The False Promise of Forgiveness

What about student loan forgiveness? That idea was sold right alongside the message that every college student needs a student loan. All you had to do was meet certain requirements after graduation and—poof—your student loans would disappear!  Well, now that those borrowers are on the other side of graduation, those promises aren’t coming through. In fact, student loan forgiveness is super rare even when borrowers meet the requirements.

Let’s look a little closer at this so-called student loan forgiveness, including a few different types.

Public Service Student Loan Forgiveness

To even be eligible for public service student loan forgiveness, borrowers need to:

Work full time for a qualifying employer, like the government or a nonreligious nonprofit.

Make (or prove that they’ve made) on-time payments for 10 years.

Have Direct Loans (a loan directly from the government).

Have an income-driven repayment plan (that just means the amount of each monthly payment is based on your income).1

If—and that’s a big if—someone is eligible, it still doesn’t automatically mean their loans will be forgiven. As of March 2020, 145,758 people submitted more than 188,000 public service student loan forgiveness applications.2 Can you guess how many loans were actually forgiven?


That’s just a measly 1.7%—hardly worth betting your future on.

Forgive Student Loans

Other Student Loan Forgiveness Programs

There are a couple of other loan forgiveness programs out there. Teachers, for example, can apply to have their loans forgiven, but they have to meet specific requirements as well, including things like:

Teachers must teach full time for five academic years in a row.

They need to teach low-income students at an educational service agency, or at the elementary or high school levels.

They must have taken out the loan before the end of their five teaching years.

They must never have had an outstanding balance on their loan.

Another student loan forgiveness program allows people who become totally or permanently disabled to have their loans forgiven. In those situations, borrowers need to be able to prove their disability status through Veterans Affairs, the Social Security Administration, or their physician.4 Obviously, this isn’t a route anyone wants to take.

The student loan crisis is an opportunity for your business.

This is where a lot of people on your team live: sold on the promise of a dream job or loan forgiveness and left out to dry.

As their employer, you have options to help put them on a path to win with money. Because, unless something changes, they’ll bring their money stress and distractions to work, costing you in lost productivity—not to mention the thousands of dollars in turnover costs as they leave for higher-paying jobs to try to keep their heads above water.

So, what can you do to help solve this problem? Offering student loan employer programs can be a good idea. But first, let’s look a little closer at what they are and what you should watch out for.

1. U.S. Department of Education, 2020
2. U.S. Department of Education, 2019
3. U.S. Department of Education, 2019
4. U.S. Department of Education, 2020