In January, Anna Brekken had finally made 120 student loan payments, the number at which borrowers are supposed to get the rest of their debt cancelled under the public service loan forgiveness program.
When she submitted her request for forgiveness, she looked forward to walking away from her $100,000 balance and no longer having a $580 a month loan payment. And for the first time in 12 years, she could think of leaving her government job to do something else. Her dream is to teach English in South America.
But then her student loan servicer FedLoan came back and said she hadn’t made 120 payments yet, but closer to 80. That would mean Brekken would have to continue paying her student loans for another three years.
“It’s devastating,” Brekken, 39, said. “That’s going to be a lot more money. Why did they make this program if they weren’t going to let anyone get forgiveness? It’s like a program in name only.”
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Most borrowers are still unable to access debt forgiveness under the public service loan forgiveness program, which is supposed to allow not-for-profit and government employees to have their federal student loans canceled after 10 years.
Just around 5% of student loan borrowers who’ve applied for the relief as of April 30 have qualified, according to data from the U.S. Department of Education. That means just around 3,700 borrowers hoping for forgiveness out of 171,000 have gotten it. In 2013, the Consumer Financial Protection Bureau estimated that one-quarter of American workers could be eligible.
However, the program has been plagued by problems.
Plenty of people in public service jobs believe that they’re paying their way to loan forgiveness only to discover at some point in the process that they don’t qualify for one technical reason or another. And borrowers often complain that servicers undercount their payments, pushing out their date for forgiveness again and again.
President Joe Biden has promised to improve the program, but it’s unclear when those changes could happen.
The U.S. Department of Education and FedLoan did not immediately respond to a request for comment.
In the meantime, there are steps borrowers can take to improve their chances for forgiveness.
Understand the program’s four basic requirements:
- Your loans must be 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.
- You need to be repaying your student loans in one of four income-driven repayment plans.
- By the end, you need to have made 120 qualifying, on-time payments.
To begin, check that your student loans, payment plan and employer all qualify.
Borrowers can get a list of their federal loans by logging into StudentAid.gov. You want to make sure your loans are Direct loans. Federal Family and Education loans and private loans do not qualify.
There are some 14 ways to repay your student loans, but to be eligible for public service loan forgiveness you need to be enrolled in one of these four income-based repayment plans: income-contingent repayment, income-based repayment, pay-as-you-earn repayment and revised pay-as-you-earn repayment.
And lastly, to make sure your employer qualifies, at least once a year, you should fill out and submit to your servicer a so-called employer certification form. These forms will also enable you to keep records of your confirmed qualifying payments.
It’s especially important to fill out this form if you switch employers, said higher education expert Mark Kantrowitz.
Maintaining a record of your payments can also protect you when it comes to proving that you’ve made the full 120, he said.
“Borrowers should keep a spreadsheet showing, for every payment, the date of the payment, the amount of the payment, the repayment plan and the eligible job,” Kantrowitz said. “If there are ever any problems, this spreadsheet will be helpful in resolving those.”
Keep in mind that even if you haven’t paid your student loans during the government’s suspension of bills until September, those months still count toward your required 120 payments. (That’s at least 19.)
If your loan servicer insists that you haven’t made 120 payments and you believe you have, you should continue making payments, Kantrowitz said.
“If they did indeed make the required number of payments, the extra payments will be refunded to them,” he said.
In the meantime, you can appeal your loan servicer’s count. Again, it will be helpful if you can show a record of your payments as well as your employers over the last decade.
Brekken is currently in that process, and fortunately she had kept records.
“I submitted my payment history in black-and-white,” she said. “And I’m going to have to keep bugging them.”