This Loan Forgiveness Program Might Surprise You in a Bad Way

Nearly 30,000 people have applied to the federal Public Service Loan Forgiveness program over the last year. The idea is that the government will forgive student loans if applicants devote career time to public service. It sounds like a plot point from an especially idealistic West Wing episode, but even in this cynical day and age, it's real. There's just one problem: Fewer than 100 people have actually been approved for these discharges.

Last week, the Department of Education reported that just 96 individuals have had their debts dispersed under PSLF. (Even more depressing is that 96 people could hold $5.52 million worth of educational debt.) The reason for these abysmal numbers? Stringent standards put in place to ensure compliance. PSLF applicants must have taken out the right kind of loans, gotten the right kind of post-graduation job, and be able to make 120 qualifying payments, which can't be too low or too high.

Some critics may point out that this is a feature for the government, not a bug: As one headline at FiveThirtyEight puts it, student loans may actually be too expensive to forgive. Conservative analyst Preston Cooper writes for Forbes that we shouldn't panic about all the rejections — PSLF is only in its first year, essentially, and the kinks will get ironed out. Indeed, the Education Department has offered a Temporary Expanded Public Service Loan Forgiveness program to many of those it rejected, "which provides limited, additional conditions under which borrowers may be eligible for loan forgiveness if some or all of the Direct Loan payments were made under a non-qualifying repayment plan for PSLF."

All in all, if you or a loved one are counting on PSLF in your long-term financial planning, now might be a good time to look closely at its stipulations and whether the program is still a good fit.