99% Of Applications Denied In Federal Student Loan Forgiveness Program

SMS
99% Of Applications Denied In Federal Student Loan Forgiveness Program
The Education Department is implementing changes after a report found 99% of applications for one student loan forgiveness program were denied.
SHOW TRANSCRIPT

A federal report found the Department of Education denied 99% of applications for one of its student loan forgiveness programs. 

The report looked at the Temporary Expanded Public Service Loan Forgiveness program. It erases federal student loan debt for borrowers who meet a handful of criteria, including making 120 qualifying payments toward their loan and working for certain public service or government organizations for 10 years.

The Government Accountability Office analyzed one year's worth of data for the program. From May 2018 to May 2019, the Education Department processed just over 54,000 requests. But it only approved 661. The GAO says a confusing application and qualification system are largely to blame for the 99% denial rate. 

The Temporary Expanded Public Service Loan Forgiveness program exists thanks to a $700 million appropriation from Congress. Lawmakers created this fund to expand on the existing Public Service Loan Forgiveness Program

Here's where the complicated application process comes in: Borrowers have to apply for the original forgiveness program *before* they can apply for the temporary program funded by Congress. The GAO report found that 71% of rejected requests were denied because borrowers didn't apply to the original forgiveness program first.

Determining who's eligible for either program is also complicated. The original one requires applicants to have made "120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer." The eligibility requirements for the temporary program are largely the same, but it expands the types of acceptable repayment plans.

The GAO sent the Education Department four recommended changes to help reduce the confusion, and the department plans to implement each one.