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Student loan borrowers face hiccups reapplying for forgiveness program

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Ronda Lee
·4 min read

As a key deadline looms, borrowers still face problems getting their student debt forgiven under a program for public service workers that Republican lawmakers are now targeting.

Borrowers previously denied forgiveness under the public service loan forgiveness program waiver (PSLF) have until October 31, 2022, to try again. However, it hasn’t been smooth sailing for some borrowers who are re-applying.

“PSLF applicants are still receiving denial letters and some denials are reversed,” Katherine Lucas McKay, associate director of research at Aspen Institute’s Financial Security Program, told Yahoo Money. “I am aware of PSLF applicants that received checks after their loan has been forgiven for ‘overpayment’ with no letter of explanation. They don’t know what to do with the checks.”

The ongoing troubles come as Republican lawmakers propose to eliminate the PSLF program, considering it part of the student loan debt problem.

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What is PSLF?

Public Service Loan Forgiveness PSLF Program documents.
Credit: Getty Images (designer491 via Getty Images)

PSLF is similar to college graduates who sign up for the military in exchange for loan forgiveness after a number of years of service like the Military College Loan Repayment Program (CLRP) or National Defense Student Loan Discharge.

As an incentive to teachers, nurses, doctors, lawyers, and other professionals — especially in rural and urban areas — student debt forgiveness was offered to those that worked at least 10 years in public service jobs with federal, state, local, or certain non-profit organizations through the public service loan forgiveness (PSLF) program.

PSLF is also available for military service members who don’t qualify under other military loan forgiveness programs.

Waiver exemption for PSLF
Credit: U.S. Department of Education (U.S. Department of Education)

Why are borrowers reapplying?

When Betsy DeVos was U.S. Education Secretary under the Trump Administration, more than 98% of borrowers who applied for the PSLF program were denied loan forgiveness by the Department of Education.

“Teachers and professors can’t make ends meet and the shame of student loan debt, which is why we sued Navient and Betsy DeVos for public service loan forgiveness,” Randi Weingarten, president of the American Federation of Teachers (AFT), said in a roundtable on student debt cancellation sponsored by the AFL-CIO. “If you can’t pay your student debt, you’re constantly not being able to get ahead.”

After the lawsuit, the Department of Education entered a settlement agreement, making changes to PSLF that allows those denied loan forgiveness to reapply with a deadline of October 31, 2022.

“Under DeVos only 2% of applicants would get PSLF, but under Biden the numbers have reversed,” Weingarten said.

As of May 2022, 12,523 PSLF applications were approved for loan discharge and 6,498 have been approved under the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) that expires October 31st.

To get the word out, the Department of Education sent PSLF notices out to all student loan borrowers, regardless of eligibility for PSLF, causing confusion with the current push for broad-based student debt cancellation.

Student debt debate

A graduating student wears a money lei, a necklace made of US dollar bills, at the Pasadena City College graduation ceremony, June 14, 2019, in Pasadena, California. - With 45 million borrowers owing $1.5 trillion, the student debt crisis in the United States has exploded in recent years and has become a key electoral issue in the run-up to the 2020 presidential elections.
A graduating student wears a money lei, a necklace made of US dollar bills, at the Pasadena City College graduation ceremony, June 14, 2019, in Pasadena, California. (Photo credit should read ROBYN BECK/AFP/Getty Images) (ROBYN BECK via Getty Images)

Already, some borrowers saw their student debt from for-profit colleges canceled following class-action settlements.

Recently, three Republican lawmakers, Reps. Virginia Foxx, Elise Stefanik, and Jim Banks introduced the Responsible Education Assistance Through Loan (REAL) Reforms Act, as an alternative to reform student loan programs proposed by the Education Department.

The Biden Administration is reportedly considering an executive action to cancel $10,000 in student debt for each borrower. But more progressive Democrats, such as Rep. Ayanna Pressley (D-MA) and Sens. Elizabeth Warren (D-MA) and Chuck Schumer (D-NY), are pushing for a broad-based elimination of student debt up to $50,000 per borrower.

“Canceling up to $50,000 of student debt is the only just and moral response to our nation’s student debt crisis, and it would be a game-changer economically for educators, nurses, public employees and other working people who face enormous economic challenges as a result of their debt burden,” Weingarten said. “We have told this generation higher education is vital, yet have asked them to shoulder the burden of college tuition themselves, undermining, in the process, their faith in American higher education as an engine of economic mobility.”

Ronda is a personal finance senior reporter for Yahoo Money and attorney with experience in law, insurance, education, and government. Follow her on Twitter @writesronda

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