Student Loan Forgiveness
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What Is Student Loan Forgiveness?
Student loan forgiveness is debt relief offered to students with federal loan debts. It offers relief from the obligation to repay part or all of the federal direct loan.
With over 44 million Americans holding over $1.6 trillion in student debt, the thought of getting student loans canceled, forgiven, or discharged is a dream come true for some Americans. Once a loan is forgiven, it means that a person is no longer required to make principal and interest repayments to the federal debt.
However, not all student loans meet the requirements for forgiveness. Usually, the federal government may cancel part or all of a student loan under certain circumstances, such as performing military service, doing voluntary work, etc.
In other cases, the federal government may cancel a student debt due to circumstances beyond the borrower’s control, such as a borrower’s permanent disability, death of a borrower, falsification of loan qualifications, and closure of school during a school session.
How To Get Your Student Loans Forgiven
- Option No. 1 – If having a job that serves the public. If you’re a teacher or police officer or firefighter or social worker or health care worker or government employee who kept up with payments for 10 straight years, you’ve got a good shot. If you are a sign spinner or pet psychic, forget it.
- Option No. 2 – Through a repayment plan that is based on your income. You will still have to pay a large chunk of your debt over a long period, but under the current laws, a portion will be forgiven at the end. Those options are available for federal student loans.
- Option No. 3 – Is called a discharge and it’s available for federal or private loans, but you probably don’t want to go there. A discharge is when you can’t repay the loan for a variety of reasons, like death, disability, fraud, identity theft or bankruptcy.
Student loan forgiveness programs
- Income-driven repayment forgiveness. The federal government offers four main income-driven repayment plans, which allow you to cap your loan payments at a percentage of your monthly income. When enrolled in one of these plans, your remaining loan balance will be eligible for forgiveness after 20 or 25 years, depending on the plan. These plans are most beneficial for those with large loan balances relative to their income. Only 32 borrowers have received loan forgiveness through income-driven repayment forgiveness, according to the National Consumer Law Center. This forgiveness was made tax free retroactive to Dec. 2020 through the end of 2025, as part of the March 2021 American Rescue Plan. However, most borrowers will not qualify for forgiveness through income-driven repayment until the early 2030s.
- Public Service Loan Forgiveness. Public Service Loan Forgiveness is available to government and qualifying nonprofit employees with federal student loans. Eligible borrowers can have their remaining loan balance forgiven tax-free after making 120 qualifying loan payments. Until Oct. 31, 2022, the Education Department has expanded which payments on federal student loans count toward PSLF through a limited waiver; now, payments on FFEL and Perkins loans, late payments and payments made on any repayment plan will retroactively count as qualifying payments.
- Teacher Loan Forgiveness. Teachers employed full time in low-income public elementary or secondary schools may be eligible for Teacher Loan Forgiveness after working for five consecutive years. They can have up to $17,500 in federal direct or Stafford loans forgiven. To qualify, teachers must have taken out loans after Oct. 1, 1998.
- Student loan forgiveness for nurses. Nurses shouldering student debt have several options for student loan forgiveness: Public Service Loan Forgiveness, Perkins loan cancellation, and the NURSE Corps Loan Repayment Program, which pays up to 85% of qualified nurses’ unpaid college debt. Public Service Loan Forgiveness may be the most likely option for most nurses — few borrowers have Perkins loans, and the NURSE Corps program is highly competitive.
- Obama student loan forgiveness. There’s no such thing as “Obama student loan forgiveness.” However, some student “debt relief” companies use it as a catch-all term for free federal programs — which they charge to enroll borrowers in. If you encounter a company offering “Obama student loan forgiveness,” consider it a red flag. Enrolling in federal programs like income-based repayment and federal student loan consolidation is free to do on your own through the Department of Education.
Other student loan forgiveness programs
There are a few additional niche student loan forgiveness or payment assistance programs you may qualify for through federal or state programs. Eligibility in these programs depends on your profession and where you work.
- State-sponsored repayment assistance programs. Licensed teachers, nurses, doctors and lawyers in certain states may be able to take advantage of programs to assist with repaying debt. For example, the Mississippi Teacher Loan Repayment Program will pay up to $3,000 per year for a maximum of four years on undergraduate educational loans to teachers with a specific teaching license for each year of teaching full time in a particular geographical or subject area. Contact your state’s higher education department to find out if you qualify for a program.
