Denied Public Service Loan Forgiveness? You Could Get a Second Chance

Public Service Loan Forgiveness
Aileen Perilla/The Penny Hoarder

As the first wave of borrowers submitted applications to get their remaining student loan debt erased under the Public Service Loan Forgiveness (PSLF) program last year, many were met with an unexpected response: They didn’t qualify.

That was after 10 years working in the nonprofit sector, or as teachers or government employees. After submitting the proper paperwork every year. And after making 120 payments.

Rather than having their debt swept away, they were told they didn’t hold up their end of the bargain and that many of their payments didn’t count toward the requirements to qualify for forgiveness.

In most cases, that was because the borrower’s monthly payments were not made under the right kind of repayment plan, according to Adam Minsky, a New York student loan lawyer.

In the worst situations, borrowers were told they would have to start their payments again from the beginning and complete another 10 years of payments before they could qualify for forgiveness.

That changed in March, when lawmakers created a $350 million fund to give those who were denied forgiveness a second chance.

On Wednesday, the Department of Education announced the process for those previously denied forgiveness to appeal.

Denied Before? How to Know if You Qualify for Loan Forgiveness

Under this temporary program, borrowers still have to adhere to most of the qualifications for the forgiveness program.

“You still have to have direct loans, you still have to be working qualifying employment, but if you were on the wrong plan for some of those 120 payments, you can request forgiveness under the program, and the fund is designed to pay for that,” Minsky said.

Now, borrowers who made payments under the graduated repayment plan, extended repayment plan, consolidated standard repayment plan or consolidated graduated repayment plan could qualify for forgiveness too, according to the Department of Education.

But there is one important caveat: The money will be issued on a first-come, first-served basis until the fund runs out. That means you could qualify to get your loans wiped away but still be denied if you wait too long to notify the Department of Education.

“It’s not a fool-proof guarantee, but it is a potential option for some borrowers,” Minsky said. “Something is better than nothing, generally.”

How to Appeal Your Student Loan Forgiveness Denial

If you meet the qualifications for student loan forgiveness, simply send an email to [email protected] with your name and date of birth.

Here’s a template from the Department of Education you can use to make it simple. Just copy and paste, then fill in the blanks and send it off as soon as possible.

To: [email protected]

Subject: TEPSLF request

I request that ED reconsider my eligibility for public service loan forgiveness.

Name: [Enter the same name under which you submitted your Public Service Loan Forgiveness application]

Date of Birth: [Enter your date of birth in MM/DD/YYYY format]

Thank you.

Expecting Forgiveness Later? Here’s What You Need to Know

Right now, only those who have already completed 10 years in a public service career and made 120 payment toward their direct federal loan and then got denied forgiveness can apply for help from the $350 million fund.

For those who are still working toward that goal, this isn’t going to help you now.

“It certainly means that unless Congress is going to be committed to replenishing that fund, it is going to be a limited number of borrowers who are going to be able to access that,” Minsky said.

The fund may be empty long before they can take advantage, and the future of the program is still unclear.

“Could someone who has made less than 10 years of payments on the wrong plan have those non-qualifying payments count under this expansion? Yes, it’s possible,” Minsky said. “But they’re not going to be able to get a definitive answer to that until they have accrued 120 qualifying payments, they apply, they get denied and then they appeal.

“The vast majority of people are going to be in the situation… where they have made some years of payments that don’t count and then they’re questioning whether or not they will be able to get those years counted, and the answer is there is absolutely no way to know.”

In the uncertain meantime, be sure to keep track of every communication with your student loan servicer and double-check any information it gives you to make sure it’s accurate.

Desiree Stennett (@desi_stennett) is a senior writer at The Penny Hoarder. She writes about how government and court actions impact your wallet.