The exact number of borrowers eligible for and planning to apply for
PSLF forgiveness when it becomes available beginning in 2017 is not
known.
Page 27 GAO-15-663 Federal Student Loans
39 Only borrowers who complete Education’s voluntary process
provide their employment information to Education, and we identified no
additional data source on both federal student loans and public service
employment that would allow us to identify borrowers who may be eligible
for PSLF. However, according to 2012 annual employment data from the
Bureau of Labor Statistics, an estimated 24.7 percent of U.S. workers
nationwide (32.5 million of 131.7 million) were employed in public service,
considering federal, state, and local government agencies and 501(c)(3)
nonprofit organizations.40 If rates of public service employment are
comparable among Direct Loan borrowers, about 4 million current Direct
Loan borrowers may be employed in public service.41 Furthermore, if
rates of public service employment are comparable among Direct Loan
borrowers across repayment plans, about 643,000 Direct Loan borrowers
repaying their loans through IBR, PAYE, and ICR as of September 2014
may be employed in public service. As previously discussed, these
repayment plans are more likely to leave borrowers with an outstanding balance after 120 payments and enable them to benefit from PSLF after it
becomes available in 2017.
Most of the borrowers who had their employment and loans certified for
PSLF were enrolled in an income-driven repayment plan, had annual
adjusted gross incomes exceeding $20,000, and had borrowed more than
$30,000.
Page 28 GAO-15-663 Federal Student Loans
42 As of September 2014, 71 percent (104,422 of 146,866) of
borrowers who had their employment and loans certified for PSLF were
enrolled in IBR, PAYE, or ICR (see fig. 8).43 Borrowers on these incomedriven
plans for longer periods of time are more likely to have remaining
loan balances to be forgiven after making the required 120 payments, in
contrast to those on other qualifying plans, such as 10-year Standard
repayment, who would be set to fully repay their loans in 10 years or
less.44 Officials from Education’s loan servicer for PSLF told us they
encourage borrowers who had employment and loans certified for PSLF
to enroll in repayment plans that are more likely to enable them to benefit
from forgiveness.As of September 2014, nearly two-thirds of borrowers who had
employment and loans certified for PSLF had annual adjusted gross
incomes of more than $20,000 (see fig. 9).45 In addition, nearly two-thirds
of borrowers were employed in federal, state, or local government (63 Borrowers who had employment and loans certified for PSLF had higher
student loan debt than Direct Loan borrowers generally. According to the
September 2014 data on borrowers who had employment and loans
certified for PSLF, 80 percent of borrowers had borrowed more thanTo understand the potential costs and benefits of PSLF, we created two
example borrowers—Borrower A and Borrower B—and found that the
program may provide substantial savings over the life of the loan for
qualifying borrowers in IBR and PAYE, without the trade-off of higher loan
costs faced by some borrowers in these repayment plans. In contrast,
borrowers who make all qualifying payments on the 10-year Standard
repayment plan would have paid their loans in full (i.e., have $0 balance) after 120 qualifying payments (see fig. 11).
Page 32 GAO-15-663 Federal Student Loans
47 For each borrower,
forgiveness under PSLF would reduce the amount of the loan that the
federal government collectsEducation has taken some steps intended to increase borrower
awareness of PSLF, but it has not notified all borrowers who have
entered repayment about the program. As previously noted, Education
aims to compile and distribute information on the costs and benefits of
higher education programs to improve financial literacy and support
borrowers’ decision-making.
Page 34 GAO-15-663 Federal Student Loans
48 Although Education provides general
information about PSLF on its website and through social media,
borrowers must actively seek information through these sources.
Education also provides information about PSLF in the borrower rights
and responsibilities statement that is provided when borrowers receive
their loans, and through entrance and exit counseling that borrowers
complete when they begin and end school.49 In addition, Education has
included information about the program in targeted emails sent to
borrowers in their grace period who had more than $25,000 in debt.
However, Education has not examined borrower awareness of PSLF to
determine how well these efforts are working. For example, although
Education conducts regular surveys of borrowers to measure customer
satisfaction, it has not included an assessment of borrower awareness of
PSLF in these surveys. Beyond its current efforts, Education officials told
us they are considering a PSLF email campaign targeted to borrowers on
income-driven plans and an effort to publicize the program to public
service employers. Education officials told us they have not provided
information about PSLF to those employed in public service because they
do not have a way to identify and target such Direct Loan borrowers.
Apart from its targeted efforts, Education does not directly provide