Student loan debt is a growing crisis in America. Over 43 million borrowers collectively owe $1.6 trillion in student loan debt in the U.S. alone. With rising tuition fees and the soaring cost of living, paying off student loans has become extremely challenging for many.
The good news is there are federal student loan forgiveness programs that can help eligible borrowers get some or all of their student loans discharged. Here’s what you need to know about these programs, who qualifies, eligibility criteria and how to apply for student loan forgiveness.
Types of Federal Student Loan Forgiveness Programs
There are various federal student loan forgiveness programs, each with their own unique qualifying criteria. The main programs include:
Public Service Loan Forgiveness (PSLF)
The PSLF program forgives the remaining balance on Direct Loans for borrowers who are employed full-time in an eligible public service job and make 120 qualifying monthly payments. You must have Direct Loans to qualify.
Teacher Loan Forgiveness
Offers up to $17,500 in loan forgiveness for teachers who teach full-time for five complete and consecutive academic years in certain elementary and secondary schools and educational service agencies that serve low-income families.
Perkins Loan Cancellation
Discharges all or part of your Federal Perkins Loan if you perform qualifying service in fields like teaching, military service, law enforcement etc.
Income-Driven Repayment (IDR) Forgiveness
Allows for forgiveness of the remaining balance after 20-25 years of monthly payments, depending on the IDR plan. Eligibility is based on your income.
Total and Permanent Disability Discharge
Discharges federal student loans if you become totally and permanently disabled and are unable to work or earn money to repay your loans.
Closed School Discharge
Discharges federal student loans if you were unable to complete your program because your school closed while you were enrolled.
Borrower Defense to Repayment
Allows you to have your federal student loans forgiven if your school misled you or engaged in misconduct in violation of certain laws.
Do I Qualify for Student Loan Forgiveness?
Eligibility for federal student loan forgiveness programs depends on many factors like your loan type, repayment plan, employer and occupation. Here are some key qualifying criteria:
- Loan Types: Most programs require you to have federal Direct Loans. Perkins Loans, FFEL Loans and private loans generally don’t qualify.
- Repayment Plan: You must be on an income-driven repayment plan to qualify for PSLF and IDR forgiveness. Standard and graduated plans don’t qualify.
- Employment: PSLF and Perkins Cancellation require full-time employment in a qualifying public service job. Teacher Loan Forgiveness is for those employed as full-time teachers.
- Payments: You must make the required number of qualifying payments on your loans to be eligible. This ranges from 120 monthly payments for PSLF to just 5 years for Teacher Loan Forgiveness.
- Disability: For disability discharge, you must provide documentation from your doctor stating you’re totally and permanently disabled.
- School Closure: You must have been enrolled when your school closed and unable to complete your program even after transferring.
Always check the official federal student aid website to determine eligibility based on your specific circumstances. Some key requirements are highlighted below for major forgiveness programs:
Eligibility for Public Service Loan Forgiveness (PSLF)
To qualify for the PSLF Program, you must:
- Be employed full-time by a U.S. federal, state, local, or tribal government or not-for-profit organization.
- Work for a qualifying employer when making each of the required 120 qualifying monthly payments.
- Have Direct Loans or consolidate other federal student loans into a Direct Loan.
- Repay your loans under an income-driven repayment plan.
- Make 120 qualifying payments after October 1, 2007.
Teachers, nurses, government employees, military members and not-for-profit workers often qualify for PSLF. Your employment and payments must be certified as eligible.
Eligibility for Teacher Loan Forgiveness
To qualify for Teacher Loan Forgiveness, you must:
- Have federal Direct Subsidized Loans, Unsubsidized Loans, Subsidized/Unsubsidized Consolidation Loans, or PLUS loans.
- Teach full-time for five complete and consecutive academic years at a low-income elementary or secondary school or educational service agency.
- Meet the qualifications for a highly qualified teacher.
- Not owe more than the current limits which are $17,500 on Direct Loans and $5,000 on Perkins Loans.
The five years of service don’t have to be at the same school. Private school teachers may also qualify but additional requirements apply. Pre-kindergarten, kindergarten and librarians are not eligible.
Eligibility for Income-Driven Repayment (IDR) Forgiveness
To qualify for forgiveness under IDR plans like PAYE, REPAYE and IBR, you must:
- Have Direct Loans and/or FFEL program loans. Perkins Loans and private loans don’t qualify.
- Repay your loans under an approved IDR plan.
- Make the required monthly payments for 20 years (undergraduate debt) or 25 years (graduate debt).
- Have a remaining balance at the end of those 20-25 years of payments.
IDR plans already offer very low monthly payments based on your income and family size. You’ll qualify for forgiveness of any balance left after 240-300 qualifying monthly payments.
