Student loan borrowers may have been mistakenly denied PSLF acceptance, and other current student loan news for the week of Nov. 8, 2021

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FedLoan Servicing, the federal student loan servicer that currently manages the Public Service Loan Forgiveness program, wrongly denied program applications that should have been eligible under new guidelines established in early October. Here’s what to know about this week’s trends and how it affects your student loans.

1 current trend within student loans for the week of Nov. 8, 2021

1. FedLoan Servicing has been denying PSLF applications, despite new guidelines

For at least three weeks, FedLoan Servicing continued to operate under the Public Service Loan Forgiveness (PSLF) regulations that were in place prior to the program overhaul in early October, resulting in denied applications that may have otherwise been approved.

The U.S. Department of Education announced the overhaul of PSLF — a program that discharges public servants’ federal loan balances after 10 years of qualifying payments — on Oct. 6. Among other revisions, the overhaul introduced temporarily relaxed eligibility and acceptance criteria, which will make the program accessible to thousands more borrowers. However, NPR discovered that FedLoan has been continuing to reject borrowers on the basis of the older, more restrictive eligibility criteria.

FedLoan spokesperson Keith New told NPR that the company has complied with the Education Department’s request to stop denying potentially eligible borrowers. However, according to New, the Education Department needs to amend its contract with FedLoan in order for the company to communicate the changes to borrowers and process requests.

The Education Department is continuing to work with servicers about the new guidelines, allegedly sending the most detailed guidance on Oct. 29. The department told NPR that despite the complications with FedLoan, the overhaul has still been a success; many borrowers have already received notices about their automatic progress toward loan forgiveness.

How this affects student loans

The office of Federal Student Aid (FSA) will be reprocessing applications that may have been mistakenly denied. Borrowers who have applied for PSLF since Oct. 6 and have been denied should expect communication from FSA if they meet requirements under the new guidelines.

Borrowers already enrolled in PSLF should also be vigilant about their loan details. FedLoan’s contract with the Department of Education is expiring on Dec. 14, so those loans are in the process of being transferred to another servicer. Keep a copy of your payment history and your employer certification forms so you have those details on record when the transfer goes through and to make sure you’re receiving the credit you should.

Key takeaway
FedLoan has been processing PSLF applications using outdated eligibility criteria, but the Education Department will be revisiting applications denied during that time.

Here’s how you can get prepared

Whether you’re new to student loans or well into repayment, it’s wise to stay informed about how your student loan rates could change. As 2021 continues, more opportunities for cheaper loans or loan forgiveness could open up; keep an eye on the Bankrate student loans news hub for the latest trends.

Learn more:

Written by
Hanneh Bareham
Student loans reporter
Hanneh Bareham specializes in everything related to student loans and helping you finance your next educational endeavor. She aims to help others reach their collegiate and financial goals through making student loans easier to understand.
Edited by
Student loans editor