Why are Over 98% of the Applications for Debt Discharge Under the Public Service Loan Forgiveness Program Being Denied?

On October 1, 2017, student loan borrowers who had taken out federal Direct Loans first became eligible for debt forgiveness under the Public Service Loan Forgiveness program after completing the required ten years of qualified public service employment. But as of March 31, 2020, over ninety-eight percent of the more than 188,000 applications for debt relief that had been filed and fully processed under this program have been denied. The later-adopted Temporary Expanded Public Service Loan Forgiveness program also has a strikingly high ninety-four percent plus denial rate for the over 29,000 applications for debt relief filed and processed as of that date. This short Article considers the possible reasons for these bizarrely high denial rates and concludes that they are due in large part, though not entirely, to inadequate borrower outreach and assistance efforts by the Department of Education and its several loan servicers. Over the coming years, the proportion of debt relief applications approved under these programs will likely increase, hopefully rather dramatically. This is likely to happen because: (1) each year a somewhat larger proportion of outstanding federal student loans will be the Direct Loans that are eligible for discharge under these programs, rather than ineligible loans taken out under the earlier, and now-discontinued, Federal Family Education Loan program; (2) borrowers will surely become more aware over time of both the large benefits and specific requirements of these programs as they are more extensively publicized in the media; and (3) under the Biden Administration the Department of Education will almost certainly make more effective efforts to assist eligible borrowers to obtain debt forgiveness