Public Service Loan Forgiveness

Many thought Congress’ announcement of a $350 million public service loan forgiveness fund this year would bring about great relief and wipe away their debt. Those in the public service industry, including Michael Sonn, were elated by the idea of finally being debt-free.

However, the reality of the situation is far from this.

The temporary expanded public service loan forgiveness (TEPSLF) program was enacted to help those struggling with their student loans but nearly 90% of applicants have been denied.

This statistic was given in a response letter from the Education Department sent to Sen. Tim Kaine, D-Va., who had inquired about the program’s success.

Soon is one of the thousands that have been denied acceptance into the program and was denied acceptance into the original public service loan forgiveness program as well.

The Department of Education does not make it easy nor helpful for the millions of borrowers who are attempting to pay back their loans and finally become debt-free.

If a borrower is enrolled in the wrong payment plan they are denied the ability to qualify for public service loan forgiveness even if all other requirements are met. This seems cruel and unusual to a group of people who have often been misled and defrauded by their schools.

It is now shown in a recent Education Department report that over 99% of the program’s applicants have been rejected.

The program, which was aimed to help those in need in the public service industry, allows certain not-for-profit government employees to have their federal student loans canceled after 10 years of on-time payments.

The three requirements for the program are as follows:

  • You must have federal direct loans
  • Your employer must be a government organization at any level, a 501(c)(3) not-for-profit organization or some other type of not-for-profit organization that provides public service
  • By the end, you need to have made 120 qualifying, on-time payments in an income-driven repayment plan or the standard repayment plan

The main reason over 90% of people have been rejected from the program is simply because they’ve been paying back their loans under the wrong payment plan. They meet the other two criteria but the payment plan, which many people enrolled in not knowing the consequences, is the issue.

The new TEPSLF was enacted to help those people which is why Sonn was hopeful. However, he is still not eligible because he hasn’t made enough payments towards his loans (120 required).

“That doesn’t make sense,” said Sonn who works for the Minnesota Department of Transportation. “I’ve been paying for 12 years now.”

There are so many “gotcha’s” when it comes to student loans which are why we always recommend, for the borrower’s benefit, to consult a professional loan advisor so they understand everything they need to know about their loans.

Back in 2006, Sonn consolidated his loans which reset the clock on his forgiveness which he now will be eligible for in 2022.

These programs were designed to help borrowers but they’ve done the exact opposite. Many still aren’t seeing the light at the end of the tunnel after close to a decade of paying back their loans.

To avoid the same fate as Soon and millions of others, call us today to speak with a Public Service loan Forgiveness specialist who can advise and direct you in the right direction (702) 747 9946.

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