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TEPSLF Denies 99% of Borrowers Who Apply for Student Loan Forgiveness

ElitePersonalFinance
Last Update: September 7, 2021 • Financial News •

    According to a U.S. Government Accountability Office study, the Temporary Expanded Public Student Loan Forgiveness (TEPSLF) program approved 1% of applications in 2018. It also denied 99% of borrowers who applied for student loan forgiveness.

    In total, 54,184 applications were processed, while 661 were approved.

    Same Old Story

    In 2018, Congress expanded its student loan forgiveness program to increase the pool of eligible applicants. Before the change, many borrowers were rejected because their loans did not meet the program’s eligibility requirements. However, even with the expanded criteria, approval rates were still below expectations.

    Breaking Down The Numbers

    From May 2018 to May 2019, 53,523 applicants were denied student loan forgiveness. Roughly 38,000 were denied because they did not submit a Public Student Loan Forgiveness program (PSLF) application, and roughly 15,000 were denied because they did not meet the program’s requirements:

    • 5,589 were denied because they had not been repaying their student loans for at least 10 years.
    • 3,078 were denied because their most recent and 12-month loan payments were less than what they would have been under an income-driven repayment plan.
    • 2,155 were denied because they had less than 120 qualifying payments.
    • 1,267 were denied because they did not provide the loan service with the necessary information.
    • 1,255 were denied because they had less than 120 months of qualifying employment.
    • 367 were denied for “other reasons,” including having loans in default or already receiving prior approval for some form of loan forgiveness.

    In total, the TEPSLF forgave approximately $26.9 million in student loans. However, the number paled in comparison to the $700 million that Congress appropriated for the program. Approved borrowers received an average of $41,000 in loan forgiveness, while amounts ranged from $190 to $227,000.

    Confusion Among Applicants

    Researchers concluded the high denial rates signaled that many borrowers were confused about applying and whether they qualified for the program. To combat the issue, Congress allotted $4.6 million, so the PSLF and TEPSLF could help familiarize borrowers with the requirements. Outreach was targeted to borrowers who otherwise would qualify for TEPSLF loan forgiveness, except their plans were deemed ineligible.

    Press secretary for the U.S. Department of Education, Angela Morabito, told NPR, “The Department has taken steps to help borrowers better understand the complex eligibility requirements, application process, benefits, and other information related to the PSLF and TEPSLF programs. The Department agrees with the GAO’s recommendations about how to improve the programs; a number of our efforts are already underway.”

    Eligibility Criteria

    To qualify for TEPSLF loan forgiveness, you must:

    • Work full-time for at least 10 years at an eligible public service organization. These include government organizations (federal, state, local or tribal), tax-exempt nonprofits, and private nonprofits that provide certain public services.
    • Not be in default of your student loan.
    • Make 120 in-full and on-time monthly loan payments – which generally means no later than 15 days after the scheduled due date. However, monthly payments do not have to be consecutive.

    The TEPSLF program is also open to plans that fall outside of standard PSLF eligibility criteria. Plans include: the Graduated repayment plan, Extended repayment plan, Consolidated Standard repayment plan, and the Consolidated Graduated repayment plan.

    Besides, loan forgiveness is available on a first-come-first-serve basis until the $700 million is extinguished or Congress repeals the program.

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