Paul L. Caron
Dean


Monday, June 17, 2019

Why Are 99% Of The Applications For Debt Discharge Under The Public Service Loan Forgiveness Program Being Denied, And Will This Change?

Gregory S. Crespi (SMU), Why Are 99% of the Applications for Debt Discharge under the Public Service Loan Forgiveness Program Being Denied, and Will This Change?:

During the first 18 months after October 1, 2017 that student loan borrowers were able to apply for tax-free debt forgiveness under the Public Service Loan Forgiveness program a striking 99% of the 76,002 applications that have been fully processed have been denied. The more recently adopted Temporary Expanded Public Service Loan Forgiveness program also has a 97% to 99% application denial rate, depending on how it is calculated. This short article discusses the various factors that may be contributing to such a bizarrely high denial rate, and why the number of applications filed and the proportion of applications filed that are approved are both likely to increase significantly over time, particularly after 2024, and to a greater extent if the Department of Education improves its currently inadequate borrower outreach and loan servicer oversight activities.

https://taxprof.typepad.com/taxprof_blog/2019/06/why-are-99-of-the-applications-for-debt-discharge-under-the-public-service-loan-forgiveness-program-.html

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Comments

Obligatory mention that the GOP is still trying to kill off PSLF entirely, a specter that will almost certainly appear again with Sen. Alexander's planned rewrite of the HEA by the year's end. And given that the Democrats under Obama were willing to limit PSLF forgiveness to $57,500, with the remainder to have gone on IBR or PAYE for another 10-15 years with a tax bomb at the end, I don't have much faith that any significant number of people will ever use PSLF. Both parties are willing to strangle it.

Posted by: Unemployed Northeastern | Jun 17, 2019 11:20:11 AM