The Department of Defense employs nearly 3 million people, many of whom perform a fundamental form of civil service: service in the armed forces. However, as of January last year, only 124 military personnel had their student loans granted under the public loan program.
This represents approximately 9% of service member applications for debt relief under the program – and that's even better than the national success rate of 1%.
That is according to a report released by the Government Accountability Office on Thursday that also found that 1,410 military personnel have requested to have their debts canceled under the program.
Public Service Loan Issuance awards the remaining balance on direct loans after the borrower has made 120 qualified monthly payments under a qualified repayment plan while working full-time for a public service employer listed in the program.
In addition, 11% of the 176,906 active military personnel who already had credits that were eligible for forgiveness or credits that could be consolidated for qualification completed the paperwork.
To qualify for forgiveness, borrowers must be on the right type of student loan repayment program. Not all of them are eligible. You have to be in the right kind of public service. Some community service jobs are not qualified. You have to make monthly payments worth 10 years. and they need to have the right kind of federal student loan.
Among the soldiers whose debts were paid were 34 from the Army, 37 from the Navy, 42 from the Air Force, and 11 from the Marine Corps. In total, only 287 borrowers employed by the Department of Defense had canceled their debts under the program, out of 5,180 who applied – a rejection rate of 94%.
"Just when you think we have hit rock bottom when it comes to total mismanagement of the public credit program, you see reports like this," said Seth Frotman, executive director of the Student Borrower Protection Center, an advocacy group for borrowers.
"To finally receive confirmation that only 124 service members received forgiveness more than a decade after this program was created is truly a national shame."
In addition, GAO found that only 11% of the 176,906 active military personnel who already had credits that were eligible for forgiveness or credits that could be consolidated to qualify for forgiveness who had completed the records to get her on the path to relief.
Given the needs of an active duty soldier, it can be especially important to streamline the process for these soldiers.
The GAO results are the latest evidence of the challenges borrowers faced in accessing PSLF. This initiative enables people who work for the government and certain nonprofits to redeem their federal student loans after 10 years of payments and community service.
PSLF struggled to deliver on its promise in its earliest tests
Launched in 2007, the program struggled to deliver on its promise in its earliest tests. When, after 10 years of existence, the first cohort of borrowers in 2017 was eligible to pay their loans under the program, 99% of the applications were rejected.
Some watching the program closely had hoped that in the years following the first cohorts of applicants, the proportion of those admitted for relief under the PSLF would increase.
One of the main reasons for this forecast: In the early years of the program, the type of federal student loan that most borrowers have issued cannot be granted under the PSLF unless a borrower consolidates their debt.
The first cohort of borrowers were eligible for loan repayments under the program in 2017. 99% of the requests were rejected.
Borrowers who took out student loans as of 2010 and were therefore eligible to forgive under the PSLF for the first time in 2020 were only given the type of loan that qualified for the program.
For Frotman, improving numbers is no excuse for the damage borrowers have already suffered. As a student loan ombudsman for the Consumer Financial Protection Bureau, he warned of potential challenges for the PSLF before the first cohort was eligible for forgiveness.
Additionally, the GAO report released Thursday shows that many of the barriers applicants in these first cohorts faced in accessing forgiveness remain. The Ministry of Education did not immediately respond to a request for comment on the report.
In his response to GAO, Mark Brown, a Betsy DeVos-appointed person who was Chief Operating Officer of Federal Student Aid at the Department of Education prior to her resignation in March, said the agency agreed with GAO's proposals. He also highlighted the steps the agency has taken to simplify PSLF, including creating a database that borrowers can use to check if they are working for an eligible employer.
During the campaign, President Joe Biden promised "to make public servant lending work," and proponents urged the administration to deliver.
The promise is simple, but accessing relief can be challenging
While the idea and promise of public service loans is relatively simple – work 10 years in the civil service, pay off your student loans for that period, and let the remaining balance settle – it can actually be complicated to find relief to obtain.
Only direct loans are eligible for PSLF, but borrowers with Family Federal Education Loans can consolidate their debts into direct loans to be eligible for relief. For years, borrowers and advocates have said that student loan service providers – companies paid by the government to manage the student loan repayment process – do not provide enough or the correct information to borrowers to take advantage of this option.
This means that, in some instances, borrowers work in the public sector and repay their student debts, provided they are eligible for relief to find, after several years of payments, that those efforts did not count towards the program.
In his response to the GAO report, Brown noted that some Department of Defense officials who asked for forgiveness but was declined are in this situation.
Eighty percent of the rejected applicants had not had a direct loan that had been repaid in at least a decade, he wrote, adding, “although some of these borrowers may have been repaid for that period in the FFEL program. ”
"Full indictment against the larger program"
It is "a full indictment of the larger program" that borrowers clearly eligible for public lending are struggling to access promised relief, Frotman said.
"It is clear that if you cannot do it right for people who are literally serving in active service to our country, there is now no question that you are completely incompetent of everyone else as well," he said.
"If you can't do it right for people who are literally serving in active service to our country, there is no question that you are completely incompetent of everyone else as well."
GAO suggested that the Department of Education take steps to provide the Department of Defense with more information about eligible employees and those who have taken steps to continue the program. The agency also recommended that the Department of Defense provide more information about PSLF to its staff.
But Frotman and other proponents have urged the Biden government to go further. A coalition of 97 organizations sent a letter to Education Minister Miguel Cardona earlier this week urging the department to cancel the debts of students of those who had worked in the civil service for at least 10 years.
For those currently doing or serving in the military, Frotman said the government should use their data on who has federal student loans and who has arranged for those years of service to count towards eligibility for forgiveness.
"Anyone who has been in the service for 10 years will have their credits wiped out tomorrow," he said.
Frotman, who prior to serving as the CFPB's Student Loans Ombudsman, was senior advisor to Holly Petraeus, then assistant director of service member affairs at the Consumer Bureau, urged the Department of Education to have a plan on Cardona's desk to address these issues that day after the report was published.
"It's completely unsustainable," Frotman said of the challenges military borrowers face in accessing student loans. “This is the priority to get this right on behalf of military families and dedicated public servants. That has to be in front and in the middle. "