Student Loan Forgiveness — Denied!
Student loans are increasing in size and prevalence in dramatic numbers. The current total of student loans outstanding is $1.5 trillion. Yes with a T.
That said, borrowers need to utilize every tool available to help pay those loans back. None can be more important than the Public Service Loan Forgiveness program (PSLF).
Unfortunately, 99% of applicants have been denied forgiveness, so what gives?
What is student loan forgiveness?
Student loan forgiveness is a program that’s offered to people who work in public service after graduation.
Here’s how it works:
- You apply for and receive federal student loans for school
- You graduate college
- You work for the next 10 years in public service (public school teacher, firefighter, etc.)
- You must make payments on your student loans during those 10 years
- After your 10 years of public service is complete, the federal government will forgive (pay for) the remaining balance of your student loans
It’s important to remember that only federal student loans are eligible for forgiveness
What’s the story?
Less than 300 of the 29,000 applicants have actually had their loans forgiven. One source suggests that its because people are still confused by the requirements.
Apparently, one-third of applicants were denied for missing information, and the rest were denied because they didn’t meet the requirements.
A gentleman from NPR did some research and found that the majority of two-thirds were given bad information as to what would or wouldn’t qualify them for the program.
They were told that they might not have the right type of loan (only certain federal loans qualify for the program). They were told that they might not have the right type of repayment plan (again, only certain repayment plans qualify).
They could have even made the payment on time, but the transaction was lost in transit (mail or electronic), thus disqualifying them because you need 100% on-time payments for 10 years.
What loans qualify for forgiveness?
- Direct Subsidized and Unsubsidized Loans
- Direct PLUS Loans
- Direct Consolidation Loans
What repayment plans qualify?
- Income-Based Repayment (IBR)
- Pay As You Earn Repayment (PAYE)
- Revised Pay As You Earn (REPAYE)
- Income-Contingent Repayment (ICR)
- Standard Repayment
What professions qualify?
- Federal, state, local, or tribal government organizations
- A 501(c)3 nonprofit
- A not-for-profit that’s not 501(c)3 designated but meets other requirements related to public service
- AmeriCorps, in a full-time capacity, or the Peace Corps
What else should I do?
- File the Employment Certification Form — and fill it out when starting your public service job and every year thereafter. ((Form))
- Refinance your private student loans to switch to a federal loan
Sources
https://www.upi.com/Govt-report-99-of-student-loan-forgiveness-applicants-were-denied/4981538159423/
https://studentloanhero.com/featured/the-complete-list-of-student-loan-forgiveness-programs/
https://studentloanhero.com/featured/public-service-loan-forgiveness-do-you-qualify/
