FSA Finds Number of Borrowers on Track to Qualify for PSLF Continues to Increase
By Joelle Fredman, NASFAA Staff Reporter
As the Trump administration is seeking to cut the Public Service Loan Forgiveness (PSLF) program in 2019, and Congress passed a spending bill last month to protect borrowers who intended to qualify for forgiveness under the program, new data from the Office of Federal Student Aid (FSA) shows that the number of borrowers on track to have their loans discharged continues to rise.
FSA released a series of new reports Friday that included new data on PSLF borrowers from the final quarter of 2017 and showed that the number of borrowers on track to qualify to have their loans forgiven after making 120 monthly payments in approved repayment plans has continued to increase year over year.
As of December 2017, around 800,000 borrowers submitted at least one approved, voluntary form to track their progress toward making those payments — an increase of a little more than 45 percent from the previous year. In the third quarter of 2017, FSA reported a 50 percent jump from the previous year.
The approval rate of the form has remained at 66 percent for the past few years, FSA reported. In the final quarter of 2017, 130,243 forms were submitted and 71,915 were denied. A form may be denied due to missing information, the fact that a borrower’s loans are ineligible, or because an employer does not meet PSLF requirements. If a borrower is enrolled in a repayment plan that does not qualify for PSLF the form is not denied, rather the borrower is advised to switch to another plan, according to FSA.
While the Trump administration's fiscal year (FY) 2019 budget proposal, as well as House Republicans’ bill to reauthorize the Higher education Act (HEA), sought to cut the program, Congress gave borrowers some hope last month when it passed a spending bill that will fund the government through September and set aside $350 million to allow Direct Loan borrowers who made 120 monthly payments under an extended or graduated repayment plan to qualify for forgiveness. Previously, payments made under these plans would only count as qualifying payments for PSLF if the monthly payments exceeded the monthly payments the borrower would have made under the standard 10-year plan.
The bill also set aside $2.3 million for the Department of Education (ED) to reach out to borrowers who would qualify for forgiveness if they were enrolled in approved repayment programs, and make improvements to the employment certification process. Last month, four Democratic senators sent a letter to Education Secretary Betsy DeVos asking ED to give a briefing in coming weeks on how it plans to implement these provisions.
In addition to an increase in borrowers who may qualify for PSLF, FSA found that enrollment in income-driven repayment (IDR) plans also continued to rise. From December 2016 to December 2017, FSA reported a 13 percent jump in borrowers enrolled in IDR plans, which followed a 16 percent increase in the third quarter of 2017. The reports found that more than 6.7 million Direct Loan borrowers are enrolled in plans such as Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE).
In his FY 2019 budget proposal, however, Trump proposed to consolidate all IDR plans into one single plan with a discretionary income cap of 12.5 percent and a 15-year repayment term for undergraduates, and 30-year repayment term for graduate students. Trump’s proposal would only take effect for those who originate their first loan on or after July 1, 2019 or are currently borrowing to “complete their current course of study.”
FSA has more new data available on the characteristics of borrowers in IDR plans as well as the number of borrowers who submitted forms to track payments toward PSLF in the FSA Data Center.
Publication Date: 4/10/2018
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