In fall 2017, the first cohort of borrowers became eligible for Public Service Loan Forgiveness (PSLF). The program started in 2007 and can forgive the student debt of those who work for nonprofit or government agencies for 10 years. However, there have been questions about whether anyone has actually received forgiveness for their loans.
While the Department of Education has been somewhat tight-lipped about the situation, a few people now claim to have actually received confirmation of their loan forgiveness. Here’s what you need to know.
Fewer than 1,000 are expected to benefit from PSLF in 2018
As of Jan. 5, 2018, the Department of Education said it has received about 7,500 unique applications for PSLF.
“Fewer than 1,000 people are expected to be eligible for a loan discharge under the PSLF program in fiscal year 2018,” the Department of Education told Student Loan Hero. This is due, in part, to the “limited availability of income-based repayment plans in the early years of the program.”
The Department of Education pointed out that the application period has only been open for a short time and said that verifying 10 years’ worth of borrower employment and payment history can take a great deal of time.
On Reddit, a user known as Agnail shared a screenshot described as a portion of a loan forgiveness letter, claiming to have received a discharge of remaining balances.
“Those of us who have feared that PSLF might be a mirage can take some solace that, at least for now, PSLF is real, and actual borrowers have begun receiving it,” Agnail wrote. Student Loan Hero wasn’t able to authenticate the letter as of the writing of this post.
In the thread, Agnail said that the case might have been expedited due to the fact that there wasn’t a lot of complexity in the application.
“The fact that I worked for the same employer for the full time probably made it easier for the Department of Education to verify my PSLF application,” Agnail wrote. Additionally, Agnail turned in the employer certification form each year after it became available in 2012.
How to become eligible for PSLF
In order to receive PSLF, you need to work for a nonprofit or government agency while making 120 payments on qualifying loans. One of the issues that have arisen in the last few months has been confusion over which loans are eligible for the program.
“Only Direct Loans are eligible for PSLF,” the Department of Education said in a statement. “Older loans, such as those under the Federal Family Education Loan program or the Federal Perkins Loan program, are not considered eligible loans.”
In order for those loans to “count,” borrowers must consolidate them using the Direct Loan program. However, consolidation resets the clock on the 120-payment requirement for forgiveness. So if you’ve been making payments on old loans, you might not qualify for PSLF.
For some borrowers, this reality has been sobering. One Oklahoma teacher was looking forward to PSLF but found out her loans didn’t qualify, reported CNN Money. She’d been paying for a decade and her loan balance had ballooned from $37,000 to $75,000 due to income-driven options.
Complaints against servicers over PSLF have been on the rise as borrowers claim they weren’t presented with accurate information about their eligibility.
“At the time the PSLF program was created, only an estimated 25% of the total loan portfolio consisted of Direct Loans,” said the Department of Education, which expects more people to qualify in the future as older programs phase out.
The Department of Education recommended submitting the employer certification form each year to make it easier to track your eligibility for the program. The first form was made available in 2012. So if you began work before then, the government will take longer to verify your status.
Note that the Department of Education makes the final decision. Even letters issued in the past saying you’re on track might not be binding.
The future of PSLF
No matter who benefits from PSLF now, the future of the program is in doubt. Legislation in Congress, known as the PROSPER Act, aims to end PSLF. Additionally, President Trump’s latest proposed budget suggests getting rid of PSLF.
However, there are expectations that those currently working toward PSLF will be grandfathered in and still receive their forgiveness if they qualify.
For now, consider whether working in a lower-paying job is worth the loan forgiveness. In some cases, it might make more sense to take a high-paying private sector job and pay off your loans early. Refinancing can help you lower your interest rate and payment if you’re in that situation.
If you want to stick with PSLF, double-check to see that your loans qualify. Additionally, make sure to turn in your employer certification form each year and track your qualifying payments.
Finally, if you think that PSLF should stick around, track the legislation moving through Congress and contact your representatives to let them know your position.
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1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of October 1, 2020.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of September 9, 2020. Information and rates are subject to change without notice.
3 Important Disclosures for SoFi.
4 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of July 31, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 7/31/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
5 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 10/15/2020 student loan refinancing rates range from 1.98% APR to 8.55% Variable APR with AutoPay and 2.99% APR to 8.77% Fixed APR with AutoPay.