The Washington PostDemocracy Dies in Darkness

Data shows only 20 percent of applicants for a student loan forgiveness program will receive relief by 2026

Advocacy group says the data underscores persistent problems in the Public Service Loan Forgiveness program

There are about 1.3 million people pursuing Public Service Loan Forgiveness, a program that cancels federal student debt after 10 years of on-time payments for people who take public-sector jobs. (iStock)

Low approval rates have plagued a popular student loan forgiveness program for public servants, and data from the company overseeing the federal initiative shows not much will change in the coming years.

There are about 1.3 million people pursuing Public Service Loan Forgiveness, a program that cancels federal student debt after 10 years of on-time payments for people who take public-sector jobs. But just 1 in 5 of those borrowers are on track to secure relief by 2026, according to an analysis released Thursday by the Student Borrower Protection Center.

Why people are being denied public service loan forgiveness

The advocacy group analyzed monthly projections of approvals obtained through a Freedom of Information Act request from the Pennsylvania Higher Education Assistance Agency (PHEAA), a state financial aid agency that manages the forgiveness program for the U.S. Education Department.

The organization says the 20 percent success rate is an indictment of the program and those charged with managing it, as so few people will be positioned for relief nearly two decades after its inception. What’s more, rates of success could be even lower, given that the numbers capture only borrowers who’ve informed the Education Department of their intent to seek forgiveness, which is not required.

“These revelations make clear that without sweeping action by the Biden administration, the promises that Washington made to teachers, nurses and so many other dedicated public service workers will remain broken,” said Seth Frotman, founder of the Student Borrower Protection Center. “It’s time for the administration to do its part by eliminating the debt of anyone who served their community or country for a decade or more.”

The PHEAA, which also operates as FedLoan Servicing, argues that the center’s analysis lacks context about the complexities of the forgiveness program that affect approval rates.

“There seems to be a disconnect between borrowers who may be pursuing forgiveness and those who have actually qualified per PSLF rules,” said PHEAA spokesman Keith New. “When considering the volumes eligible for forgiveness up to this point, it is important to fully consider the timelines around the program and its eligibility requirements.”

Seeking forgiveness: The dizzying journey for public servants with student debt

To qualify for forgiveness, borrowers must make 120 on-time monthly payments for 10 years to have the remaining balance canceled. They must work for the government or certain nonprofits. They must have loans made directly by the federal government. And they must be enrolled in specific repayment plans, primarily those that cap monthly loan payments to a percentage of their income.

The rules Congress created are complex. And missteps can be devastating for people who plan their lives and careers around the promise of tax-free loan forgiveness. Tens of thousands of borrowers have applied for forgiveness, but barely 8,500 have been successful, according to the latest available data from the Education Department. The agency has said many people simply have not made enough qualifying payments, an explanation echoed by New at the PHEAA.

The Student Borrower Protection Center says the PHEAA’s position ignores that many people awaiting forgiveness have been faithfully paying their debt for more than a decade but are being held back by technicalities. Many have loans originated by private lenders through the now-defunct Federal Family Education Loan Program, according to the Education Department. While those loans can be consolidated into the Direct Loan program, only payments made after the consolidation would qualify for forgiveness.

As the first wave of borrowers was set to receive forgiveness in 2017, problems in the program came to light. Public servants complained of poor guidance from loan servicers that have added years to their journey. Many have complained about a lack of transparency on the part of the Education Department, which the agency has tried to address by publishing data on the program and creating an online portal to guide borrowers.

“We are actively collecting feedback from the people who rely on the Public Service Loan Forgiveness Program about how to make it better,” said Kelly Leon, a spokeswoman for the Education Department. “Our goal is to make short-term operational improvements … but also deliver permanent fixes through future rulemaking sessions that will make the program easier for borrowers to navigate and help more of them successfully receive relief.”