Want to forgive your student loan? New report says 80% of you will be rejected
Want a student loan discount? Shocking New Report Says 80% Of You Will Get rejected.
Here’s what you need to know.
A Freedom of Information Act (FOIA) request revealed that the civil service loan forgiveness program will continue to reject 80% of student loan borrowers by 2026. This is based on previously unpublished internal documents that the US Department of Education disclosed to Student Loan Borrower Protection, a leading nonprofit student loan advocacy organization. (This follows another report that shows $ 40 million in wages was garnished to pay off student loans – after the wage garnishment was banned by Congress in the Cares Act, the stimulus package of 2,200 billion dollars). The Public Service Loan Forgiveness program was created by a bipartisan congress in 2007 and helps public servants like police, military, teachers, firefighters, first responders, nurses, doctors, lawyers and others to achieve Complete federal student loan cancellation if they work for a government or nonprofit employer and make at least 120 monthly student loan payments, among other requirements. Currently, however, 98% of student borrowers who apply for this student loan discount have been rejected. Congress even tried to fix the program with a temporary student loan cancellation program, but it also has a 97% rejection rate.
The orange line in this graph is not the border of the graph; It’s the actual approval rate of the civil service loan forgiveness program over the past two years. That’s right – 2%.
Student loan cancellation: the details
The student loan cancellation is in trouble, according to the findings of the Student Borrower Protection Center, which found thanks to the new publication The data this:
80% of student loan borrowers will be turned down for a student loan forgiveness by 2026
According to monthly projections by the PHEAA – the student loan manager that manages the civil service loan forgiveness program – the PHEAA expects only 276,370 student loan borrowers to receive a civil service loan forgiveness. until January 2026. These student loan borrowers represent approximately 20%, or 1 in 5 borrowers out of 1,250,373 who have currently declared their intention to request a public service loan discount. The first student loan borrowers became eligible for the student loan exemption in 2017, meaning that almost a decade later, nearly 80% of student loan borrowers will still be rejected.
This data does not take into account future registrations for the cancellation of student loans.
As reported by the Student Borrower Protection Center, this estimate of an 80% rejection rate is based on the running number of student loan borrowers who request student loan forgiveness. However, more and more student loan borrowers will continue to request a utility loan forgiveness by 2026. The Student Borrower Protection Center estimates that 2.2 million student loan borrowers will declare their intention to withdraw. apply for a utility loan forgiveness by 2026. If 276,370 student loan borrowers are expected to obtain student loan relief, then that represents an approval rate closer to 12.5%, which means that 87.5% of student loan borrowers would be turned down for a student loan forgiveness.
Paying off student loans for 10 years won’t necessarily give you a student loan forgiveness
It’s important to note that student loan borrowers who pay off federal student loans for 10 years will not necessarily get their student loan canceled. Why? The civil service loan forgiveness program has multiple requirements including being enrolled in an income-based repayment plan, making the majority of the 120 monthly student loan payments while enrolled in an income-based repayment plan. income and consolidate all FFELP loans into a direct consolidation. To lend. This is in addition to working for a skilled utility or non-profit employer. Here’s some more striking data: In 2017, 10 years after the program began, the US Department of Education said 739,719 student loan borrowers intended to apply for a public service loan forgiveness. If only 276,230 are expected to get a student loan forgiveness, that means nearly two-thirds of student loan borrowers who are currently applying for a student loan forgiveness will not have their student loans canceled. Keep in mind that these are student loan borrowers who in many cases will have paid off their student loans for 10 years, but still will not get their student loan waived.
Student loan exemption: make sure you do it
If you want to know how to get student loan forgiveness, make sure you understand this:
1. Focus on your employer, not your role
The cancellation of public service loans is not based on your role. “Working in the public service” will not qualify you for the public service. You must be working full time (at least 30 hours per week) for a qualified public service or non-profit employer. So, it’s your employer, not your role, that matters. Complete an employment certification form with the US Department of Education.
2. Make sure your employer certification form is correctly completed.
It sounds obvious, but the main reason student loan borrowers are turned down for a utility loan forgiveness is incomplete or incorrect paperwork. Seriously. Double check your form. Make sure all of your information is included. Make sure your form is signed by your employer.
3. Focus on 120 student loan payments, not 10 years of public service
To get student loan forgiveness, it’s imperative that you focus on the number of student loan payments, not years of service. In most cases, 10 years of service and 120 monthly student loan payments will cover the same period. However, sometimes a student loan borrower may work for a public service employer for 10 years, but that borrower has made less than 120 monthly payments on time and in full. The good news is that student loan relief due to the Covid-19 pandemic will give student loan borrowers ‘credit’ for all 120 payments even if you haven’t made any federal student loan payments since March 2020. This means that you can get credit for more than 20 monthly student loan payments until January 31, 2022 for the 120 monthly student loan payments.
4. Join an income-based repayment plan
Working in the public service for 10 years for a qualified employer is not enough. You need to enroll your federal student loans in an income-based repayment plan such as IBR, PAYE, REPAYE, or ICR, for example. Plus, you have to make the majority of the 120 monthly student loan payments while enrolled in an income-based repayment plan.
5. Consolidate FFELP student loans
If you have FFELP student loans, be careful with this. Please don’t ignore it and work for a public service employer and think you meet all the requirements for student loan forgiveness. FFELP student loans are not eligible for the civil service loan exemption. There are too many stories of public servants who have passed all the requirements of the civil service loan forgiveness program to later find out that their student loans do not qualify, which is another main reason for rejection. Fortunately, there is a solution: consolidate your FFELP Credits into Direct Consolidation Credit. Do this before you start your 120 monthly student loan payments, or your student loan payments won’t count. Student loan consolidation can be done through the US Department of Education and you can contact your student loan manager for details. The reason you need to consolidate your FFELP loans is that only direct loans are eligible for the civil service loan exemption.
Student loan cancellation: final thoughts
President Joe Biden has canceled nearly $ 10 billion in student loans. (Find out here if you qualify for a student loan cancellation). Biden’s approach was based on the targeted cancellation of student loans, but he did not focus on actively revising the civil service loan forgiveness program. (Here are 5 reasons why Biden didn’t cancel student loans). If Congress intended the civil service loan forgiveness program to provide student loan relief to public servants, then student loan cancellation was not made available as widely as expected. Presidents George W. Bush, Barack Obama and Biden have all supported the Public Service Loan Forgiveness program. President Donald Trump removed the program from his budget proposal and said student loan cancellation should continue to be accessible to all through income-driven repayment plans. Biden, along with US Secretary of Education Miguel Cardona, are focused on improving the program and outcomes for student loan borrowers. (Here’s what canceling the Biden student loan means for your student loans). The Department of Education has solicited public comment on how to improve the forgiveness and cancellation of student loans. This could lead to substantial changes in the program to help more student loan borrowers get more student loan cancellations. Biden also proposed canceling student loans after five years, rather than 10 years, which could result in a student loan forgiveness of $ 10,000 for each year of service, for a total of $ 50,000 of loan cancellation. student.
If and until there is a solution for student loan cancellation, make sure you understand all of your options for your student loans. Hundreds of thousands of student loan borrowers who expect student loan forgiveness may not qualify or ultimately get student loan forgiveness. Also, student loan cancellation only applies to federal student loans, not private loans, so make sure you have a game plan especially for private loans. Here are some popular options for saving money: