Confusing rules deny student loan forgiveness

The vast majority of applications for a student loan forgiveness program are still being rejected, even after Congress set aside $700 million to temporarily expand it, according to a federal report .

The Government Accountability Office said Thursday that the Education Department has created a “confusing and inefficient” process that could cause borrowers to miss out on the program. It urged the agency to simplify the application process.

Congress approved the temporary funding last year after finding that only 1% of applicants for the Public Service Loan Forgiveness met narrow eligibility rules, often because they had certain types of federal loans that weren’t covered by the 2007 program. The funding was intended to expand the program to borrowers who were otherwise eligible but had other types of federal student loans.

But out of more than 54,000 applications for the temporary funding, just 661 had been approved as of May 2019, according to the report. In total, borrowers received about $27 million in loan erasures out of the $700 million pool allotted by Congress.

Most rejections were tied to a single eligibility rule that the department added but was not explicitly ordered by Congress. In order to qualify for the new funding, the agency says borrowers must have previously applied for the original loan forgiveness program. The GAO found that the rule was not made clear to borrowers.