In 2007, Congress created the Public Service Loan Forgiveness (PSLF) program to encourage citizens to serve their communities and their country through public interest work—including military service. , military borrowers have complained to the CFPB about practices that have kept them from getting the benefits PSLF promised. And in 2020, the GAO reported that 176,906 active-duty servicemembers had federal loans eligible for the PSLF program or that could be consolidated into eligible loans, but that only 124 servicemembers had received loan forgiveness under PSLF.
In October 2021, the Department of Education announced to increase student loan borrowers’ access to benefits under PSLF. Public service employees, including servicemembers, can now receive credit toward forgiveness for payments that were previously not eligible. Servicemembers who already have Direct Loans will automatically be identified by the Department of Education to receive benefits. But servicemembers with Perkins or Federal Family Education Loans (FFEL) must consolidate those loans into Direct Consolidation Loans before submitting their PSLF applications. And in order to benefit, they must take these steps by October 31, 2022.
It is possible that tens of thousands of servicemembers could benefit if they get the right paperwork submitted by the deadline. But in order to do so, servicemembers must receive the information and support they need from their student loan servicer. With servicemembers’ loan forgiveness hanging in the balance, servicers must use all the tools at their disposal identify military borrowers and ensure they get the credit towards PSLF they deserve under the program.
Servicers have all the information they need to identify military borrowers
Servicers have a simple solution for reaching servicemembers: they are already required to check which borrowers are in the military and are covered by the Servicemembers Civil Relief Act (SCRA). Servicers can review the information they already have to find military borrowers with Federal Family Education Loans or Federal Perkins Loans who would stand to benefit by consolidating into Direct Consolidation Loans to qualify for PSLF. Then, servicers can provide information to these military borrowers to ensure that they are informed about the PSLF Waiver and its benefits, and follow through to provide any assistance military borrowers need to benefit under the program.
This outreach is the right thing to do
Between active duty, moves between duty stations, and the pressures of military life, it is vital that student loan servicers are particularly attentive to servicemembers’ needs. Managing student loan debt is a serious issue—these are not trivial amounts of money. Many military borrowers have education loans that exceed the average mortgage for a home in America. For military borrowers, failing to get their PSLF application approved will force them to pay thousands or tens of thousands of extra dollars on their student loans unnecessarily. That extra cost can have cascading effects, crowding out servicemembers’ ability to save for a home, build a nest egg for retirement, or save for their children’s college costs. Moreover, successful management of servicemembers’ student loans increases financial readiness, which can impact a servicemember’s ability to perform wartime responsibilities. Failing to ensure servicemembers get full PSLF benefits would be particularly nonsensical because servicers already know which of their borrowers are in the military, and are already paid to assist them. Servicemembers have dedicated their lives to protecting the United States – it’s time to protect their financial futures.
Are you a servicemember with student loans? Take action
If you’re reading this blog post and you are a military servicemember with student loans, or a family member of a military servicemember with student loans, act now to ensure that you or your loved one are getting the full benefits intended under the new PSLF rules. Military borrowers with Federal Family Education Loans or Federal Perkins Loans must and submit by October 31, 2022. Military borrowers who already have a Federal Direct Consolidation Loan should file a PSLF application if they have not previously had their employment certified. You can learn more about the process at , and by reviewing our PSLF Guide. And if your student loan servicer is not giving you the information and support you need to benefit under the new PSLF rules, submit a complaint.