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PSLF Caution! PSLF appears to be failing 99% of applicants!

Home Student Loan Management PSLF Caution! PSLF appears to be failing 99% of applicants!

  • White.Beard.Doc White.Beard.Doc 
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    I am so fortunate that we didn’t have things like PSLF or 300k student loan balances when I went to med school.  4 years at a fancy pants private med school, all in, was only $60k in my day.

    Caution to those that are counting on PSLF.  The latest government report found a 99% denial rate.  I don’t know much about all of these loan programs, but please be careful if you are counting on PSLF to come through for you.

     

    https://www.npr.org/2019/09/05/754656294/congress-promised-student-borrowers-a-break-then-ed-dept-rejected-99-of-them

    #243903 Reply
    Avatar StarTrekDoc 
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    So NOT as dismal as it appears as the vast majority weren’t PSLF in the first place.

    71% TEPSLF instead

    10% didn’t get to 10 years yet

    6% messed up the payment amounts

    that’s 87% —- still 11-12% rejection of different reasons.  That’s the curious part and deeper dive into the GAO report hopefully will shed light on those folk.

    #243906 Reply
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    Faithful Steward Faithful Steward 
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    PSLF is a great program. Your statistic is not only old but misleading.

    Michael Peterson, CFP® | Faithful Steward Wealth Advisors
    https://ProsperousPhysician.com | (717) 496-0900

    #243930 Reply
    The White Coat Investor The White Coat Investor 
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    Addressed months ago. Sounds like NPR is behind the times. Here’s my post on it:

    https://www.whitecoatinvestor.com/dont-give-up-pslf/

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #243936 Reply
    Avatar Dilaudidopenia 
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    Sigh…this again…more spreading of misinformation

    #243994 Reply
    Avatar StarTrekDoc 
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    Listened to the NPR segment this morning on the way into work. This report actually is the newly released GAO report on the fix to PSLF .. the TEPSLF. Which has just as low numbers in the first year and paid out a small amount.

    Will be interesting to see how year 2 is. I have a few colleagues midway through and making sure they dot their Is and cross those ts.

    The harder part is the part time status

    #244001 Reply
    White.Beard.Doc White.Beard.Doc 
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    My apologies if this NPR piece that I linked to is bad information.  As I said in my original post, I don’t know much about the PSLF program, but all I hear in the news is how it is failing people.

    It is a sad state of affairs how poorly some of these government programs are run.

    #244013 Reply
    jfoxcpacfp jfoxcpacfp 
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    My apologies if this NPR piece that I linked to is bad information.  As I said in my original post, I don’t know much about the PSLF program, but all I hear in the news is how it is failing people.

    It is a sad state of affairs how poorly some of these government programs are run.

    Click to expand…

    You are simply a good guy, WBD.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #244016 Reply
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    Lordosis Lordosis 
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    At how many years out will we hold on and pray for this program. I agree when this news hit last year I was not surprised and figured people just screwed up the applications. However we should start noticing an increased trend of loans getting forgiven over the next year or two.
    I remember hearing about the program in 2010 but I did not think it would be around half this long so I never looked into it. I heard a lot about it in residency because the other residents were banking on it. I thought they were crazy. I hope I continue to be wrong for the sake of the people who need it.

    “Never let your sense of morals prevent you from doing what is right.”

    #244025 Reply
    Avatar wa2106 
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    At how many years out will we hold on and pray for this program. I agree when this news hit last year I was not surprised and figured people just screwed up the applications. However we should start noticing an increased trend of loans getting forgiven over the next year or two.

    Click to expand…

    How about a year or two

    #244040 Reply
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    The White Coat Investor The White Coat Investor 
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    The Consolidated Appropriations Act, 2018 provided limited, additional conditions under which you may become eligible for loan forgiveness if some or all of the payments you made on your William D. Ford Federal Direct Loan (Direct Loan) Program loans were under a nonqualifying repayment plan for Public Service Loan Forgiveness (PSLF). The U.S. Department of Education (ED) is referring to this reconsideration as the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) opportunity.

    So it’s exactly like PSLF except you were enrolled in a payment program that doesn’t qualify for PSLF. Like one of these:

    Graduated Repayment Plan, Extended Repayment Plan, Consolidation Standard Repayment Plan, and Consolidation Graduated Repayment Plan.

    In addition, you must have padi at least as much as you would have paid under a qualifying IDR:

    You will be eligible for the TEPSLF opportunity only if, among other requirements, the amount you paid 12 months prior to applying for TEPSLF and the last payment you made before applying for TEPSLF are at least as much as you would have paid under an income-driven repayment plan. FedLoan Servicing will assess this and contact you if they need documentation of your income to determine whether you are eligible.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #244044 Reply
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    Avatar TheDangerZone 
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    Only a perfect storm type of scenario require both luck and careful attention to detail would have qualified a loaner for PSLF during the audited period. So despite the doomsday attention grabbing headlines of this article and similar pieces put out by reputable news sources, it’s truly not a surprise that only 1% failed.

    Over the next couple of years, the percentage of applicants who actually qualify will start climbing. Whether or not they get loan forgiveness will be the real test.

    Hopefully all this premature outrage doesn’t actually incit a government response resulting in cancellation of the program.

