Reassessing America’s Approach to Student Loan Forgiveness

By Deandra Han Garcia

Student loan forgiveness has been subject of ongoing debate, with many Americans advocating for universal loan forgiveness. Considering the soaring costs of academic degrees and increasing debt, policymakers are working to find the best path forward. While efforts have been made toward resolving the issue of student loans, some of these solutions have flaws that perpetuate existing disparities in education amongst lower and higher-income individuals.

Education is a public good, and burdening individuals with debt for seeking higher education undermines the ideal of equal opportunity. Individuals should have the right to pursue higher education without worrying about affordability. The Public Service Loan Forgiveness (PSLF) program, established in 2007, is a federal program aimed at forgiving the remaining balance of direct loans for individuals working in public service jobs who have history of consistent payments [1]. To qualify for PSLF, individuals must be employed full time at government or nonprofit organizations and have to make 120 qualifying payments following October 1, 2007 [1]. Additionally, only loans under the William D. Ford Federal Direct Loan program are eligible for PSLF [1]. After meeting these qualifying requirements, individuals must apply to see if their remaining loan balance is eligible for forgiveness.

Despite the fact that PSLF works towards alleviating financial burdens, its eligibility requirements, lack of clarity, and service errors have proven to be barriers for individuals pursuing financial relief. Making the required 120 qualifying monthly payments takes roughly 10 years of payment [2]. This disproportionately affects the eligibility of lower-income households who cannot afford to pay off loans for consecutive years while managing other financial burdens [3]. Furthermore, lack of transparency and unclear language has led to confusion among borrowers, making it difficult for them to navigate the program effectively. For example, loan servicers may provide inaccurate information about the program, leading borrowers to be ultimately disqualified [3]. Since November 2020, just 2.3% of PSLF applications have been approved [4]. Many are led to believe they meet criteria and will be quickly approved, but learn they have made no progress [3].

Although the program has not been a great success and many continue to hold debt, the program can be improved upon to make it better suited for borrowers. Making program details simplified improves borrowers’ understanding of the PSLF and what the process of loan forgiveness entails. This could include providing clear guidelines on qualifying employment, which repayment plans are accepted, and the types of documentation needed. Including example imagery, similar to the DMV, could improve the quality of the website.

Having income-based eligibility requirements may increase the rate of applicants acceptance, and makes the overall process fairer. Income-based eligibility requirements would combat the previous 10-year required repayment plan, making the program inclusive and considerate of lower-income individuals.

Lastly, improving communication between the program, loan servicers, and borrowers is key to defeating confusion and lack of clarity. A direct line of communication between all three and better oversight would prevent misunderstandings that lead to disqualification.

With the increasing cost of education and amount student loan debt, loan forgiveness remains a prevalent issue. While programs like PSLF were designed to incentivize public service careers and alleviate financial stress from borrowers, it has faced many challenges because of its inequitable eligibility requirements, lack of clarity, and low acceptance rates. By adjusting eligibility requirements, simplifying language, and implementing clearer communication across loan servicers and borrowers, loan forgiveness can be improved and better suited to serve its intended purpose of supporting individuals in public service.

Works Cited