How to Apply for Student Loan Forgiveness
Applying for federal student loan forgiveness involves submitting an application, income details and employment documentation. Here are the steps for each main program:
Applying for Public Service Loan Forgiveness
To apply for PSLF, you must complete the following steps annually:
- Submit the PSLF Certification Form to verify your employment qualifies. Do this annually and when changing jobs.
- Enroll in an IDR plan like PAYE, REPAYE or IBR. Submit income documents so your payment amount can be calculated.
- Make qualifying payments and track them using the PSLF Help Tool or by contacting your servicer.
- After making 120 qualifying payments, submit the PSLF Application for Forgiveness form.
Keep documentation of all employment periods and payments in case of errors or discrepancies. Approval can take up to 90 days. Forgiveness is tax-free under current laws.
Applying for Teacher Loan Forgiveness
To apply for Teacher Loan Forgiveness, you must complete the following steps:
- Complete the online Teacher Loan Forgiveness Application or a print version.
- Submit certification of your teaching service from the chief administrative officer at the school where you completed your 5 academic years of teaching service.
- Submit documents showing your status as a highly qualified teacher during each service year.
The application requires details on the schools you taught at, the subject(s) taught, proof of completion dates and compliance with the highly qualified teacher requirements. You can apply after completing your 5th year of service.
Applying for IDR Forgiveness
To qualify for forgiveness under income-driven plans (PAYE, REPAYE, IBR, ICR), you must:
- Enroll in the IDR plan annually and recertify your income to set payment amounts.
- Make the required monthly payments based on your income for 20 years (undergrad loans) or 25 years (graduate loans).
- After making the 240-300 payments, your remaining loan balance will be forgiven. No specific application is required.
Keep records of payments as forgiveness under IDR plans may be taxable for loans taken out after a certain date. For older loans, forgiveness is tax-free.
Can My Private Student Loans Be Forgiven?
Unfortunately, private student loans are not eligible for the federal student loan forgiveness programs. However, here are some options for getting relief on private student loans:
- Refinancing: You can potentially lower your monthly payments by refinancing to a lower interest rate. Be cautious of extending loan terms though.
- Deferment or Forbearance: Ask your lender about temporarily postponing payments, usually for up to 12 months. Interest still accrues.
- Hardship Programs: Some lenders offer assistance programs based on financial hardship that can temporarily suspend payments.
- Settlement: You can offer a lump-sum payment to settle your loan for less than the amount owed. Any remaining balance is forgiven.
- Bankruptcy: Private student loans can potentially be discharged through bankruptcy, but this requires filing a lawsuit against the lender and is difficult to achieve.
Before taking any action on private student loans, be sure to carefully consider the financial implications, especially on your credit score.
Common Questions and Concerns about Student Loan Forgiveness
Here are answers to some frequently asked questions about qualifying for student loan forgiveness and applying:
FAQ: What types of jobs qualify for Public Service Loan Forgiveness?
Employment with the government, military, public schools and colleges, public hospitals, and 501(c)(3) non-profit organizations qualify for PSLF. This includes teachers, nurses, government employees, first responders, social workers and many other roles. Always verify your employer qualifies before pursuing PSLF.
FAQ: Can I qualify for Teacher Loan Forgiveness at any school?
No, you must teach at a low-income school or educational service agency where over 30% of students qualify for Title 1 services. This data can be found on your state education website. Many public schools qualify but verify eligibility.
FAQ: What income-driven plans qualify for student loan forgiveness programs?
You must be on an IDR plan like PAYE, REPAYE, IBR or ICR to qualify for PSLF or IDR forgiveness. Other plans like Standard and Graduated repayment plans do not qualify for forgiveness. Consolidating into the Direct Loan program is often required.
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FAQ: What types of payments count towards the required 120 for PSLF?
Only full monthly payments made after October 1, 2007 while employed full-time qualify for PSLF. Late, lump sum (double payments), and payments made while not working full-time at a qualifying employer don’t count.
FAQ: Can student loan forgiveness be taxable?
Forgiveness under current IDR plans may be taxed. PSLF, Teacher Loan Forgiveness, disability discharges, closed school discharges and borrower defense forgiveness are all currently tax-free federal programs. Always consult a tax professional.
FAQ: How long does it take to get approval for student loan forgiveness?
Processing times can vary. For PSLF and IDR forgiveness, it may take up to 90 days after submitting the application to receive forgiveness. Teacher Loan Forgiveness is often faster within 30-60 days after applying. Track all documentation.
The federal government offers several student loan forgiveness programs that provide relief for borrowers who meet specific criteria. Carefully evaluate which programs you qualify for based on your loan types, job, and repayment history.
Submitting the necessary applications, documentation of employment and payments is key. Work closely with your loan servicer to ensure you are on track and getting accurate credit for qualifying payments. With persistence and proper tracking of progress, millions of borrowers can see some or all of their student loan debt forgiven.