    #244056 Reply
    Avatar StarTrekDoc 
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    The Consolidated Appropriations Act, 2018

    You will be eligible for the TEPSLF opportunity only if, among other requirements, the amount you paid 12 months prior to applying for TEPSLF and the last payment you made before applying for TEPSLF are at least as much as you would have paid under an income-driven repayment plan. FedLoan Servicing will assess this and contact you if they need documentation of your income to determine whether you are eligible.

    Click to expand…

    That’s actually the point of the NPR piece.  They were just unclear by mixing the two stories — which is ironic as the many same mistakes are made.

    TEPSLF itself is rejecting an equally high percentage of applicants — the very ones that was meant to save from the PSLF rejections.  One of the typical bureaucracy requirements — You had to submit proof of rejection from PSLF itself first (like PSLF is primary insurance and TEPSLF is secondary).  Like Dept of Education doesn’t already know that status, but needed proof of rejection regardless.   71% applicants got wiped out simply based on this one criteria.

    So all this reporting is actually new stuff on the new program.  Just sadly the same result in many ways.  🙁

     

    I do anticipate the % approved will rise as a fix will be made for #1 bucket and be somewhat automated rejection status verified.   Actually kind of hard to move the bar much lower.

     

    Agree that PSLF and TEPSLF are worthy and attempts to do right – just so sad our Dept of Education makes our Health Insurance people look like nice easy to work with auditors.

    #244085 Reply
    Avatar hightower 
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    Only a perfect storm type of scenario require both luck and careful attention to detail would have qualified a loaner for PSLF during the audited period. So despite the doomsday attention grabbing headlines of this article and similar pieces put out by reputable news sources, it’s truly not a surprise that only 1% failed.

    Over the next couple of years, the percentage of applicants who actually qualify will start climbing. Whether or not they get loan forgiveness will be the real test.

    Hopefully all this premature outrage doesn’t actually incit a government response resulting in cancellation of the program.

    Click to expand…

    The outrage you’re hearing is not premature to those people who got rejected and were depending on this plan as their only way out of debt.  Doctors making 400k a year are not the ones that need this program.  A teacher making 40-50k/year, sitting on 100k of loans for the last 10 years getting rejected is a terrible tragedy for them.  There are people that planned their entire life around this program and are now devastated to find out they don’t qualify and have to make another 10 years of payments.  Call it their fault or not, it doesn’t matter.  It’s unlikely they’ll ever recover from such a huge hit during their wealth building years.  The program shouldn’t be so tricky to figure out.

    That’s why we’re hearing about this all over the news.  And I certainly hope it gets the government’s attention.  It should be massively overhauled.  I think it should have income limits as well to discourage people from taking on insane amounts of debt in the first place.

    #244165 Reply
    Avatar TheDangerZone 
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    Only a perfect storm type of scenario require both luck and careful attention to detail would have qualified a loaner for PSLF during the audited period. So despite the doomsday attention grabbing headlines of this article and similar pieces put out by reputable news sources, it’s truly not a surprise that only 1% failed.

    Over the next couple of years, the percentage of applicants who actually qualify will start climbing. Whether or not they get loan forgiveness will be the real test.

    Hopefully all this premature outrage doesn’t actually incit a government response resulting in cancellation of the program.

    Click to expand…

    The outrage you’re hearing is not premature to those people who got rejected and were depending on this plan as their only way out of debt.  Doctors making 400k a year are not the ones that need this program.  A teacher making 40-50k/year, sitting on 100k of loans for the last 10 years getting rejected is a terrible tragedy for them.  There are people that planned their entire life around this program and are now devastated to find out they don’t qualify and have to make another 10 years of payments.  Call it their fault or not, it doesn’t matter.  It’s unlikely they’ll ever recover from such a huge hit during their wealth building years.  The program shouldn’t be so tricky to figure out.

    That’s why we’re hearing about this all over the news.  And I certainly hope it gets the government’s attention.  It should be massively overhauled.  I think it should have income limits as well to discourage people from taking on insane amounts of debt in the first place.

    Click to expand…

    So you’re saying that people who “planned their entire lives around this program” are now justifiably outraged. I would argue that if your entire livelihood depends on a program, you should really pay attention to the criteria that qualifies you for said program because most of these rejected applicants were either in the wrong repayment plan and/or have loans that don’t qualify for the forgiveness. Again, almost NO ONE could have actually qualified for PSLF during this audited period by the letter of the law so it’s no surprise that these rejections are taking place. The NY Times has a great article outlining this here: https://www.nytimes.com/2019/07/24/upshot/student-debt-forgiveness-already-happening.html

    Now FedLoan has clearly been a terrible servicer and their representatives have often times provided confusing, wrong or misleading information. BUT if your ENTIRE LIFE depends on public service loan forgiveness, then you are truly doing yourself a disservice if you don’t understand basic qualifications. Therefore, in my opinion, outrage towards the program by you and others on your behalf is misguided.

     

    What sort of income limit provision would you suggest and how would that discourage large amounts of borrowed debt? I don’t quite follow you there. Are you suggesting that median income for a person’s anticipated profession be used to approve loan disbursements while they are in school? Or are you suggesting income after graduation limit how much forgiveness can be rewarded? If so, how would that discourage “insane” amounts of debt from being borrowed?

    #244250 Reply

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