Think Your Student Loan Will Be Forgiven? Maybe Not!

Posted: Updated:
(Image courtesy of Bedel Financial Consulting Inc.) (Image courtesy of Bedel Financial Consulting Inc.)

With the 2020 election in sight, there’s a hot new topic for potential candidates to rally around—the Public Service Loan Forgiveness program. Thousands of college graduates who thought they were on track to have their student loans forgiven are now learning they don’t meet the requirements. Should the program be eliminated, revised, or allow to stand as a harsh lesson to pay attention to the details?

The Program

The Public Service Loan Forgiveness program was included in the College Cost Reduction and Access Act of 2007.  The loan forgiveness program benefits student loan debtors who choose a career in the public service sector. This would include careers in government, military, public safety, law enforcement, nursing, teaching, childcare, social work, and more.

Signed into law by George W. Bush in 2007, the Public Service Loan Forgiveness program was established to encourage college graduates to pursue public service jobs that often paid modest salaries but served the greater good.

As an incentive, the government agreed to forgive the student loan debt balances of college graduates who opted for public service jobs once they completed 10 years of monthly income-based repayments. The federal government’s willingness to erase outstanding student loan debt after 10 years of monthly payments was a generous long-term financial offering.

Sounds like a good deal, right? Maybe. If you neglected to pay attention to the (sometimes) convoluted details, you might land in the same predicament as thousands of others who now find themselves unexpectedly responsible for their remaining student loan repayments.

The Issue

The misunderstandings that led to many of the rejections mainly involved the approved employers, specific types of federal loans, and eligible loan repayment programs. Many recently rejected applicants are now seeking restitution. In response, the Government Accountability Office released a 2018 report claiming the Department of Education failed to bring clear and concise details to borrowers or loan servicers.

Considering 2017 marked the first chance for 2007 participants to apply for loan forgiveness, the sample size for applicants is very small. But the numbers don’t look good. As of December 2018, the Department of Education revealed that only one percent of the 54,000 borrowers who have applied for loan discharges were approved.

The Politics

It is estimated that nearly one million borrowers have taken steps to be part of the program. That’s why lawmakers and politicians are earmarking this as a potential key topic in the upcoming 2020 election.

In 2018, Congress passed a $700 million temporary fix, forgiving the loans of rejected applicants who entered the wrong income-based repayment plan. That error was a reoccurring theme for applications that were rejected.

This narrow solution didn’t solve the dilemma of hundreds of other rejected applicants, however. Some politicians are now questioning the implementation of this temporary fix. President Trump recently proposed the elimination of the program for new loan borrowers, starting in July 2020.

Whatever happens, it’s likely the program, if still in operation, will be more forgiving in the future. Both sides of the aisle have a vested interest to not leave over a million future applicants, and voters, on the sidelines.


The Public Service Loan Forgiveness program provides a valuable incentive to increase the employment competition and quality of employees within (often) lower-paying public service industry jobs. It appears the details and rules for approval were too complex for recent college graduates, many who were in their early 20s, to grasp.

Fortunately, accountability for not following the rules may fall to the wayside in this instance, given the large percentage of borrowers who thought they were playing by the rules all along. For now, we’ll wait and see if this program will be unchanged, repaired, or completely eliminated.

With college graduation only a few weeks away, if you know a graduate who intends to enter into this student loan forgiveness program, please encourage them to pay attention to the details!

Evan Bedel is a Director of Strategy and Finance with Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. For more information, visit their website or email Evan.

  • Perspectives

    • Mitigating Your Company’s Cybersecurity Risk

      Frequently, I encounter people who think that a software developer understands all languages and can “fix” anything tech related. While that may be true for a few, areas of expertise within tech evolve as rapidly as the technology itself. For instance, there was a time (not long ago) when operating in the cloud was revolutionary. Today, it is considered best practices for some or all of an organization to function within a cloud. Managed information technology began with...



Company Name:
Confirm Email:
INside Edge
Morning Briefing
BigWigs & New Gigs
Life Sciences Indiana
Indiana Connections


  • Most Popular Stories

    • (photo courtesy of the town of Plainfield)

      Plainfield Breaks Ground on Parking Structure

      The first piece of a redevelopment plan for downtown Plainfield is underway. City and community leaders have broken ground on the new Downtown Plainfield Parking Structure, which is expected to be complete in the late summer or early fall of 2020.

    • Tony Bates previously worked for companies including Skype, Microsoft and Cisco.

      Genesys Names New CEO

      California-based Genesys has selected former Skype CEO Tony Bates as its new chief executive officer. The company, which employs more than 800 in Indianapolis, says Bates' predecessor, Paul Segre, will continue as chairman.

    • The Waterside project aims to transform 100-acres of the former GM Stamping Plant site. (photo courtesy of Ambrose Property Group)

      Ambrose, Glick Partner on Waterside

      Indianapolis-based Ambrose Property Group has announced a key partnership for the redevelopment of the former GM Stamping Plant in downtown Indianapolis. The commercial real estate firm is teaming up with the Gene B. Glick Co. to build and manage apartments as part of the $1.4 billion mixed-use redevelopment project. Ambrose says the partnership is also part of plans to catalyze "philanthropic and community-centric strategies to strengthen Indianapolis." The firm also...

    • (photo courtesy Dax Norton)

      Whitestown Tops Indiana's Fastest-Growing Communities

      The Indiana Business Research Center at the Indiana University Kelley School of Business says Whitestown in Boone County is Indiana's fastest-growing community for the eighth consecutive year. The center says the town's population nearly tripled, from 3,132 in 2010 to 8,627 last year. Westfield in Hamilton County is not far behind. Its population grew 5.2 percent in 2018, according to information reported by the U.S. Census Bureau. Other communities on the list include...

    • I-65 INDOT construction map

      I-65 Construction Update

      Construction work is scheduled to start next week on I-65 near downtown Indianapolis. Indiana Department of Transportation crews will begin to clean up the interstates after two years of freeze/thaw cycles. Crews will be working in segments, including patching and repaving work. INDOT crews will begin work in earnest on northbound and southbound in segments, beginning on weekend nights from April 26 through August.