Student Loan Forgiveness Program Rejected 99% of its Applicants
In 2018, The US Congress developed a fund to expand the student loan forgiveness program and help the public servants who were in debt and unsettled by the previous forgiveness program. However, this fund has had as many issues as the previous one. It didn’t deliver the results desired because a large number of the people who applied were rejected during the first 12 months – 99% of the applicants. Here, you will find out more about this program, the reasons for the rejections, and if you qualify for it. Let’s get right to it, shall we?
Understanding the Student Loan Forgiveness Program
The US Department of Education announced on May 2018 the details of the Temporary Expanded Student Loan Forgiveness program. This program was created for borrowers who have been rejected from the previous student loan program because of the ineligible repayment plan they selected. However, under this newly expanded program, 99% of the applicants were rejected.
So, how many requests were granted under this program? Only 661 requests out of 54, 184 applicants received student loan forgiveness from May 2018 to May 2019. Out of the $700 million, set aside by Congress for this expanded program, only a total of $27 million has been allocated. So, what is the reason for this large rejection rate?
Why 99% of these Applicants Were Rejected
Complex Qualification Requirements – some borrowers have stated that loan servicers poorly communicated the requirements to them and lawsuits have been filed by some of them against these companies.
Wrong Federal Student Loan – it is common for borrowers to find out that they do not have the correct federal student loan that makes them eligible for the forgiveness program.
Wrong Repayment Plan –borrowers find themselves enrolled in an extended loan repayment plan rather than an income-driven plan.
Employer’s Non-eligibility for Forgiveness – most employers do not qualify for forgiveness which in turn makes their employees ineligible.
Confusing Application Process for Borrowers – for borrowers to be eligible for this expanded plan, they must be rejected from the public service loan forgiveness progress. However, most borrowers are not aware of this requirement.
Here are the eligibility requirements for this temporary expanded loan forgiveness program:
- Make sure that you work in an eligible public service role;
You must have federal direct student loans as private student loans are not eligible;
You have to consolidate your FFEL loans into Direct Consolidation Loan to be eligible;
Ensure that you are enrolled in a qualified income-driven repayment plan and you need to have made several on-time payments on this plan;
You must have been rejected for the public service loan forgiveness.
Borrowers who meet all these requirements can apply for this expanded student loan forgiveness plan. However, they can send an email to the servicing agency that handles this program (FedLoan) if they get rejected. In this email, they must request that the Education Department reconsider their eligibility.
If you are stuck with student loan payments you cannot handle, you have options. Elias Dsouza of Dsouza and Strachan Lawgroup Group has the knowledge and experience to get you on track. Contact Elias today for a free consultation.