Approximately 147,000 people have been rejected for student loan forgiveness.
Here’s what you need to know.
Student Loan Forgiveness: Debt Statistics
The U.S. Department of Education, which is led by Betsy DeVos, released the latest statistics for public service loan forgiveness:
- As of April 30, 2020, 150,545 student loan borrowers have submitted 196,046 applications for public service loan forgiveness.
- Of that total, approximately 180,798 applications have been processed. Another 15,248 applications are pending.
- Of the applications processed total, 3,376 have been approved and 177,422 have been rejected.
- Of approved applications, 74% of borrowers work for the government and 26% work for non-profit organizations.
How many people were approved for student loan forgiveness?
Out of 150,545 borrowers, 2,215 borrowers collectively have received $146 million in public service loan forgiveness. That’s less than a 1.5% approval rate. The average student loan balance discharged was $66,066.
Another 1,826 requests have been approved under the Temporary Expanded Public Service Loan Forgiveness Program. Of this total, 1,310 borrowers have received $56 million of student loan forgiveness. The average student loan balance discharged is $42,943.
Why do you get rejected for student loan forgiveness?
As of April, approximately 147,000 borrowers have been rejected for public student loan forgiveness. Here are the reasons why:
- Qualifying Payments: 58%
- Missing Information: 23%
- No Eligible Loans: 14%
The most recent data reflects some of the earliest applicants to the Public service Loan Forgiveness program, which started in 2007, and required 10 years of student loan payments. Over time, the approval rates should increase as more borrowers become familiar with the Public Service Loan Forgiveness program requirements. How can you get student loan forgiveness? The good news is that you can take several concrete action steps. Let’s jump in.
1. Understand the requirements for public service loan forgiveness.
There’s so much confusion about the requirements, so let’s make them very clear. The Public Service Loan Forgiveness Program is a federal program that forgives federal student loans for borrowers who are employed full-time (more than 30 hours per week) in an eligible federal, state or local public service job or 501(c)(3) nonprofit job who make 120 eligible on-time monthly payments.
2. Complete the Employment Certification Form
To start the process, you must complete an Employment Certification Form. Remember, public service loan forgiveness is based on your employer, not your type of job. How often should you submit an employment certification form for public service loan forgiveness? You should submit an Employment Certification Form to the U.S. Department of Education when you begin a job in public service, when you switch employers and annually to ensure you’re on track. Approximately 44% of Employment Certification Forms have been deemed ineligible. The number one reason is missing information (80% of the ineligible forms).
3. Enroll in an income-driven student loan repayment plan
There are four major income-driven repayment plans: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE) and Income-Contingent Repayment (ICR). Remember, only federal student loans are eligible for public service loan forgiveness. Approximately 58% have been rejected for making non-qualifying payments. Your monthly payments do not need to be consecutive, but you must be employed when you make the payments. You can only make one qualifying payment per month. So, at a minimum, it will take 120 monthly payments, or 10 years, to receive student loan forgiveness.
4. Consolidate your federal student loans
What type of federal student loans do you have? Only Direct student loans qualify for public service loan forgiveness. This is a recurring theme that also applies to the CARES Act, even though there have been proposals in Congress to change this. If you have Perkins Loans, FFELP Loans or you borrowed student loans before 2011, you may need to consolidate these federal student loans into a Direct Consolidation Loan. Approximately 14% of borrowers have been rejected for having ineligible student loans. If you have Direct Loans, you don’t have to consolidate student loans to qualify.
5. Refinance your student loans
Public service loan forgiveness is only for federal student loans (not private student loans). Refinance private student loans and get a lower interest rate.
This student loan refinancing calculator helps show you much money you can save through student loan refinancing.
How to pay off student loans faster
What’s the best way to pay off student loans faster? Start with these four options, all of which have no fees:
- Student loan refinancing
- Student loan consolidation
- Income-driven repayment plans
- Student loan forgiveness
source: forbes
