This public service loan forgiveness remedy isn’t reaching many people

Public service loan forgiveness allows certain not-for-profit and government employees to have their federal student loans canceled after 10 years of on-time payments.

But most people, like Sonn, are rejected because they don’t fulfill one of the requirements. Consumer advocates say that student loan servicers have failed to guide borrowers to the consumer protection.

These are the public service loan forgiveness requirements. Often, if you don’t meet one of them, you can make changes so that you do.

  • Your must have 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.
  • By the end, you need to have made 120 qualifying, on-time payments in an income-driven repayment plan or the standard repayment plan.

Congress’ fix to the program earlier this year addressed people who had been denied the loan forgiveness simply because they had been repaying their debt in a disqualifying plan. Those people were offered a second chance at having their debt canceled.

More from Personal Finance:
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That’s why Sonn was hopeful, and quickly reapplied. However, he was told he still wasn’t eligible because he hasn’t made enough payments. “That doesn’t make sense,” said Sonn, who works for the Minnesota Department of Transportation. “I’ve been paying for 12 years now.”

But then he learned that, even though he graduated in 2006 and has spent his entire career in public service, he had consolidated his loans in 2012 — and that reset the clock on his loan forgiveness.

That means the soonest he will be eligible for loan forgiveness is in 2022.

By then, he said his student loan servicer told him, Congress’ fund will likely be depleted. “It feels like the hoops were put in place to not pay out in the end,” Sonn said.

It’s the responsibility of Education Secretary Betsy DeVos to implement Congress’ fund to fix some of the flaws of the public service loan forgiveness program, said Kaine.

“I hope the Trump Administration will turn things around by creating a simple process that gives fair consideration to the teachers, military personnel, law enforcement officers, and other public servants who apply for this debt relief,” he said.

The Education Department did not respond to requests for comment.

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