A student-loan forgiveness program will continue to reject 80% of public servants through 2026, report finds

A student-loan forgiveness program will continue to reject 80% of public servants through 2026, report finds
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  • The Public Service Loan Forgiveness (PSLF) program provides student-loan relief to public servants.
  • But a report finds only 20% of applicants will get relief through the program by 2026.
  • PSLF already rejects 98% of borrowers, and Biden campaigned on reforming the program.

The Public Service Loan Forgiveness (PSLF) program, which relieves student debt for public servants after 120 monthly qualifying payments, has rejected 98% of applicants. Reform is on the way - meaning its denial rate will drop down to the still very high 80%.

The Student Borrower Protection Center released data on Thursday that found if PSLF continues on its current track, only 20% of borrowers will receive student-loan relief by 2026.

The report analyzed monthly projections obtained via a Freedom of Information Act request from the Pennsylvania Higher Education Assistance Agency (PHEAA), which manages PSLF. It revealed that PHEAA expects 276,370 borrowers to become eligible for relief in five years, out of the more than 1 million who have declared their intent to participate in the program.

When analyzing what those projections mean for future enrollment in the program, the report estimated that over 2.2 million borrowers will likely have declared their intent to pursue PSLF by 2026, meaning that only one in eight borrowers will obtain relief by that time.

"It's time for ED (Education Department) to take the steps necessary to ensure that everyone who has worked in public service for a decade or more gets the relief that Washington promised," the Student Borrower Protection Center wrote in a blog post. "The data revealed here show that the only way to ensure that this happens for the millions of servicemembers, teachers, and social workers across the country with student loan debt is to end the era of piecemeal attempts at fixes and to enact sweeping change."


PHEAA spokesperson Keith New told Insider that the data is being "presented out of context as there is a disconnect between borrowers who may be pursuing forgiveness and those who have actually qualified per PSLF rule." He said that to qualify for PSLF, a borrower must have made 10 years of qualifying payments along with 10 years of qualifying employment, and that is not always the case.

"Context is everything, especially with this already complicated topic," New said.

PHEEA's student-loan company, FedLoan Servicing, is shutting down in December, and an Education Department spokesperson told Insider it will work with those borrowers to ensure a smooth transition to a new company but did not provide a comment on how, or if, the transition will impact borrowers under PSLF.

The department did not immediately respond to Insider's request for comment on the recent projections.

President Joe Biden promised during his campaign to reform PSLF, given its high denial rate, and the Education Department has begun the process of implementing those reforms. But, as Insider reported, lack of communication from student-loan companies have made it very difficult for eligible borrowers to get relief.


And even for those who managed to get relief through PSLF, it wasn't easy. Insider spoke to David O'Keefe, a public servant who succeeded in getting his remaining $20,000 student debt balanced wiped out through the program, but he was mistakenly told he wasn't eligible and had to conduct follow-up after follow-up to ensure his paperwork was being processed accurately.

"It was the same thing again and again," O'Keefe said. "It was extremely frustrating."

The Student Borrower Protection Center urged the Biden administration to take quick action in fixing this program and give eligible borrowers the student-loan relief they deserve.

"PHEAA's projections make clear that without sweeping change along these lines, hundreds of thousands or even millions of student loan borrowers will continue to face broken promises and shattered financial futures," it wrote. "We cannot continue choosing that future."