Military Service Could Eliminate Student Loan Debt with PSLF
Military Service Could Help Erase Student Loan Debt with Public Service Loan Forgiveness
Did you know that your military service could lead to the forgiveness of student loans?
The Department of Education (DoE) recently made changes to the Public Service Loan Forgiveness (PSLF) program due to the COVID-19 pandemic.
The Problem of Student Loans
Information from the Education Data Initiative shows that:
- 43.2 million student borrowers are in debt by an average of $39,351
- The average public university student borrows $30,030 for their undergraduate degree
- Student loan debt in the US totals $1.75 trillion
- Student loan debt grows 6 times faster than the nation’s economy
Post-secondary education is important, and it can get expensive. During the pandemic, when universities either shut down or went online, indignant students demanded a reduction or refund of their tuition.
The most notable case comes from a Harvard University lawsuit that was filed by students to force a partial refund of the nearly $50,000/year tuition. The lawsuit alleged that the online learning environment was subpar compared to the in-person learning the students expected when they took out their student loans.
A federal judge dismissed the lawsuit, but it demonstrates a crescendo of student voices who are questioning the value of their education for the price they have to pay.
Public Service Loan Forgiveness Waiver
People who are employed by the federal, state, local, or tribal government, or a not-for-profit organization, may be eligible for the Public Service Loan Forgiveness (PSLF) program.
Eligibility for the PSLF program depends on certain factors.
The following must be true:
- You must be employed by a U.S. federal, state, local, or tribal government or a non-profit organization. Military service counts as federal service.
- You work full time for that agency or organization
- You have Direct Loans, or you consolidate other federal loans into a Direct Loan
- You repay your loans under an income-driven plan
- You make 120 qualifying payments
Because you need to make 120 qualifying monthly payments, it will take at least 10 years before you are eligible for the PSLF program.
Changes to PSLF as of October 2021
On October 6th, 2021, the Department of Education announced coming changes to the PSLF.
The changes to the program include:
- A limited PSLF waiver that allows all payments by student borrowers to count toward PSLF, regardless of loan program or payment plan. This includes past payments that were late, or payments for less than the amount due.
- Allows active duty service members to count deferments and forbearances toward PSLF.
- Automatically provides credit toward PSLF for military service members and federal employees.
- Reviewing denied PSLF applications for errors and giving borrowers the chance to have their PSLF determinations reconsidered.
- Borrowers can receive forgiveness even if they’re not employed or not employed by a qualifying employer at the time of application and forgiveness.
The press release also mentioned that the current administration has approved more than $11.5 billion in loan cancellation for over 580,000 borrowers.
These temporary changes will last only until October 31, 2022.
Check out the PSLF Waiver page for more information on Qualifying Payments. They also have a robust Q&A section that covers a lot of ground specific to each category of student borrower.
Applying for a PSLF Waiver
Your first step should be to use the PSLF Help Tool, which lets you search for qualifying employers and to learn what actions you should take to become eligible for PSLF. To use the PSLF Help Tool, you must first login to your student aid account.
Every time you submit a form, the office of Federal Student Aid will evaluate your eligibility for forgiveness, and then grant that forgiveness if you are eligible.
Loan Forgiveness Problems
While the elimination of student loan debt is a highly politicized arena, there have been ambiguities and issues that have plagued the PSLF program for some time.
The nonprofit organization Education Data Initiative provides recent statistical data that sheds some light on these problems. According to EDI:
- The Higher Education Act has never been funded by Congress
- 0.7% of eligible borrowers will benefit from the forgiveness program
- 6.7% of eligible student borrowers apply for the program
- Slightly more than 1% of applications to the PSLF have been approved since the program began
- In the first year of PSLF, 0.032% of all applications were approved
- 3 million student borrowers are eligible for the PSLF, but little more than 200,000 have applied
- The Department of Education approved only $26.9 million of the $700 million appropriated for the PSLF
One of the main problems with the Public Service Loan Forgiveness program is that very few student borrowers even know about it.
Another is the historically selective and rigorous demands of the program. You can make all the money in the world available for loan forgiveness; but if the regulations are so tight, then it eliminates most of the student borrowers.
Time is Running Out
Let’s hope that these temporary changes will allow more applicants to benefit from the PSLF program. The changes are only in effect until October 31, 2022, which means you need to have your application in by then.
If you are an active duty service member who is carrying student loan debt, please do not miss this chance to have your military service count toward debt forgiveness.
The process sounds like it’s not easy, so take advantage of the time available to square yourself away!
About the author
Robert Haynes is a retired Army infantryman who has a squad of kids and is married to an active duty Soldier. He is a veteran of Operation Iraqi Freedom, who spent his last few years in the Army as a Drill Sergeant. He is now a full-time dad, freelance writer, and out-of-work comedian.