98% Public Service Loan Forgiveness Applications Rejected: What To Do With College Debt



As of April 2021, 98% of those who applied to participate in the government service loan forgiveness program were rejected. Here’s what to do with your student loans if your application is rejected.

IN Public Service Loan Forgiveness (PSLF) The program was created in 2007 with good intentions: student loan borrowers who become government employees may be disbursed a portion of their federal student loans after 10 years of full-time employment and loan repayments.

However, in practice, only 2% of PSLF applicants have been granted student loan forgiveness as of April 2021, according to data US Department of Education data… As a result, millions of teachers, military personnel, nurses, emergency responders, and non-profit organizations are unable to receive the promised student debt relief.

President Joe Biden’s Proposed Federal Budget significant improvements have to be made to the PSLF. But until tangible progress is made, government officials who counted on forgiving student loans must continue to pay off their loans or risk losing their eligibility for PSLF.

Private student loans will not be eligible for the PSLF program, so borrowers may instead consider refinance your private student loans with Credible at a lower interest rate to save money. However, be careful not to refinance your federal student loans as you are no longer eligible for loan forgiveness and are giving up your current federal tolerance options.

Read on to find out what you should do with your student loans if you are denied by PSLF.

  1. Make sure you have the right type of loan
  2. Make sure you work for the right employer
  3. Keep track of student loan payments
  4. Consider Other Student Loan Assistance Programs


1. Make sure you have the correct type of loan.

The vast majority of PSLF’s rejected applications were due to the applicant’s lack of a loan of the correct type. To be eligible for the government service loan forgiveness program, your student loans must be federal direct loans, including:

  • Direct subsidized and unsubsidized loans
  • Direct loans PLUS
  • Direct Consolidation Loans

The type of federal credit you have is listed at the top of your monthly bill and on your loan agreement. If you do not have access to your records, you can find out what type of federal loans you have by logging in Federal Student Aid website or by calling the Federal Student Information Center at 1-800-433-3243.

Since borrowers with private student loans are not eligible for forgiveness, they may consider refinancing, although interest rates have historically been low. The refinancing rates for student loans on 10-year fixed rate loans were only 3.57% for the week of July 7, 2021. according to Credible

If you decide to refinance your private student loans, visit an online loan marketplace like Credible to compare rates for several lenders


2. Make sure you are working for the right employer.

A small proportion of government service loan forgiveness forms were rejected because they did not meet the requirements of a job certificate. Applicants for the PSLF must work for the federal, state, local, or tribal government, or an appropriate non-profit organization. This includes military service.

The PSLF also requires applicants to make the appropriate payments while working for the organization full time.

You can find a suitable employer using PSLF Help Tool


3. Keep a record of student loan payments.

The PSLF requires borrowers to make 120 qualifying payments while working full time for a suitable employer. It is important that you keep records of these payments yourself in case you need to dispute the information with the Department of Education.

Federal loan payments are currently suspended for a period Abstinence period from COVID-19which ends on September 30, 2021. Although you do not need to make payments, you will receive a loan from PSLF as if you made payments during this time.


4. Consider other student loan assistance programs.

Since PSLF has such a high failure rate, it may be better to look for other student loan forgiveness programs. These are usually offered depending on the profession, so look for programs in your area. Here are some examples:

Want to know more about your options? Contact an experienced loan officer at Credible to learn more about what to do with student loans, including refinancing.

Have a financial question but don’t know who to contact? Write to the Safe Money Specialist at moneyexpert@credible.com and your question can be answered by Credible in our Money Expert column.


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