This Is The Reason It Is Hard To Qualify For Public Service Loan Forgiveness

This article tells why public service loan forgiveness is so hard- with a high rejection rate. It gives the reasons why the rejection rate for PSLF is so high and what you can do properly to have PSLF granted to you.

Updated by Anuroop C on 22nd July 2020

Public Student Loan Forgiveness(PSLF) is one of the most amazing benefits offered for federal student loan borrowers while paying for college. But that comes with a catch. A lot of student loan forgiveness programs are available to check for qualification of a student loan forgiveness. 

It should be noted that are a number of jobs available to help get your loans forgiven. Having an in-depth understanding of the various student loan forgiveness jobs out there is crucial to see if your job can get your loans forgiven.

It is a well-known fact that the number of students receiving forgiveness under PSLF is staggeringly low. In all the applicants, less than one percent of them actually are granted Public Service Loan Forgiveness!

This can be noted from the loan forgiveness figures of 2019

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Figures for PSLF in 2019(Source- US Department of Education)

The number of applications of borrowers received is 41,221 and the total number of applications received is 49,669. In that, only 423 applications were approved and the total amount forgiven is $12.3 million that has been forgiven. This is even less than 0.5% of the total borrowers that have applied for Public Service Loan Forgiveness.

Reasons why the Approval Rate is that Low for Public Service Loan Forgiveness

These are some of the reasons why the approval rate is so low for the PSLF program:

Applications that are incomplete

Around 12,000 of the above applicants who applied for the PSLF program did not have their application forms that are complete. Insufficient information as a result always leads to rejection.

The “Luck” testers

There are many people who actually won’t qualify for the PSLF program, but still, apply for the program to test their so-called “Luck”. These applications, as a result, lead to rejection. These people also include the people that are short of their 120 payments requirement and apply for PSLF by want, or even if they don’t have a consistent payment history

Mistakenly submitting the wrong form

The form for student loan forgiveness and the employer certification form are closely similar to each other. Since borrowers seeking for PSLF are advised to complete an employer certification form every year(which actually helps them track their progress towards the 120 payments requirement). Although this sounds hard to believe,  Borrowers mistakenly might have applied this form instead of their PSLF form. They are really identical.

Wrong Repayment Plan

Many of the rejected applicants were enrolled in a repayment plan that is not eligible(such as graduated or extended repayment plans). These borrowers can make use of the help from the temporary legislative fix.

Borrowers having the loans that are not eligible

If you have student loans that are not eligible for PSLF, then consolidation of your student loans is the best option that you can make use of. Learn more about Student Loan Consolidation.

As you now know the reasons that are actually causing the high rejection rate, let us see the factors that you should make sure are correct when you are applying for the Public Service Loan Forgiveness Program.

Requirements for Public Service Loan Forgiveness

The three basic requirements for Public Service Student Loan Forgiveness are:

You should have Eligible Loans

Borrowers must have federal direct loans to have them forgiven. Some federal loans, as well as the private student loans, are not applicable for Public Service Loan Forgiveness. If you have some loans that are federal and are not eligible, then consider using the federal direct consolidation service. Learn more about Federal Direct Loan Consolidation.

You must be in an Eligible Repayment Plan

Federal repayment plans such as the graduated repayment plan or the extended repayment plan are NOT eligible for Public Service Loan Forgiveness. Some plans that are eligible are IBR, ICR, PAYE or REPAYE.

Eligible Employer

Not all employers qualify as public service. Borrowers who are directly employed by the government or a 501(c)(3) should be able to prove their eligibility.

Number of payments

You must meet the number of payments required in order to be eligible for Public Service Loan Forgiveness. The number of payments is 120.

Once the borrowers meet all the eligibility requirements, that is when you can apply for Public Service Loan Forgiveness. Read more about Public Service Loan Forgiveness to know more about all the requirements and positives and negatives.

Looking for student loans? Find the best student loans just for you.

With so many of the borrowers applying for PSLF who may potentially have thousands of dollars as student loan debt, the federal government has every right to deny their PSLF pleas. But it is also important to recognize that Public Service Loan Forgiveness is a law and an agreement between borrowers and the federal government. It won’t be easy, but it is not really very tough as well, as long you meet the requirements.