98% of applicants are still denied for a student loan forgiveness program

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  • Biden campaigned to establish the Public Service Loan Forgiveness Program (PSLF).
  • But new data from the education department shows that the program still turns down 98% of borrowers.
  • Experts and lawmakers want Biden to resolve the “extraordinary confusion” the program has caused.

President Joe Biden campaigned for reform of the Public Service Loan Forgiveness (PSLF) program, which has come under fire for years for turning down the vast majority of applicants.

New education department data found that 98% of borrowers continue to be turned down for the program.

PSLF allows government and nonprofit employees with federally backed student loans to apply for loan forgiveness after proving 120 monthly payments under an eligible repayment plan, but it has an extremely high bounce rate. Biden campaigned to fix it. His campaign website said: “Biden will ensure that the existing public loan forgiveness program is established, simplified and actually helps teachers.”

But recently released data from the Department of Education showed that as of April this year, 97.9% of borrowers had been rejected from the program for failing to meet the program’s requirements. in 2018, 99% of applicants were rejected. The department’s reasoning for the high bounce rate boils down to borrowers failing to meet the 120 qualifying payments, but experts say the program itself is to blame β€” not the borrowers.

“Washington has had nearly 14 years to get PSLF right,” Seth Frotman, executive director of the Student Borrower Protection Center, which advocates an end to the student debt crisis, wrote on Twitter Monday. Enough excuses. Enough distractions. Enough industry raking in money while borrowers struggle and struggle @usedgov sits on the sidelines. It’s time to restore PSLF’s promise,” he added.

Last month, 56 Democrats sent a letter urging Education Minister Miguel Cardona to dissolve the loan forgiveness program in order to eliminate the “extraordinary confusion” the program has caused among borrowers, which led to its high rejection rate.

β€œAfter the first round of forgiveness was initially made available to PSLF borrowers more than three years ago, approval rates for the program have remained below 2.5%,” the letter said. “The program has been plagued by numerous ‘donut holes’ that disqualify certain types of loans, repayment plans, and the payments themselves, leading to extraordinary confusion and mistrust of the PSLF program and, by extension, the federal government.”

A government accountability office report also found that 287 Department of Defense personnel had received loan forgiveness as of January 2020, while 5,180, or 94% of DOD borrowers, were denied. sen. Elizabeth Warren released a statement called the findings, and PSLF, “nothing short of a disaster.”

Education Secretary Betsy DeVos was even charged several times about the high rejection rate of the programme.

Biden’s education department has announced plans to begin work on improving the program. Insider reported last week that Biden’s regulatory agenda includes reviewing PSLF and “plans to look at these regulations for improvements.”

That followed the Ministry of Education Announcement that it was a start to promulgate new regulations for higher education, but that no further details were given on what the said improvements would look like.

Frotman called on the Department of Education to waive student debt for eligible borrowers rejected from PSLF, writing on Twitter that “it’s time for @usedgov to forgive the debt of public service employees who have paid for more than 10 years.”

Do you have a story about student debt cancellation? Contact Ayelet Sheffey at asheffey@insider.com.

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