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  • Michael Kostelnik

Why The 98% Decline Rate of Student Loan Forgiveness ​Happened, and Why it Does Not Matter

Not going to lie, 98% is a lot of people for the Department of Education to decline for student loan forgiveness. It makes for great headlines and a lot of outrage. It's also a lie.


It is true that 98% of people were denied, but the real surprise is that 2% were approved. The whole store needs to be known, and it is nothing overly complicated.


The biggest problem is, the media is scaring people away from seeking forgiveness.


Why did this happen?


The simple answer, the program was designed by our government, and they have shown a consistent inability to do anything right. The more detailed explanation? The plan was put in place before the tools needed were available.


In 2007, Congress created the Public Service Loan Forgivenss program. At that time, people were receiving FFEL loans. These loans do not qualify. It wasn't until 2010 that borrowers began using the correct loans.


Picture this. You graduate in 2018 and dive right into teaching or a nursing job at a hospital. You hear rumors of a forgiveness plan and know you have federal loans. Not only do you have federal loans, but you also work for a qualifying employer. This is a win.


Over the next ten years, you get married, buy a house, have a kid or two, and change jobs. During this entire period, you never looked into the details of the program because it should be simple.


This loan confusing is what happened to 98% of people that applied for forgiveness.


Further complicating the process, there is more to forgiveness than just having the right loans and the right employer. You have to have the right payment plan; the creation of the first qualifying payment plan in 2009 and 2013, and the DOE offering the Employer Certification form in 2012.


Why I KNOW Things Will Change


It tells us a lot about the state of our media when they cry so loudly that 98% of applicants were denied but didn't mention the March PSFL report. In this report, the Department of Education tells us that people certifying their employer are receiving approval at a rate of 50%.


These people are taking the proactive step of checking with the DOE to make sure they are doing loan forgiveness correct before the day of judgment is upon them.


Many people are making the right moves.


Not only does this report tell us how many people applied (2,181,000), and how many were rejected (1,032,089), but why the DOE rejected the request.

60% of the rejected certifications were due to missing information, 20% were for having ineligible loans (I will talk about ways to fix this later), and 5% had ineligible employers.


There were other reasons, but these show a trend; borrower error. My next post will talk about how to make sure you do not make one of these errors.


If you expect to receive PSFL and want to know for sure, you can contact your loan servicer. Since there have been horror stories of loan servicers not giving the right information, I can also help. Reach out, and I will provide you with a quick review of your loans.