In the latest release of PSLF statistics from the Department of Education, we see that the number of unique borrowers with PSLF discharges processed as of November 2020 is…3,776. To us, that sounds a bit low, but keep in mind that the PSLF program was enacted in 2007 and since it takes 120 monthly payments or 10 years at minimum to qualify, there are only so many people who have fulfilled all the requirements during the 2017-2020 period.
We decided to break down the numbers a bit more to see just how many PSLF applicants were forgiven by month and it turns out that, on average, 216 unique borrowers were forgiven each month in 2020. The greatest number of unique borrowers forgiven in a month during 2020 was 431 (June 2020). The least number was 98 (September 2020). The slowdown during September may indicate some sort of change in the Department of Education, as we have also seen an increase in PSLF processing times towards late 2020. Although PSLF forgiveness applications were processed relatively quickly at 2-3 months in early 2020, approval seemed to take much longer at 6 months processing during late 2020.
Here’s our chart tracking the PSLF approvals during 2020, with data taken from the Department of Education (click to enlarge):
Also, data has shown that almost all borrowers are now in COVID-19 related forbearance or deferment. Only 1% of all outstanding Direct Loan dollar balances or approximately 400,000 Direct Loan recipients’ loans were in a repayment status as of September 30, 2020. According to the Federal Student Aid Data Center:
Shift in Loan Statuses
As a result of student loan flexibilities introduced at the end of March, approximately 400,000 Direct Loan recipients’ loans were in a repayment status as of September 30, 2020, compared to 18.5 million recipients one year ago. The outstanding balance of recipients in repayment represents one percent of all outstanding Direct Loan dollar balances. These are largely customers who have opted out of the CARES Act payment suspension. Alternatively, as student aid recipients exit grace periods or education-related deferments, they may briefly enter repayment before being transitioned to the CARES Act mandatory administrative forbearance.
More than 22 million Direct Loan borrowers with outstanding loans totaling approximately $887 billion are now in a forbearance status. More than 99 percent of the total balances in forbearance are in a mandatory administrative forbearance (the forbearance type used for the special CARES Act forbearance), which increased from $1.7 billion last September to more than $882 billion this September. When including ED-held FFEL, $922 billion is in mandatory administrative forbearance. As of September 30, 2020, almost 68 percent of all outstanding Direct Loan total dollar balances are in forbearance, compared to about 10 percent one year ago. When including ED-serviced FFEL, the total ED-serviced forbearance portfolio increased, year-over-year, from $130 billion to $927 billion.
Prior to March, about 90 percent of DL deferments were education-related deferments. With the CARES Act implementation, loans in unemployment deferment and economic hardship deferment were moved into the special CARES Act forbearance (using the mandatory administrative forbearance type). As a result, nearly 100 percent of DL deferments are now education related.
ED-Held Delinquencies and Direct Loan Defaults
As a result of the CARES Act, most federal student loan borrowers have been placed in a mandatory administrative forbearance, including those borrowers who were previously delinquent. Since ED-Held borrower delinquencies were cured, no DL borrowers entered default during this quarter. While the Direct Loan Portfolio by Delinquency and New Direct Loan Defaults reports were updated to reflect this, the more detailed Direct Loan delinquency demographic reports have been temporarily suspended until March 31, 2021, the first quarter for which borrowers could potentially be delinquent.
Income-Driven Repayment Enrollment
Enrollment in income-driven repayment (IDR) plans such as Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE) has slightly increased, despite the temporary suspension of repayment for most borrowers. As of September 2020, 8.2 million DL borrowers were enrolled in IDR plans, a six-percent increase from September 2019. Although 1.3 million ED-held FFEL borrowers are enrolled in IBR and Income-Sensitive Repayment (ISR), there is a large overlap of DL and ED-held FFEL IDR borrowers. Combined, more than 8.5 million unique borrowers are enrolled in IDR plans, representing 31 percent of all ED-serviced borrowers in a repayment, deferment, or forbearance status. In terms of dollars, about 50 percent of ED-serviced balances in a repayment, deferment, or forbearance status are enrolled in an IDR plan.
Public Service Loan Forgiveness (PSLF)
As of September 30, 2020, more than 179,000 borrowers had submitted more than 229,000 applications for public service loan forgiveness. Of the more than 210,000 applications that were processed, more than 5,000 have been approved by the PSLF loan servicer as meeting all program requirements, resulting in more than $260 million in discharges for nearly 3,500 unique borrowers.
Of those applications that were ineligible, 56 percent were ineligible due to not having 120 qualifying payments, 25 percent were ineligible due to missing or incomplete information on the form, 14 percent were ineligible due to having ineligible loans, and the remaining five percent were ineligible due to not meeting other program requirements such as qualifying employment.
Under the Temporary Expanded PSLF program, almost 2,200 borrowers’ requests were deemed eligible for loan forgiveness, resulting in more than $87 million in discharges for more than 2,000 unique borrowers.
If you have any questions, contact the Department of Education or your loan servicer.