Of The  432,000 Borrowers  Applying  for Student Loan Forgiveness - 0 Qualify

Of The 432,000 Borrowers Applying for Student Loan Forgiveness - 0 Qualify

 

About 432,000 borrowers have submitted employment forms demonstrating they would qualify for the federal Public Service Loan Forgiveness program beginning in October 2017, the U.S. Department of Education said Monday.

However, Department of Education data indicate zero borrowers are on pace to qualify for Public Service Loan Forgiveness by 2017, according to Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators

Administrative issues appear to be creating obstacles.  “If the data reveal a likely large underutilization of this public benefit, steps should be taken now to help remedy this situation before October 2017,” Draeger wrote in a letter to Education Secretary John King Jr. and Under Secretary Ted Mitchell.

The loan forgiveness program was established in 2007 to allow borrowers of federal direct student loans who make 120 monthly payments under an income-driven repayment plan while working full time for a qualifying employer in the government or nonprofit sector to have their loan balance forgiven after 10 years.

The employment certification forms are submitted by borrowers who plan to apply for loan forgiveness, regardless of how many qualifying monthly payments they have made.  Jason Delisle, a policy analyst at the American Enterprise Institute, said it’s too early to be alarmed about borrowers qualifying for loan forgiveness in the first year. That’s because income-based repayment wasn’t available until 2009.

“I don’t think there’s anything amiss,” he said. “There can be zero people who qualify on day one. And it can also be a program where there are lots of people who aren’t eligible today and will receive loan forgiveness in the future. I don’t think those things are mutually exclusive.”

Delisle predicted that benefits provided by the program would ramp up in the future as more student borrowers learn about it. Income-based repayment plans have also become more generous since the Public Service Loan Forgiveness program was established, he said.

Stay tuned…

 

 
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