Veterans encounter bureaucratic hurdles while attempting to cancel their promised student loans
The Public Service Loan Forgiveness (PSLF) program, designed to erase student debt for those who take lower-paying public service jobs, has faced challenges in helping military borrowers. However, recent changes to the program aim to simplify criteria and broaden qualifying repayment plans, benefiting many service members.
The Department of Education is collaborating with the Department of Defense to set up a system that would automatically match data across the two agencies, potentially ending borrowers' hours on the phone seeking signatures. This collaboration is a significant step towards easing the process for military borrowers.
The strict eligibility rules of PSLF, which require Direct Loans and 120 qualifying monthly payments under an income-driven repayment plan while working full-time for a qualifying employer, have been a barrier for many military borrowers. Many borrowers may have non-Direct federal loans or may not have made all payments under an eligible plan.
Recent reforms have expanded the types of qualifying payments and provided a "limited PSLF waiver," allowing previously ineligible payments to count retroactively towards forgiveness. This waiver benefits many military borrowers with mixed loan types or prior repayment plans. Additionally, new repayment options such as the Repayment Assistance Plan (RAP) starting in 2026 offer features like interest forgiveness and automatic balance reductions, aligning better with military borrowers’ income patterns and qualifying for PSLF.
The Department of Education announced in October that months spent on active duty count toward PSLF even if the service member's loan payments were in deferment. However, the department has yet to explain why they're not counting some military borrowers' time. Navy veteran Stacy Hunter is one such case where time spent on active duty has not been recognised.
Jodie Parks, an occupational therapist working at a Michigan state psychiatric hospital, is one of the military borrowers who have had their loan forgiveness approved. Parks worked part-time to prove her military service in order to have her student loans forgiven under the PSLF program. Navy veteran Mike Smiley's loan forgiveness was also approved after he submitted a complaint to the Department of Education and went to the department's ombudsman.
The U.S. Government Accountability Office reported that military borrowers were denied due to confusing and narrow rules about eligible loan types and repayment plans. Fewer than 2% of applicants were approved for the PSLF program between 2017 and the onset of Covid-19.
Kelly Hruska, government relations director at the National Military Family Association, is hopeful about the Department of Education's efforts to help more military borrowers qualify for loan forgiveness. The department is also working with advocates to draft new permanent regulations designed to help more borrowers qualify after the waiver expires in October.
As of the end of February 2022, the Department of Education had about 173,000 forgiveness applications in process. Thousands of dollars of student debt are at stake for active-duty service members, making the improvements to the PSLF program a significant relief.
The story about military veterans and student loans was produced by a nonprofit, independent news organization focused on inequality and innovation in education.
[1] Department of Education Spokesperson: If a forgiveness application is otherwise in order, the DD 214 "generally suffices" to prove military service. [2] FedLoan Spokesperson: DD 214 forms are acceptable if submitted with other information "supporting that the requirements for eligible employment have been met (e.g., full-time employment)". [3] Department of Education: The Department of Education is making improvements to the Public Service Loan Forgiveness program. [4] U.S. Government Accountability Office: The U.S. Government Accountability Office reported that military borrowers were denied due to confusing and narrow rules about eligible loan types and repayment plans. [5] Department of Education: The Department of Education announced in October that months spent on active duty count toward PSLF even if the service member's loan payments were in deferment, but neither the department nor FedLoan has explained why they're not counting Navy veteran Stacy Hunter's time.
- The Department of Education has stated that a DD 214 form generally suffices to prove military service for Public Service Loan Forgiveness (PSLF) applications.
- FedLoan, the servicer of federal student loans, has confirmed that DD 214 forms are acceptable if they are submitted along with additional information that demonstrates the requirements for eligible employment have been met.
- The Department of Education is currently making improvements to the PSLF program to help more military borrowers qualify for loan forgiveness.
- According to the U.S. Government Accountability Office, military borrowers have been denied PSLF due to confusing and narrow rules regarding eligible loan types and repayment plans.
- Despite the Department of Education's recent announcement that months spent on active duty count toward PSLF, even if loan payments were in deferment, Navy veteran Stacy Hunter's time has not been recognized and an explanation is yet to be provided.
