Planning on Student Loan Forgiveness? Be Careful

A recent GAO report found that the Education Department’s student loan forgiveness program isn’t working out so well for borrowers.

A recent Government Accountability Office (GAO) report found that less than 1% of borrowers who submitted a federal student loan forgiveness application had actually received any loan forgiveness.

The Public Service Loan Forgiveness (PSLF) program is run by the Education Department’s (ED). One of the types of jobs that are considered qualified employment for the program are working for government organizations at any level (federal, state, local, or tribal).

Don’t Spend the Money Just Yet

While this may be an appealing benefit for current or prospective federal employees, the GAO report notes that it hasn’t been working out so well for borrowers. Just 55 eligible borrowers had received forgiveness out of over 19,300 that had submitted applications. That amounts to about .003%.

The most common reasons borrowers were denied by ED included missing information on the application or because the borrower did not have qualifying federal loans.

Graphic showing the total number of borrowers who applied for student loan forgiveness as of April 2018 per GAO's report and the number who qualified, number who made qualifying payments, and the number who had actually received forgiveness (55 out of 19,321)

The GAO report seems to mostly blame ED for causing confusion among borrowers due to a lack of information and outreach, noting that “the large number of borrowers whose certification requests and forgiveness applications were denied suggests that many borrowers do not understand or are not aware of these requirements.”

GAO also said, “Education has not provided the PSLF servicer with a comprehensive source of guidance and instructions on how to operate the program, raising the risk that the PSLF servicer may improperly approve or deny borrowers’ certification requests and forgiveness applications. Education officials told us they have plans for creating a comprehensive PSLF servicing manual, but no timeline for doing so.”

GAO’s Recommendations

GAO made the following recommendations in its report:

  • Develop a timeline for issuing a comprehensive guidance and instructions document for the PSLF servicer
  • Provide the PSLF servicer and borrowers with additional information about qualifying employers
  • Standardize payment information other loan servicers provide to the PSLF servicer
  • Ensure borrowers receive sufficiently detailed information to help identify potential payment counting errors

Federal Student Aid Report

A separate report released by the Federal Student Aid office within ED provides more recent information on the status of student loan forgiveness and continue to indicate the same problematic trends found by GAO in its report. Federal Student Aid states in the report:

As of June 30, 2018, approximately 28,000 borrowers had submitted almost 33,000 applications for loan forgiveness under this program. Of the approximately 29,000 applications that have been processed, more than 70 percent of them have been denied due to not meeting the program requirements (such as having eligible loans, 120 qualifying payments, or qualifying employment).

Another 28 percent of PSLF applications were denied due to missing or incomplete information on the form. These borrowers have been advised to submit a complete application so a determination of their eligibility can be made. Almost 300 applications have been approved by the PSLF loan servicer as meeting all program requirements, resulting in $5.52 million in processed discharges for 96 unique borrowers.

96 borrowers out of 28,000 amounts to .003% who had loans forgiven.

An Alternate Approach

Given the problems facing the government’s student loan forgiveness program, an alternate school of thought is to instead work on paying the loans off as fast as possible rather than waiting 10 years to have them forgiven, possibly only to find out that they are not forgiven anyway as these recent reports indicate.

One proponent of this approach is Dave Ramsey, a financial advisor well known for teaching people how to get out of debt.

“If you’re waiting on the government to fix your life, you’re screwed, ” said Ramsey in response to the report from the Federal Student Aid office.

He added, “To start with, let’s just assume that you were one of the 96 [who got loans forgiven]. You still waited 10 years to start your financial life. That’s asinine. We have people on here [his radio show] every single day doing debt-free screams that have paid off $50,000, $100,000, $150,000 in student loan debt and they have done it in 1,2,3 years; not 10. They got it out of their lives, they were done with it and they were not waiting on welfare to fix their life. When you wait on welfare to fix your life, you get screwed, and that’s what’s happened.”


The main message in these reports is for student loan borrowers hoping to have their loans forgiven to be careful. They do not say getting a portion of the loans forgiven is impossible, but to date there is a high failure rate.

A more extreme approach like Ramsey suggests is an option, although it means hard work and sacrifice (i.e. working extra jobs to pay down debt) in the short term but faster freedom from the debt in the long term. The student loan forgiveness program can still work, however, the lesson here is if you are a federal employee hoping to have your loans forgiven, take extra care to ensure you understand and meet all of the requirements to avoid an unpleasant surprise in the future.

About the Author

Ian Smith is one of the co-founders of He has over 20 years of combined experience in media and government services, having worked at two government contracting firms and an online news and web development company prior to his current role at FedSmith.