Here's a shocking statistic: 99% of people who applied for public service loan forgiveness have been rejected.
Here's what you need to know and what to do about it.
Student Loan Forgiveness: Debt Statistics
According to Make Lemonade, there are more than 44 million borrowers who collectively owe $1.5 trillion in student loans.
The U.S. Department of Education released the latest statistics for public service loan forgiveness:
As of June 30, 2018, 28,000 student loan borrowers submitted 33,000 applications for public service loan forgiveness.
Of that total, approximately 29,000 applications have been processed.
Of that total, more than 70% of applications have been denied due to student loan borrowers not meeting the program requirements. For example, borrowers did not have eligible student loans, make 120 qualifying payments or have qualifying employment.
Another 28% of applications for public service loan forgiveness were denied due to missing or incomplete information on the employment certification form.
The Education Department advised these rejected applications to submit a completed application.
So, who has been approved?
Approximately 300 applications have been approved and 96 borrowers have collectively received $5.52 million in public service loan forgiveness.
Public Service Loan Forgiveness: Requirements
Don't become another public service loan forgiveness rejection statistic. If you are interested in public service loan forgiveness, please pay attention. When it comes to the Public Service Loan Forgiveness program, the requirements can be tricky.
Here are 5 things to remember:
1. Public Service Loan Forgiveness: Requirements
It's not as simple as saying you "work" in public service.
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) non-profit job who make 120 eligible on-time payments.
2. Complete the Employment Certification Form
In addition to meeting the requirements for public service loan forgiveness, you must complete the Employment Certification Form.
How often should you submit the employment certification form for public service loan forgiveness?
You should submit this form:
- when you begin a job in public service
- when you switch employers
- annually
It's important to submit this form annually to keep the U.S. Department of Education aware of your employment to ensure you're on the right track.
Remember that more than 9,000 applicants for public service loan forgiveness submitted an incomplete Employer Certification Form. Don't be like them.
3. Enroll in an income-driven federal student loan repayment plan
To be eligible for public service loan forgiveness, you must be enrolled in an income-driven federal student loan repayment plan.
Remember, only federal student loans (not private student loans) are eligible for public service loan forgiveness. You also must make a majority of the 120 required payments while enrolled in a federal student loan repayment plan.
This public service loan forgiveness calculator shows you which income-driven student loan repayment plan will maximize your student loan forgiveness.
4. Consolidate your federal student loans (if necessary)
Only Direct student loans qualify for public service loan forgiveness.
If you have Perkins Loans, FFEL Loans or you borrowed student loans before 2011, you may need to consolidate these federal student loans into a Direct Consolidation Loan.
You can consolidate federal student loans through StudentLoans.gov.
5. Refinance your private student loans
You may be asking: Should you refinance private student loans? If you plan to have your federal student loans forgiven, you still need an action plan for your private student loans.
The good news is your can refinance private student loans and lower your interest rate - even if you are enrolled in public service loan forgiveness.
This student loan refinancing calculator helps show you much money you can save through student loan refinancing.
Final Thoughts
While only 96 borrowers have received public service loan forgiveness, these numbers should rise significantly in coming years as more borrowers become aware of the program and its requirements. The program started in 2007 so borrowers only became eligible for student loan discharge in October 2017.
While the requirements can be confusing, make sure to follow this roadmap and you'll be on the right track.
