Milestone: 1 Million Borrowers Have Received PSLF Loan Forgiveness

The Biden Administration announced today that over 1 million student loan borrowers have been approved for Public Service Loan Forgiveness (PSLF), eliminated more than $73 billion in debt.

When Congress created PSLF in 2007, champions of the program made certain promises to eligible borrowers. First, individuals who participated and worked in eligible public service positions would have their remaining loan balances forgiven after 10 years of payments. Borrowers wouldn't have to pay federal income taxes on forgiven loan amounts through the program either, thus they could avoid facing a student loan tax bomb down the road.

Requirements for the program were (and still are) relatively simple. Borrowers must work in an eligible position for 120 months to qualify, but not necessarily on a consecutive basis. Participants also have to repay their federal student loans on an specific repayment plans, and certify their employment during their time working.

Unfortunately, the initial rollout for PSLF was plagued with all kinds of tracking issues, and many borrowers aiming for forgiveness at the soonest possible qualification date (2017) were met with endless red tape and more questions than answers. At the beginning of the Biden Administration, only about 7,000 borrowers had received forgiveness.

Initial Problems PSLF

The biggest issues with PSLF came about once the first round of borrowers met the threshold for employment and payments and started applying for forgiveness.

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Only 96 borrowers out of 28,000 who applied for PSLF had been approved for forgiveness in September 2018. Out of those who didn't qualify at that point, 70% were denied for not meeting program requirements and 28% had mistakes on their applications.

An April 2020 report from the Dept. of Education also showed that, out of the 196,046 PSLF applications that had been submitted by borrowers at that point, 177,422 had been rejected for various reasons and 3,376 had been approved.

The proliferation of issues with PSLF led to all kinds of updates and "quick fixes" to the program. In 2018, for example, StudentAid.gov rolled out a PSLF Help Tool to help borrowers better assess their eligibility for the program. The Consolidated Appropriations Act, 2018 also created some new conditions for borrowers to qualify for PSLF through a program called Temporary Expanded Public Service Loan Forgiveness (TEPSLF), which attempted to count and include payments made on a repayment plan that wouldn't normally count toward PSLF.

The Department of Education also offered a PSLF waiver program from October 6, 2021 to October 31, 2022 that expanded the PSLF program rules due to the COVID-19 pandemic. This temporary waiver was also put in place to help borrowers get payments on ineligible repayment plans counted toward PSLF forgiveness.

Almost 4 Million Borrowers On Track for Forgiveness

While the rollout and operation of the PSLF program has been tumultuous to say the least, it does appear some progress is being made and that many of the "fixes" are starting to work. With today’s number of approved borrowers passing 1 million, and more borrowers on track than ever before.

The most recent PSLF data set shows that almost 4 million (3,997,781) applications for Public Service Loan Forgiveness submitted from November 9, 2020 to June 30, 2023 had been processed at that time, and that another 884,162 forms were actively being processed.

Out of the nearly 4 million completed PSLF forms borrowers had submitted, the Dept. of Education claims that 3,728,674 (or 93.3%) of forms had "met employment certification requirements, resulting in an updated qualifying payment count to track PSLF/TEPSLF progress."

This is good news for borrowers seeking student loan forgiveness through PSLF, even though these borrowers may still have years to go.

Potential Issues to Watch Out For

Regardless of any good news you hear about PSLF, program participants aren't entirely out of harm's way. As with all government programs, including ones where third party companies are involved, issues still cause problems from time to time.

In a recent example, several sources reported that MOHELA (one of the Education Department’s loan servicers) had been discharging loans through PSLF only to reinstate balances and begin requesting monthly payments again.

If you are pursing PSLF, the key is to ensure that you meeting all the requirements and being accurate with your PSLF employment form.

This means making sure that you’re on a qualifying repayment plan, have a Direct student loan, and are having your employer completely fill out the PSLF Certification Form via the PSLF Help Tool. Also, you should keep a copy of all records for yourself so that you can easily reconcile any issues that may arise.