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Student loan relief for public servants: 38,460 applied, only 262 accepted

  • A U.S. Education Department program to help public servants get student loans forgiven was criticized for being too onerous.
  • So Congress established a temporary expansion of the program, aiming to help more public servants qualify.
  • It authorized the Education Department to spend $700 million over a two-year period, but only $10.6 million has been spent.
  • Of 38,460 applicants, only 262 public servants have so far been approved.

A $700 million program set up to help public servants get student loan forgiveness has received plenty of interest, garnering 38,460 applicants. But far fewer -- only 262 people -- have been successful in obtaining loan relief, according to The Washington Post. 

The data sheds light on an effort created to help public servants -- who typically aren't earning six-figure salaries -- receive student loan forgiveness after 10 years working in such jobs as a public school teacher or police officer. Called the Temporary Expanded Public Service Loan Forgiveness program (TEPSLF), it was funded by Congress last year with $700 million to spend over two years. So far, only $10.6 million has been spent, the Post reported. 

The idea of the TEPSLF program was to broaden the availability of student loan forgiveness to public servants. An earlier program, called the Public Service Loan Forgiveness (PSLF) Program, faced criticism after some workers found they were given bad information and, as a result, failed to qualify. The idea behind the newer temporary program was to given them a second chance at applying for loan forgiveness. 

But the temporary extension program so far is approving only a trickle of applicants. About three-quarters were denied because the applicants hadn't earlier filled out a formal loan forgiveness application, which some applicants said they were unaware of, according to the report. Others may not have met all the eligibility criteria, such as having made 120 qualifying loan repayments. Still, the low rate of acceptances is raising questions with lawmakers.

"We authorized $700 million in student loan forgiveness for public servants like firefighters, teachers, and nurses," tweeted Sen. Tim Kaine, D-Virginia, on Wednesday. "Now we're learning that fewer than 300 people have actually received it. What is going on?? This administration is maddening."

Reasons for rejections

The Education Department told CBS MoneyWatch that a rejection doesn't mean a public servant won't ultimately receive loan forgiveness. "Some requests for TEPSLF that are "denied" -- at that moment in time -- could, in fact, lead to loan forgiveness under PSLF or TEPSLF in the future," said U.S. Department of Education Press Secretary Liz Hill in an email. 

Applicants can be denied for a number of reasons, such as failing to submit required income documentation, not being in repayment for at least 10 years and being short of making 120 on-time payments, she added. The Education Department based its program requirements "on the criteria Congress established," Hill said. 

Unclear rules?

To be sure, the Education Department posts the requirements that public servants need to check off before applying. But it has come under fire previously for unclear guidance with its Public Service Loan Forgiveness Program. 

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In September, the Government Accountability Office said more than 890,000 borrowers had taken steps toward loan forgiveness by having their employment and loans certified as eligible. Yet only 55 borrowers had at that point received loan forgiveness, it added. 

"The large number of denied borrowers suggests that many are still confused by the program requirements," the GAO report said of the Public Service Loan Forgiveness program. Piecemeal information and communication create "uncertainty for borrowers and [raise] the risk some may be improperly granted or denied loan forgiveness," it added. 

Unclear communication aside, Education Secretary Betsy DeVos has signaled her lack of support for the program, proposing last month to eliminate the Public Service Loan Forgiveness Program in her department's 2020 budget. At least one lawmakers pointed at DeVos for the program's low acceptance rate.

DeVos "is failing to provide $700 million Congress intended for student debt relief to public servants," tweeted Senator Dick Durbin, D-Illinois, on Wednesday. "Teachers, firefighters, nurses and their families deserve the relief they earned."