Student loan forgiveness isn’t often a forgiving process

Personal Finance


Unfortunately, after a year of chipping away at his student debt, Rizzutti learned during a phone call with a financial aid officer that not all loans are eligible for forgiveness — and some of his loans did not qualify.

Just like that, he was back at square one.

“It was disappointing,” said Rizzutti, who immediately moved his various loans into a direct consolidation loan, which does qualify for forgiveness.

But the experience left him on edge.

“Just the thought that I might not get forgiveness is scary,” Rizzutti said. “I’d be making payments for 30 years. It would delay my life.”

As it turns out, plenty of people in public service jobs — some two-thirds of whom make less than $50,000 a year — believe they’re paying their way to loan forgiveness yet actually don’t qualify for one technical reason or another.

Each year, more than 30 percent of people who file a so-called Employee Certification Form, which is supposed to confirm one’s public service loan forgiveness status, are denied, according to the Department of Education. And this form is not mandatory for public service loan forgiveness, and so the total number of people denied is probably greater.

These problems are so common that the Consumer Financial Protection Bureau issued a report in June on the failures of the student loan industry to properly inform people about forgiveness requirements and rights.

“Borrowers have identified a range of student loan industry practices that delay, defer, or deny access to expected debt relief,” according to the report.

Jay Fleischman, a student loan lawyer, said he’s heard from people who were almost done with that decade of repayment when they first learned that none of those payments counted toward forgiveness.

“They call me up because they want me to help guide them through getting finalized,” he said. “And I’m the one who has to be the bearer of bad news: They’re going to have to start from scratch. I have people cry on the phone.”



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