Survey Results Show Approaching—and in Particular Achieving—PSLF Boosts Financial, Behavioral, and Psychological Well-Being; Research Underscores the Need for Immediate Action to Ensure Reliable Paths to Debt Relief
November 22, 2022 | WASHINGTON, D.C. — Today, a team of researchers at the University of Memphis and the University of Michigan released the results of a groundbreaking analysis revealing the massive personal benefits that student loan borrowers enjoy as they approach and, in particular, as they achieve debt cancellation through the Public Service Loan Forgiveness (PSLF) program. Using a novel survey of hundreds of student loan borrowers across the country, this research provides a first-of-its-kind look at how nearing and arriving at PSLF has positive spillover effects across nearly every area of borrowers’ lives, including improving a wide range of financial, psychological, and behavioral measures.
Today’s report, Jubilee and Jubilation: An Examination of the Relationship between Public Service Loan Forgiveness and Measures of Well-Being, was issued jointly by the Student Borrower Protection Center (SBPC), Dr. Daniel Collier, and Dr. Dan Fitzpatrick, and is available here: https://protectborrowers.org/wp-content/uploads/2022/11/Jubilee-and-Jubilation.pdf
“This report is one step towards understanding the benefits of student loan forgiveness under PSLF or any other program,” said Dr. Dan Collier and Dr. Dan Fitzpatrick, the authors of the new paper. “As such, we’ve found that receiving loan forgiveness through PSLF comes with important financial and well-being benefits. However, being on the path to forgiveness does not give a proportional share of those benefits; borrowers with loan balances still several years out from forgiveness show some stress measures that are legitimately concerning.”
PSLF is a critical pathway available to federal student loan borrowers to pursue debt relief. However, little is known about borrowers who pursue PSLF, or about how nearing and arriving at cancellation through the program relates to borrowers’ financial behaviors and measures of subjective well-being.
Using new survey data collected from from August to September 2022, the researchers behind today’s paper found the following:
- Borrowers’ rates of homeownership increased linearly as they approached and arrived at cancellation.
- Borrowers’ FICO scores improved as they approached cancellation and jumped up after they achieved it.
- Borrowers near cancellation reported lower psychological distress, and borrowers who had achieved cancellation reported the lowest levels.
Congress created PSLF in 2007 to provide public service workers with student loan debt relief in exchange for a decade of service in their communities. However, as countless borrower stories and investigations illustrate, the promise of PSLF proved not to be the reality for millions of public service workers. Instead, bad industry practices and ambivalence by the Department of Education (ED) led PSLF to have a 98 percent rejection rate—and to the expansion meant to fix PSLF having a 97 percent denial rate. Underlying these statistics, millions of teachers, nurses, and servicemembers who planned their lives around the promise of eventual loan forgiveness were cheated out of their rights over the decade after the program’s enactment.
To address these long-standing breakdowns, ED announced in October 2021 that it would temporarily waive certain of the regular PSLF program requirements. This initiative, referred to as the “PSLF Limited Waiver,” has been extremely successful, securing more than $13 billion in debt cancellation for more than 214,000 public service workers. This success accounts for the overwhelming share of the more than $15 billion in relief that more than 221,000 public service workers have accessed under PSLF, TEPSLF, and the PSLF Limited Waiver overall.
However, many provisions of this waiver expired on October 31, 2022, and much work remains to fully restore the promise of PSLF. SBPC estimates show that as many as nine million public service workers with student loan debt could be eligible for PSLF, but that only roughly 15 percent of these eligible borrowers have filed paperwork to enter the PSLF pipeline.
Today’s research underscores why, particularly in light of the PSLF Limited Waiver’s expiration, advocates and policymakers must defend the promise of PSLF and work to bolster all available pathways to debt cancellation.
Read more about SBPC’s work on PSLF here.
Read more about how to access PSLF here.
About Student Borrower Protection Center
The Student Borrower Protection Center (SBPC) is a nonprofit organization focused on eliminating the burden of student debt for millions of Americans. We engage in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance racial and economic justice for all.
About the Student Loan Law Initiative
The Student Loan Law Initiative (SLLI) at the University of California, Irvine School of Law is the nation’s first academic research project focused on student debt and the law. SLLI fosters the highest quality research, provides grants, and builds the capacity of student loan experts to shape the future of this marketplace.