To help manage their student loan debts, 28,000 borrowers have sent in 33,300 applications for the Public Service Loan Forgiveness (PSLF) program. However, approximately 99 percent of 29,000 applications that have been processed were denied, and only around $5.52 million of debt has been discharged for 96 borrowers, MarketWatch reported.
Why? More than 70 percent of borrowers had their applications rejected because they didn’t meet one or more of the program’s eligibility requirements. To qualify, borrowers must have specific federal student loans — Direct Loans. They must also have certain repayment programs and jobs that include positions in government and some nonprofits.
In addition, borrowers must complete 120 payments made on time over 10 years to qualify for forgiveness. At times, borrowers might make a payment that is higher than the required amount for a particular month. As a result, the due date for the next payment is often “more than a month later than when they overpaid,” giving them paid-ahead status. Payments made while a borrower is paid-ahead aren’t eligible for the PSLF, the outlet reported.
The news comes as American’s increased the amount of money they borrowed in the second quarter, with consumer borrowing reaching $13.29 trillion during the quarter ending in June. Reuters, citing a report from the New York Federal Reserve in mid-August, said that consumer debt during the second quarter was up $454 billion from a year ago, marking the 16th quarter in a row in which consumer debt increased.
Though the amount of debt increased, that didn’t make it harder for consumers to meet their monthly payments during the second quarter. The loans that are seriously delinquent — 90 days or more past due — were at 2.3 percent in the second quarter, flat with the first quarter of 2018. The number of student loans that are turning seriously delinquent fell to 8.6 percent from 8.9 percent, Reuters noted. Meanwhile, student loan debt hit $1.4 trillion in the second quarter, which is up $61 billion from a year ago.