- Military student loan forgiveness and assistance. Military personnel in the Army, Navy, Air Force, National Guard and Coast Guard may qualify for their own loan forgiveness programs. In the National Guard, for example, qualifying soldiers and officers could receive up to $50,000 to pay off federal student loans through the Student Loan Repayment Program.
- Additional student loan repayment assistance programs (LRAPs): There may be other national or organizational student loan repayment assistance programs offered for public service professions. The National Institutes of Health, for example, offers up to $35,000 in debt assistance annually to health professionals who are appointed by the institutes to conduct research. The American Bar Association has a list of state LRAPs for lawyers.
Student loan cancellation programs
- Perkins loan cancellation. Borrowers with federal Perkins loans can have up to 100% of their loans canceled if they work in a public service job for five years. In many cases, approved borrowers will see a percentage of their loans discharged incrementally for each year worked. The Perkins loan teacher benefit is for teachers who work full time in a low-income public school or who teach qualifying subjects, such as special education, math, science or a foreign language.
Student loan discharge programs
- Closed school discharge. You may qualify for loan discharge if your school closes. At the time of closure, you must have been enrolled or have left within 120 days, without receiving a degree. If you qualify, contact your loan servicer to start the application process. You’ll need to continue making payments on your loan while your application is being processed. If you’re approved, you will no longer have to make loan payments and you may be refunded some or all of the past payments you made on the loan.
- Borrower defense to repayment discharge. Borrowers defrauded by their colleges may qualify for debt relief. You’ll need to file a borrower defense to repayment claim with the U.S. Department of Education. If you qualify, you may have your loans automatically discharged, at the discretion of the Education Department, if your school was involved in clear, widespread fraud or misrepresentation that affected a broad group of borrowers.
- Total and permanent disability discharge. If you cannot work due to being totally and permanently disabled, physically or mentally, you may qualify to have your remaining student loan debt canceled. To be eligible for a total and permanent disability discharge, you’ll need to provide documentation proving your disability. Once your loans are discharged, the government may monitor your finances and disability for three years. If you don’t meet requirements during the monitoring period, your loans may be reinstated.
- Total and permanent disability discharge for veterans. Veterans who are totally and permanently disabled will have their student loan debt discharged. The process will be automatic unless they decline due to potential state tax liability (there is no federal tax liability for veteran loan forgiveness).
- Discharge due to death. If you die, your federal loans will be discharged once a death certificate is submitted to your loan servicer. Your parent’s PLUS loans used to pay for your schooling will be discharged if the parent who holds the loan or you die.
The Caveats
Legitimate federal forgiveness, cancellation and discharge programs are free through the Department of Education, but there are other costs to consider.
- Beware of scams. So-called debt relief companies claim to get rid of debt but rarely deliver after charging already-struggling borrowers high upfront fees. The only way to get debt discharged is through the legitimate government programs above, and it costs nothing to apply to them.
- Forgiveness isn’t an option for defaulted loans. You’ll need to use consolidation or rehabilitation to get defaulted federal student loans in good standing before they’re eligible for forgiveness programs. If your loans won’t qualify for forgiveness, student loan settlement or bankruptcy may reduce your debt in severe cases. Defaulted federal loans are eligible for discharge programs.
Student loan debt crisis:
How did we get here?
- The student loan crisis is affecting millions of people throughout the U.S. and has become a major political issue over the past few years. The amount of student loan debt has now surpassed the amount of credit card debt in our country!
- Failure to pay student loans results in severe penalties including wage garnishment, tax-offset, very high interest rates, inability to get more student loans, suspension of professional licenses and more.
- Fortunately, there are programs available that can benefit most people. Give us a call and we will let you know exactly what programs you qualify for.
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DISCLAIMER: This site does not negotiate, adjust or settle debts. All federal student borrowers are able and encouraged to apply for any federal repayment or forgiveness programs through the US Department of Education for free without paying fees to any entity. Nothing on this site constitutes official qualification or guarantee of result. We offer a fee-based services to assist with application preparation for federal student loan forgiveness and other programs. We are not affiliated with the Department Of Education or any other government entity.