If you are refused forgiveness for a student loan, do so

The cancellation of student loans continues to be a matter of debate as millions of borrowers approach the resumption of repayment in February.

Last month, the Biden administration extended the moratorium on student loan payments and the interest suspension until January 31, 2022. The relief, which was first enacted more than 18 months ago, was to expire on September 30 following several previous extensions by former President Trump and then President Biden. The Biden administration has said the most recent extension is the “final,” meaning millions of borrowers will have to resume repayment in February 2022.

Advocates have urged the Biden administration to use the final months of the domestic student loan payment hiatus to embrace a blanket student loan forgiveness. But Biden has resisted such moves, and senior administration officials have suggested that blanket student loan debt cancellation simply won’t happen. Instead, the Biden administration is focused on “targeted” student loan cancellation by trying to streamline and expand access to existing aid programs such as the Total and Permanent Disability Discharge program ( TPD) and the defense of borrowers against repayment. Borrower advocates are also pushing the administration to adopt sweeping changes to the delivery of civil service loans.

But as the debate continues over whether to reform or expand existing student loan exemption programs, many borrowers have requested relief under these programs, but have been turned down. In some cases, borrowers may still have options.

Public service loan remission

The Public Service Loan Forgiveness Program (PSLF) has faced exceptionally high refusal rates for years. Ministry of Education data on the program indicates that between November 9, 2020 and April 30, 2021, out of 168,197 PSLF applications, 3,458 were approved and 164,739 were rejected. That’s a refusal rate of almost 98%.

Several factors contribute to this high refusal rate, including complex eligibility criteria established when Congress first created the program, and poor administration of the program by the department’s contracted student loan officers. A report released earlier this year by the Federal Bureau for Consumer Financial Protection (CFPB) found that “student loan services gave borrowers incorrect information” about the civil service loan forgiveness requirements, resulting in “Missteps that could cost consumers thousands of dollars”.

If you are among the 98% of applicants who are denied PSLF relief, there are a number of potential next steps you can consider, depending on your situation and the reasons for your denial:

• If you have been denied relief because you do not have a qualifying federal student loan (PSLF is limited to direct federal loans only), you can explore direct loan bundling. However, bundling can have significant drawbacks (including capitalizing interest and restarting your repayment term), and would likely not allow you to get retroactive credit to PSLF for payments already made.
• If you were denied relief because you were making payments under an ineligible repayment plan (such as an extended or phased repayment plan), you can explore relief under the loan forgiveness program. Temporary Extended Public Service (TEPSLF), which Congress established to help Direct loan borrowers who have made payments on their Federal Direct Program loans under an ineligible repayment plan.
• If you have been denied relief because your student loan manager miscounted or underestimated your eligible payments, despite meeting all PSLF eligibility criteria, you can request a manual audit of your account to update. day the total of your eligible payments. If the audit fails (or if it is never done at all), you can ask the Ministry of Education to get involved directly by filing a complaint with the ministry’s FSA feedback unit or the Ministry of Education. ombudsman unit. It is important to submit a detailed written complaint with supporting documents whenever possible.
• Borrowers who are improperly denied relief under the PSLF may appeal the denial in federal court, depending on the underlying facts.

Defense of the borrower on repayment

The Borrower Against Repayment Defense program allows federal student loan borrowers to request a loan forgiveness if their school has engaged in fraud or other misconduct. However, the program has been mired in political and legal battles for years, and many borrowers have been denied assistance or have yet to receive a decision. Here are some options:

• Borrowers who are still awaiting a decision can contact the borrower advocacy hotline for an update on the status of their application. The Ministry of Education continues to grapple with a large backlog of applications.
• Borrowers who are denied relief can submit a request for reconsideration. According to the ministry, borrowers are encouraged to provide information about what you think was wrongly decided and why, as well as evidence that supports your position.
• Borrowers who are denied relief but have information about new allegations of misconduct by their school that were not raised in their original request can submit a new borrower defense request.
• Borrowers who are improperly denied relief under the borrower’s defense may appeal the denial in federal court, based on the underlying facts.

Discharge for total and permanent disability (DPT)

The Total and Permanent Disability Release (TPD) program offers a student loan discount to federal student loan borrowers who are unable to maintain substantial and gainful employment due to a health problem. Borrowers can prove they are eligible by providing a certificate from the Veterans Administration stating that they have a service-related disability; documentation from the Social Security Administration that they are receiving Social Security disability benefits with a disability review period of 5 to 7 years; or a certificate completed by their doctor showing that they are eligible.

Borrowers who are denied a TPD discharge may have certain options:

• You may be able to appeal the denial within one year of the date of your denial. According to the Department of Education, “If you provide us with additional information to support your release eligibility within one year of the date of your denial letter, we will reassess your PDT release request without requiring you to. submit a new request. “
• If you have been denied a PDT release and you have not appealed within the one year window, or if your condition has worsened since your denial, you can submit a new PDT release request, and the ministry will examine it.
• Consider including supporting medical records with your appeal or new claim to illustrate the severity of your disabling condition.
• Borrowers who are improperly denied relief under TPD’s relief program can appeal the denial in federal court, depending on the underlying facts.

Regardless of whether the student loan cancellation was denied under the PSLF, Borrower Defense, or the TPD Release Program, it is prudent to:

• Understand the reasons for your refusal
• Evaluate your options for appeal, challenge or reconsideration;
• Consult a qualified professional who can help you assess your options and next steps.

Further reading

Biden urged to fix civil service loan forgiveness by automatically forgiving civil servants’ debt

These student loans are excluded from Biden’s forgiveness and loan relief programs – here’s why

If you qualify for Biden’s $ 10 billion pardon, you probably know it.

Biden administration begins overhaul of student loan forgiveness and income-tested repayment programs