Student loan forgiveness programs offer a way for borrowers to have their remaining student loan balance forgiven, either in whole or in part. While this can be a helpful option for those who are struggling to make their student loan payments, it is important to understand that these programs are not available to everyone. In this article, we will discuss the various ways that you can get student loan forgiveness and the qualifications that you must meet in order to be eligible.
Public Service Loan Forgiveness (PSLF)
If you work in a public service job and have made 120 on-time monthly payments on your federal Direct Loans, you may be eligible for Public Service Loan Forgiveness (PSLF). To qualify, you must work full-time for a government organization at any level (federal, state, local, or tribal), a 501(c)(3) non-profit organization, or other qualifying non-profit organizations.
To apply for PSLF, you must first complete and submit the Employment Certification Form (ECF) to the Department of Education. The ECF will allow you to confirm your eligibility and track your progress towards the 120 payments needed for forgiveness.
Teacher Loan Forgiveness
If you are a teacher who has worked in a low-income school or educational service agency for at least five consecutive academic years, you may be eligible for teacher loan forgiveness. To qualify, you must have Direct Loans or Federal Family Education Loans (FFEL) and be a highly qualified full-time teacher.
To apply for teacher loan forgiveness, you must complete and submit the Teacher Loan Forgiveness Application to the Department of Education.
Perkins Loan Cancellation and Discharge
If you have a Federal Perkins Loan, you may be eligible for loan forgiveness if you work in certain public service jobs or if you meet certain other qualifications. Some of the qualifying public service jobs include:
Teacher
Nurse or medical technician
Law enforcement officer
Firefighter
Military service member
To apply for Perkins Loan Cancellation and Discharge, you must contact your school’s financial aid office.
IDR Forgiveness
You may qualify for an income-driven repayment (IDR) plan if, given your salary and family size, you are unable to make your required monthly student loan payments.
Your monthly student loan payments under an IDR plan are determined by a portion of your income. Any unpaid debt in an IDR plan may be waived if payments are made for 20–25 years, depending on the plan. However, it’s crucial to remember that the Internal Revenue Service can regard any money that has been forgiven as taxable income (IRS).
To apply for an IDR plan, you must complete and submit the appropriate application to your loan servicer.
Disability Discharge
You can be qualified for a disability discharge of your federal student debts if you are handicapped and unable to work. To be eligible, you must provide documents from a doctor attesting to your persistent disability and inability to work.
To apply for a disability discharge, you must complete and submit the Total and Permanent Disability Discharge Application to your loan servicer.
Bankruptcy Discharge
In rare cases, you may be able to discharge your student loans through bankruptcy. However, it is extremely difficult to qualify for a bankruptcy discharge of student loans, as you must prove that repaying your student loans would cause undue hardship.
To qualify for a bankruptcy discharge of student loans, you must file a separate lawsuit called an “adversary proceeding” within your bankruptcy case. During this proceeding, you must provide evidence to the court that repaying your student loans would cause undue hardship.
The standard for proving undue hardship varies by jurisdiction, but generally requires that you demonstrate that you cannot maintain a minimal standard of living while repaying your student loans and that this financial hardship is likely to continue for a significant portion of the repayment period.
It is important to note that bankruptcy discharge of student loans is rare and generally reserved for extreme circumstances. Most borrowers will not qualify for this option.
Military Student Loan Forgiveness
If you are a member of the military, you may be eligible for student loan forgiveness through the Department of Defense (DOD). The DOD offers several student loan repayment programs for military personnel, including the Army Student Loan Repayment Program, the Navy Student Loan Repayment Program, and the Air Force Student Loan Repayment Program.
To qualify for military student loan forgiveness, you must meet certain eligibility requirements, such as serving in a designated military occupation and committing to a specific period of service. The amount of forgiveness available through these programs varies, but may be up to $65,000 for certain occupations.
State-Based Student Loan Forgiveness Programs
In addition to federal student loan forgiveness programs, some states offer their own student loan forgiveness programs for residents. These programs may be available to certain types of borrowers, such as teachers, healthcare workers, or public service employees.
To find out if your state offers student loan forgiveness programs, you should contact your state’s higher education agency or department of education.
Employer-Based Student Loan Repayment Assistance
Some employers offer student loan repayment assistance as a benefit to their employees. This type of assistance may be available to full-time employees who have student loan debt and have been with the company for a certain period of time.
To find out if your employer offers student loan repayment assistance, you should contact your HR department or check your employee benefits manual.
Student Loan Repayment Plans
If you are unable to qualify for student loan forgiveness or do not want to wait for forgiveness, there are other options available for repaying your student loans. These options include:
Standard Repayment Plan: This is the default repayment plan for federal student loans. Under the Standard Repayment Plan, you make fixed monthly payments for up to 10 years.
Graduated Repayment Plan: Under the Graduated Repayment Plan, your monthly payments start low and increase every two years. This plan may be a good option if you expect your income to increase over time.
Extended Repayment Plan: Under the Extended Repayment Plan, you make fixed or graduated monthly payments for up to 25 years. This plan may be a good option if you have a high amount of student loan debt.
It is important to note that while these repayment plans may lower your monthly payments, they may also increase the overall cost of your student loans due to interest.
Final Thoughts
Student loan forgiveness programs can be a helpful option for borrowers who are struggling to make their student loan payments. However, it is important to understand that these programs are not available to everyone and have specific eligibility requirements. If you are considering student loan forgiveness, it is important to carefully review the qualifications and determine which option is best for your situation. You should also consider seeking the advice of a financial professional or student loan counselor to determine the best course of action for your specific circumstances
