More Borrowers Are Qualifying for Public Service Loan Forgiveness

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By Mark Kantrowitz

August 31, 2020

More student loan borrowers are qualifying for Public Service Loan Forgiveness. Public Service Loan Forgiveness (PSLF) is a program that forgives the remaining balance on Direct Federal Loans if you are employed full time by a U.S. federal, state, county, local or tribal government or not-for-profit organization. 

The number of borrowers qualifying for Public Service Loan Forgiveness (PSLF) has increased from 101 per month in March 2020 to 431 in June 2020, based on an analysis of government data. 

At the same time, the number of borrowers applying for loan forgiveness has decreased from 5,656 per month to 3,632 per month.

This means that the ratio of the number of new borrowers receiving public service loan forgiveness to the number of new borrowers applying for loan forgiveness has increased from 1.8% to 11.9%, as shown in this chart.

This ratio is not necessarily the percentage of new borrowers applying for public service loan forgiveness who are approved, since approvals tend to be a lagging indicator.

The cumulative loan forgiveness rate has increased from 1.3% in March 2020 to 1.8% in June 2020. The total of new loan forgiveness approvals in April, May and June 2020 represent more than half of the total through March 2020. 

The number of approvals for Temporary Expanded Public Service Loan Forgiveness (TEPSLF) also increased in June 2020, but this was after six months of almost no approvals.

The reason for the increase in loan forgiveness approvals in the PSLF program is unclear. It could be that fewer ineligible borrowers are applying for loan forgiveness, especially borrowers with less than 120 qualifying payments. It could also be that the PSLF loan servicer is counting the number of qualifying payments more accurately.

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