-based repayment plans.