Public scrutiny of the PSLF has been around since the start of the program in 2007. But, it wasn’t until recently that borrowers have started to realize that they won’t have their loans paid back because they don’t qualify. 99% of the borrowers who have applied for debt forgiveness have been rejected. Per StudentLoans.gov in order to qualify a borrower has to meet the below requirements:
- 1)Have a qualifying loan. Loans that qualify under PSLF are:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans for Parents (Direct Parent PLUS Loans)
- Direct PLUS Loans for Graduate/Professional Students (Direct Grad PLUS Loans)
- Direct Consolidation Loans
- Direct PLUS Consolidation Loans
2)Make 10 years(120) months of qualifying payments. According to the site, a qualifying payment is one where the borrower pays their monthly amount in full and always pays within 15 days after the due date. *Payments that borrowers make in paid-ahead status don’t qualify as a payment. The borrower has to make 120 payments in normal payment status.
- 3)Have a qualified repayment plan. Plans that qualify are:
- Revised Pay As You Earn Repayment Plan (REPAYE Plan)
- Pay As You Earn Repayment Plan (PAYE Plan)
- Income-Based Repayment Plan (IBR Plan)
- Income-Contingent Repayment Plan (ICR Plan)
4)Have to be working full time for at least 30 hours a week. An employer might define full time as less then 30 hours a week but to qualify for the program the borrower must work at least 30 hours a week.
- 5)Work for a qualifying employer. Qualified employers are:
- A government organization
- A 501(c)(3) organization
- A not-for-profit organization that is not a 501(c)(3) that provides a qualifying public service as it’s primary purpose
If any of the requirements are not met the borrower does not qualify for PSLF forgiveness. Because of the large number of rejections, the biggest concerns are that the PSLF programs weren’t properly communicated to the borrowers from the start. There seems to have been some evasiveness that caused borrowers to overextend themselves thinking they would have their debt forgiven but the debt won’t be forgiven.