The Perils of Navigating Federal Debt Forgiveness Programs on Your Own

On the surface, student debt relief programs like Public Service Loan Forgiveness look like win-win projects. With Public Service Loan Forgiveness (PSLF), students who accept in-demand jobs in public service fields can have their federal student loans forgiven after 10 years of on-time student loan payments. If you meet these qualifications, your loans will be completely erased tax-free. Or at least that’s how it’s supposed to work in theory.

The Public Service Loan Forgiveness program was implemented in 2007 in order to encourage students to enter less lucrative fields like teaching, nursing, government work, etc. But while many students happily accepted this deal, the government isn’t holding up its end of the bargain. In a data release from earlier this year, the U.S. Department of Education reported it has received over 41,000 applications for PSLF – and only 206 were granted loan forgiveness.

No Good Deed Goes Unpunished

For many borrowers, a rejection from the PSLF program is the rejection of a future free from the shackles of debt. How could so many students be misled? Because when federal loan servicers are involved, you can count on massive miscommunication being a feature, not a bug. Borrowers working with federal loan servicers like Navient have dealt with incorrect information, misfiled paperwork, or in some cases, flat-out lies from clueless company representatives.

Imagine this scenario: you’ve been in a public service job for 10 years and just made your 120th on-time student loan payment. You work for an eligible nonprofit and have never missed a payment due date. You don’t even take vacations from work! After a decade in the grind, you finally see a light at the end. Your loans are about to be forgiven and you can finally take that beach vacation you’ve been dreaming of. But wait – there’s a holdup. It turns out you weren’t enrolled in the correct income-driven repayment plan. Sure, you did everything you were asked, but the person you spoke with on the phone 10 years ago was misinformed and now you have to start all over. Sounds like a nightmare, right? Sadly, many borrowers have seen this nightmare come to life.

You can’t count on the government or loan servicers to keep track if your eligibility status. After all, they don’t really want help you NOT pay them. No, in order to avoid becoming part of the 99% of rejected applicants, you’ll need to meticulously track your loan status and recertify your employment annually.

Making Sure You’re Eligible

Here are the eligibility requirements for the PSLF program:

  1. Direct Federal Loans only
  2. Must work full-time for the government or a Section 501(c)(3) nonprofit
  3. Must be enrolled in the proper income-based repayment plan 
  4. Must make 120 on-time loan payments (they don’t need to be consecutive)

Seems easy, doesn’t it? Except it isn’t. You could circle the moon with the red tape PSLF participants must sift through when applying. For example, many students enroll in an income-based repayment plan thinking that it automatically qualifies them for PSLF. In reality, only four income-based plans are eligible (ICR, IDR, PAYE, REPAYE) and FedLoan is the only servicer who handles PSLF requests. If your Direct loans haven’t been transferred to FedLoan Servicing, you might not be properly enrolled.

Common Mistakes Borrowers Make

  • Consolidating Too Late – If you consolidate your loans into a new Direct Loan, you might get a lower interest rate but you’ll also restart the clock on your 120 qualifying payments. Make sure you consolidate your debt into a new Direct Loan BEFORE getting started with PSLF. Otherwise, your 10-year window starts all over again.
  • Believing Graduated or Extended Repayment Plans Qualify – Only income-based repayment plans like Pay As You Earn (PAYE) or Income-Contingent Repayment (ICR) qualify for PSLF. Graduated and Extended Repayment plans can be helpful to some borrowers, but not public servants. You MUST be on an income-based plan to qualify.
  • Failing to Recertify Employment Annually – One way to stay on track is by filling out the Employment Certification Form every year. Not only will this speed up getting your loans transferred to FedLoan Servicing, but you’ll be able to check on your eligibility status and see how many of your payments already qualify for PSLF. You don’t NEED to fill out an ECF every year, but it’s highly recommended. 
  • Believing Loan Servicing Reps Know What They’re Talking About – You’ve read the horror stories by now. Borrowers call up their loan servicer and ask if they’re enrolled for the Public Service Loan Forgiveness program. The rep on the other end promises the borrower everything is kosher and they’re definitely enrolled. Then years later, they find out the rep was clueless and the loans are staying put. Not only that, none of the payments made qualify. Here’s a good life lesson: never trust the word of a call center rep when your money is at stake. Always take down names and phone numbers of whom you speak with and don’t be afraid to ask for a supervisor. Get as much as you can in writing and if something sounds off, call or email back again the next day. 

Getting Help With Federal Relief Options

Navigating federal debt forgiveness programs can be frustrating. Loan servicing companies have perverse incentives when it comes to helping borrowers enroll in PSLF. To make matters worse, scam companies love to prey on desperate students by offering “services” that aren’t really services. For a fee, these companies will call your loan servicer and make sure you’re enrolled in the right repayment program – something you could very easily do yourself. Keep an eye on these red flags when debt relief companies come calling.

GotZoom doesn’t make false promises or charge upfront fees for borrowers. They have nearly a decade of experience helping employers ease the burden of student debt on their workers. On average, GotZoom helps student borrowers save over $5600 annually. If you want a student debt management plan that gets real results, contact GotZoom today.


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