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Public Servants suffer from needless anxiety caused by misleading reports about the federal Public Service Loan Forgiveness program

A widely reported but misleading statistic about the federal Public Service Loan Forgiveness (PSLF) program may be causing many public service employees unnecessary worries that the program is a sham and it is nearly impossible to qualify for the benefit.  In addition to causing unnecessary stress, the misleading reports may also discourage people from starting or continuing public service careers in roles that are vital to public health, exacerbating worker shortages.

Student loan burdens can be stressful even without misleading information that inflates the perceived burden.  Economic hardship in general negatively affects health.  Stress from debt burden has been linked to high blood pressure, which increases risk of a heart attack or stroke.  And researchers have found that student loan debt in particular is associated with poorer mental health.  The Biden Administration’s recent move to forgive a portion of lower and middle income borrowers’ debt will likely be a welcome bit of relief for many, but millions will still carry large, anxiety-inducing debt burdens.

Public servants with certain federal student loans are supposed to have a light at the end of the debt tunnel.  In 2007, Congress enacted the PSLF program to create a way for people to have some of their student loan debt forgiven if they pursue a career in public service.  In general, if a person works full-time at government or non-profit jobs while making 120 monthly payments on their qualifying federal student loan debt, their remaining loan will be forgiven.  The purpose of the program is to entice qualified workers into careers in public service that might not be as lucrative as other employment.  

To be sure, the PSLF program has had … issues.  In the first eighteen months after the first group of public service employees became eligible for forgiveness in October 2017, about 99% of applications for forgiveness were denied, according to a GAO report.  The GAO reported that borrowers were confused both about the requirements for forgiveness and the process for obtaining it.  Confusion and problems with loan servicing have persisted, and in 2022 the Biden Administration admitted that there had been “historical failures in the administration of the federal student loan programs.”  The administration announced steps to grant prompt forgiveness to an estimated 40,000 public service workers whose applications had previously been denied.

Given the program’s spotty history, it’s understandable that public service employees might be skeptical of the program.  But various sources have continued to report that the program isn’t working based on a more recent denial rate that is still around 98%, and this is contributing to a widespread but misguided belief that the program is essentially a sham and obtaining forgiveness is nearly impossible. If it were true that 98% of people who tried to get forgiveness were denied, that belief would be justified.  But in reality, the reported 98% denial rate is highly misleading.  Here’s why.

Since 2012, the Department of Education has encouraged borrowers trying to eventually qualify for PSLF to annually submit certification from their employer documenting qualifying months of public service employment in the past year.  Annual certification serves two purposes: the borrower receives confirmation of their progress toward 120 months of qualifying payments, and at the end of the process the borrower does not have to obtain certifications from past employers.  In 2020, the Department combined the application for annual certification for the application for forgiveness.  When a person believes they have reached 120 months, they certify the months that they have yet to submit and submit the same form.

Not surprisingly, the vast majority of the forms that the government receives do not entitle the borrower to forgiveness–the borrower is merely reporting more progress toward the 120 month requirement.  In fact, more than three quarters of the forms are submitted by people who haven’t even been in loan repayment for 120 months and can’t possibly qualify for forgiveness yet.  But even though most of these borrowers are well aware that they do not yet qualify for forgiveness, their forms count as denials in that 98% statistic.  The vast majority of those forms are being approved in the sense that the government accepts the certification of employment and awards months of progress towards the 120 month payment requirement.  Indeed, 98.9% of PSLF forms are being approved in that sense, which is what most borrowers are looking for when they submit the forms.  

In sum, it’s simply not true that close to 98% of people who apply for forgiveness under PSLF are denied forgiveness, despite the impression that lazy and misleading reporting has left with the public.  We don’t doubt that there are still problems with the program given its checkered history, but the reported statistics, when viewed in context, do not indicate that it is a sham.

More needs to be done to clear up misconceptions about PSLF.  While we applaud the government’s recent willingness to own up to the program’s failures and correct mistakes, misconceptions that paint a picture of the program as a near-complete failure cause needless stress and undermine the program’s worthy goals.  The government must also address these misconceptions.  

Addressing misconceptions about PSLF would alleviate one big worry of a large group of borrowers.  We believe that public service employees can handle the possibility of human error and bureaucratic red tape a lot better than the idea that they’ve been the victims of a fraud by their own government and simply won’t get promised relief from their student debt.

Moreover, there are worker shortages in many health-related public service jobs, and PSLF is an important incentive for recruiting and retaining professionals, including health care workers at government and non-profit health care institutions.  If public service employees mistrust the program and feel that they won’t get a benefit, some may leave public service. This not only frustrates the purpose of the program; it likely exacerbates shortages in health care workers and other workers vital to public health, such as those who provide daily care for people with disabilities. Clearing up misconceptions about PSLF will restore the incentive to remain in public service.

Slade Smith, JD

Slade is Assistant Director of the Applied Health Policy Institute and an Arizona attorney. He is a 2017 graduate magna cum laude of the University of Arizona James E. Rogers College of Law and co-recipient of the 2017 Ralph W. Aigler Memorial Award for his professional and scholarly contributions to the college. He is from Columbus, Ohio, and now lives in Tucson, where he regularly enjoys outdoor activities in southern Arizona's beautiful and varied desert and mountain landscapes.