Student loan forgiveness continues to be a topic of debate as millions of borrowers get closer to resuming repayment in February.
Last month, the Biden administration extended the student loan payment moratorium and interest suspension to January 31, 2022. That relief, which was first enacted over 18 months ago, had been scheduled to expire on September 30 following several previous extensions by former President Trump and then President Biden. The Biden administration has said that the most recent extension is the "final" one, meaning that millions of borrowers will have to resume repayment in February of 2022.
Advocates have been urging the Biden administration to use the final months of the national student loan payment pause to enact widespread student loan forgiveness. But Biden has resisted such moves, and key administration officials have suggested that broad cancellation of student loan debt just isn't going to happen . Instead, the Biden administration is focusing on "targeted" student loan forgiveness by trying to streamline and expand access to existing relief programs such as the Total and Permanent Disability (TPD) Discharge program and Borrower Defense to Repayment. Borrower advocates are also pushing the administration to enact sweeping changes to Public Service Loan Forgiveness , as well.
But while the debate continues about reforming or expanding existing student loan forgiveness programs, many borrowers have been applying for relief under these programs, only to be denied. In some cases, borrowers may still have options.
Public Service Loan Forgiveness
The Public Service Loan Forgiveness (PSLF) program has faced uniquely high denial rates for years. The Department of Education's data on the program indicates that between November 9, 2020 through April 30, 2021, out of 168,197 PSLF applications, 3,458 were approved, and 164,739 were rejected. That is a denial rate of nearly 98%.
There are several factors that contribute to this high denial rate, including complex eligibility criteria established when Congress first created the program, and poor administering of the program by the Department's contracted student loan servicers. A report released earlier this year from the federal Consumer Financial Protection Bureau (CFPB) found that "student loan servicers gave incorrect information to borrowers" about the requirements of Public Service Loan Forgiveness, resulting in "missteps that could cost consumers thousands of dollars."
If you are among the 98% of applicants who are denied relief under the PSLF program, you can consider a number of potential next steps, depending on your circumstances and the reasons for your denial:
- If you were denied relief because you don't have a qualifying federal student loan (PSLF is limited to Direct federal loans only), you can explore Direct loan consolidation. However, consolidation can have some significant downsides (including interest capitalization and a restart of your repayment term), and would probably not allow you to get retroactive credit towards PSLF for payments already made.
- If you were denied relief because you were making payments under a non-qualifying repayment plan (such as an Extended or Graduated repayment plan), you can explore relief under the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program, which Congress established to help Direct loan borrowers who had made payments on their Direct-program federal loans under a non-qualifying repayment plan.
- If you were denied relief because your student loan servicer miscounted or undercounted your qualifying payments, despite meeting all of the PSLF eligibility criteria, you can request a manual audit of your account to update your total qualifying payments. If the audit is unsuccessful (or if it's never done at all), you can ask the Department of Education to get directly involved by filing a complaint with the Department's FSA Feedback unit or the Ombudsman unit. It is important to submit a detailed written complaint along with supporting documentation wherever possible.
- Borrowers who are improperly denied relief under PSLF may be able to appeal the denial in federal court, depending on the underlying facts.
Borrower Defense to Repayment
The Borrower Defense to Repayment program allows federal student loan borrowers to request loan forgiveness if their school engaged in fraud or other misconduct. The program has been mired in political and legal battles for years, however, and many borrowers have either been denied relief, or have yet to receive a decision. Here are some options:
- Borrowers who are still waiting on a decision can contact the Borrower Defense hotline for a status update on their application. The Department of Education is still working through a large backlog of applications.
- Borrowers who are denied relief can submit a request for reconsideration. According to the Department, borrowers are encouraged to provide information on what you think was decided incorrectly and why, along with evidence that supports your position.
- Borrowers who are denied relief but have information regarding new allegations of misconduct by their school that were not raised in their original application can submit a new Borrower Defense application.
- Borrowers who are improperly denied relief under Borrower Defense may be able to appeal the denial in federal court, depending on the underlying facts.
Total and Permanent Disability (TPD) Discharge
The Total and Permanent Disability (TPD) discharge program provides student loan forgiveness to federal student loan borrowers who are unable to maintain substantial, gainful employment due to a medical condition. Borrowers can show that they qualify by providing a certification from the Veteran's Administration that they have a service-connected disability; documentation from the Social Security Administration that they receive Social Security Disability benefits with a 5-7 year disability review period; or a certification completed by their physician showing that they qualify.
Borrowers who are denied a TPD discharge may have some options:
- You may be able to appeal the denial within one year of your denial date. According to the Department of Education, "If you provide us with additional information that supports your eligibility for discharge within one year of the date of your denial letter, we will reevaluate your application for a TPD discharge without requiring you to submit a new application."
- If you were denied a TPD discharge and either did not appeal during the one-year window, or if your condition has worsened since your denial, you can submit a new TPD discharge application, and the Department will consider it.
- Consider including supporting medical records with your appeal or new application to illustrate the severity of your disabling condition.
- Borrowers who are improperly denied relief under the TPD discharge program may be able to appeal the denial in federal court, depending on the underlying facts.
Regardless of whether were denied student loan forgiveness under PSLF, Borrower Defense, or the TPD discharge program, it is prudent to:
- Understand the reasons for your denial
- Evaluate your options for appeal, dispute, or reconsideration;
- Consult with a qualified professional who can help you evaluate your options and next steps.
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