New Data Shows Most Who Apply To This Student Loan Forgiveness Program Are Denied (2024)

FAQs

New Data Shows Most Who Apply To This Student Loan Forgiveness Program Are Denied? ›

New data released by the U.S. Department of Education shows that most borrowers who apply to a key student loan forgiveness program are denied relief. The data shows that 98% of applications for Public Service Loan Forgiveness (PSLF) from November 9, 2020 to April 30, 2021 were rejected.

“Errors, even as minor as spelling mistakes, can cause rejections. For PSLF for example, borrowers must thoroughly fill out an Employer Certification Form (ECF) with all of their previous employers, their Federal Employer Identification Numbers, tax status, and other details.

“Under President Biden's leadership, our Administration has now approved loan forgiveness for nearly 3.9 million borrowers, and our historic fight to cancel student debt isn't over yet.”

If we determine that you're not eligible for loan forgiveness at this time, you'll be notified and will be provided with the reason(s) we determined you were ineligible. You'll then be required to resume making payments on your loans. Learn more about PSLF eligibility.

Lenders may look at your employment history, credit score, debt-to-income ratio, and enrollment status at your school. One of the most common reasons why a student might not qualify for a private student loan is because they don't meet their lender's FICO^® Credit Score criteria.

Studies show that only 6.7% of eligible borrowers apply for PSLF, and of those, 98% are denied. Most applications get denied because of misspelled words, missing the payment requirement, or missing documents.

2.3% of processed applications for PSLF had been approved since the program's inception. In the program's first year, 0.32% of applications were approved. Prior to 2021, 3.3 million student loan borrowers were eligible to apply for PSLF (though only 6.9% applied).

If you received a Pell Grant in college and meet the income threshold, you will be eligible for up to $20,000 in debt relief. If you did not receive a Pell Grant in college and meet the income threshold, you will be eligible for up to $10,000 in debt relief.

If you have loans that have been in repayment for more than 20 or 25 years, those loans may immediately qualify for forgiveness. Borrowers who have reached 20 or 25 years (240 or 300 months) worth of eligible payments for IDR forgiveness will see their loans forgiven as they reach these milestones.

You may be eligible for income-driven repayment (IDR) loan forgiveness if you've have been in repayment for 20 or 25 years. An IDR plan bases your monthly payment on your income and family size.

Which student loans are not eligible for forgiveness? ›

Opponents are concerned that wide-scale student loan forgiveness is poorly targeted and will invariably benefit wealthy student loan borrowers who don't need their student loans cancelled. For example, graduate school debt accounts for more than 40% of all outstanding student loan debt.

Your student loan servicer(s) will notify you directly after your forgiveness is processed. Make sure to keep your contact information up to date on StudentAid.gov and with your servicer(s). If you haven't yet qualified for forgiveness, you'll be able to see your exact payment counts in the future.

Most federal student loans do not require a credit check to qualify for financing. PLUS loans are the one exception; these loans involve a credit check. However, they're only looking for an adverse credit history. There are no minimum credit score requirements.

You could be denied a student loan if you lack sufficient income. Employment history: Your employment history may also come under scrutiny. If you have a short work history or don't have a job, that could jeopardize your private student loan approval.

You're not making satisfactory academic progress at your school. You've defaulted on an existing federal student loan. You owe a refund on any previous federal grants. You're enrolled in an academic program that makes you ineligible for funding.

Contrary to some perceptions, that's not because the Department of Education is capriciously denying borrowers relief to which they are legally entitled; most PSLF applications were rejected because borrowers have not met program requirements.

11% of all PSLF and TEPSLF applications have been approved, according to June 2023 data from the Department of Education (673,077 approved for discharge among 6,147,812 total applications). Total discharges processed included: 19,218 for PSLF and 6,520 for Temporary Expanded PSLF.

Average Wait Time for PSLF: What to Expect

The average processing time for PSLF applicants can vary, but borrowers should generally expect a wait of up to six months.

As of mid-July 2023, approximately 662,000 borrowers have qualified for forgiveness under the limited PSLF waiver.