Public Service Loan Forgiveness program being overhauled after 99% rejection rate

Military members, teachers, and social workers may finally get the federal student loan forgiveness they were promised. After 99% of applicants were rejected, the system is being overhauled.

Here's the promise that was made: If you work in public service for ten years and make certain federal student loan payments on time for 120 months, what's left of those loans can be forgiven.

RELATED: Biden administration announces student loan forgiveness program overhaul, will impact over 500K borrowers

But in 2018, the U.S. Department of Education revealed that of 29,000 borrowers that applied, 99% were rejected. In 2019, Congress expanded the program. Of 54,000 borrowers that applied, 99% were still rejected.

"I did everything and got my form signed and got my rejection letter, saying my loan wasn’t eliglble.  So it was very frustrating," said Deborah Harburger.

After working for years as a social worker and clinical instructor, and making years of payments toward her federal student loans, Harburger says she was never told she needed to consolidate into a different federal loan to qualify for Public Service Loan Forgiveness.

"It was hard in that moment," said Harburger. I have two kids. Daycare is expensive."

"Social workers and other public service providers would have completed five or six years of public service, and the Department would say they only had 20 payments counting toward forgiveness," said Sarah Christa Butts, Director of Public Policy with the National Association of Social Workers.

A lack of communication about the rules, or payments being even one penny off, are among the reasons thousands of social workers, teachers, military members, and government employees say they were rejected for Public Service Loan Forgiveness.

"The starting salary for social workers is about $47,000 a year," said Butts. "The required education is to have a Bachelors' and a Masters' degree in social work. The average student debt for social workers is around $67,000."

MORE: Students can begin applying for financial aid for 2022-23 college year

The Texas AFT has had old hold clinics to help teachers get approved.

"Our profession is not highly paid in the first place," said Zeph Capo, President of Texas AFT. "And they were counting on the fact that they would get some of their student loans forgiven."

He says Texas AFT sued some loan servicers, reaching a settlement to get some teachers' loans forgiven.

"They were specifically dissuaded from continuing the process where we litteraly had to go to court," said Capo.

Now the U.S. Department of Education says applicants can reapply.  It's offering a time-limited waiver for borrowers to count payments from all federal loan programs or repayment plans toward forgiveness.  And the DOE says it will automate the system to help correct errors and give military members credit while serving.

"People don’t go into social work for the money. But it is important they can stay in the job. So from a retention perspective, that can be really helpful," said Harburger.

The DOE expects 22,000 borrowers will now be entitled to forgivenss, and 550,000 will be about two years away.


To benefit from the temporary changes, borrowers must apply by October 31, 2022.  

Those with FFEL or Perkins loans must consolidate them and submit a PSLF form by October 31, 2022, to have previously ineligible payments counted.  

The Department of Education says it will post more information on its website.