A guide to student loan forgiveness programs

A guide to student loan forgiveness programs
Written by Publishing Team

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Find out what federal student loan forgiveness programs are available to you and if you qualify for them. (iStock)

62 percent of college students who graduated in 2019 had student loan debt, according to the Institute for College Access and Success. The average student debt held by these graduates was $28,950. With statistics like these, it’s no wonder so many Americans hope to take advantage of student loan forgiveness.

Student loan forgivenessForgiveness, also known as cancellation or forgiveness, relieves you of your obligation to pay off some or all of your federal student loan debt. Reducing or eliminating your student debt burden can result in significant financial relief. But know that not everyone qualifies for student loan forgiveness.

Here’s what you need to know about student loan forgiveness programs.

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Public Service Loan Forgiveness (PSLF)

As its name suggests, this loan forgiveness program is intended to waive federal student loans to those who work for a government or some nonprofit organization. Once you make 120 eligible monthly payments under the PSLF program, you may receive a 100% waiver of the remaining balance in Federal Student Loans If you are eligible.

  • Eligibility requirements You must work full-time for a government entity or 501(c)(3) tax-exempt organization and make your eligible payments through an Income-Driven Payment Plan (IDR). You do not have to make 120 consecutive payments, but you must pay them under the eligible payment plan. Party political organizations, labor unions, and for-profit organizations are not eligible for the PSLF program.
  • Eligible Loans All direct loans (loans granted through the William D. Ford Federal Direct Loan Program from the Department of Education) are eligible. Loans obtained under the Federal Family Education Loan (FFEL) Program and the Federal Perkins Loan Program are not eligible, unless you first consolidate them in your direct consolidation loan. Private student loans are not eligible for the PSLF program.

Teacher loan forgiveness

The Teacher Loan Forgiveness Program provides qualified teachers with student loan forgiveness of up to $17,500 on their direct or Federal Stafford loans. Teachers must work for five consecutive years for an elementary or secondary school or educational services agency serving low-income students.

  • Eligibility requirements Your loans must not be in default, and you must have been working full-time as a highly qualified teacher for five consecutive academic years at a qualified low-income school. “Highly qualified” means that you must have a bachelor’s degree and a government degree or teaching license. One of those five years must fall after the 1997-1998 school year.
  • Eligible Loans Subsidized and Unsubsidized Direct Loans and Subsidized and Unsubsidized Federal Stafford Loans

Income-Based Repayment (IBR)

An Income-Based Payment Plan (IBR) adjusts the amount of your payments based on your income and the size of your family. Repayment based on income It is not a traditional loan forgiveness program but you can use the program for loan forgiveness. The IBR program limits student loan payments to 10% or 15% of your discretionary income. Once you make regular payments through the IBR for 20 or 25 years – depending on when the loan was drawn down – the remaining loan balance is cancelled.

Moreover, loan amounts that are exempt under income-driven repayment plans are now tax-deductible through January 1, 2026, thanks to a provision in the $1.9 trillion stimulus package Congress passed in March 2021.

  • Eligibility requirements You are required to make payments for 20 years (if you are a new borrower on or after July 1, 2014) or 25 years (if you are not a new borrower on or after this date).
  • Eligible Loans Only Federal loans, including Stafford Loans, Grad Plus and Direct Consolidation Loans, are eligible for the IBR. Private Student Loans and Parent PLUS Loans (and consolidation loans that include a Parental Loan Plus), FFEL PLUS loans made to parents (and consolidation loans that include a FFEL PLUS loan to parents) do not qualify for an IBR.

Income Emergency Payment (ICR)

Like an income-based repayment plan, an emergency repayment plan (ICR) aims to help you reduce your payments based on your income and family size. If you qualify, your payment will be 20% less than your discretionary income or what you would pay on a 12-year fixed payment plan.

  • Eligibility requirements – After making regular on-time payments for 25 years, the remaining loan balance will be cancelled.
  • Eligible Loans Direct Loans and Parental Loans PLUS are eligible. Federal Perkins loans, Federal Family Education loans, and Direct PLUS loans do not qualify unless you combine them into Direct Consolidation Loans first.

Other types of student loan forgiveness

Here are some additional student loan forgiveness programs to consider:

  • Student loan forgiveness programs for nurses These programs include Public Service Loan Forgiveness, Perkins Loan Forgiveness, Nursing Staff Loan Repayment Program, and State Loan Forgiveness Programs for Nurses.
  • Student loan forgiveness programs for members of the armed forces These programs include Public Service Loan Forgiveness, Department of Defense Payments, and Total and Permanent Disability Veterans Discharge.
  • State sponsored repayment assistance programs Many states offer student loan assistance programs for their residents. For example, Massachusetts provides up to $50,000 in student loan benefit for eligible health care workers through the Massachusetts Health Professionals Loan Repayment Program. Check your state’s Department of Education website for tolerance options available to you.
  • Loan assistance programs LRAPs are designed for those in the public service profession. Eligibility requirements vary by program.

Perkins loan cancellation and discharge

with Perkins Loan Cancellation Up to 100% of your Federal Perkins loan can be canceled, as long as you have been working in a qualifying public service job or as a qualified volunteer for five years.

  • Eligibility requirements To qualify, borrowers must have a Perkins loan and work in a qualifying job, usually that job involves helping the public in an area of ​​critical need. Eligibility requirements usually vary by profession. For example, teachers can qualify for up to 100% cancellation if they teach at a school that serves students from low-income families.
  • Eligible Loans Federal Perkins Loans

School leaving closed

You may qualify for a closed school dismissal if your school is closed under certain conditions. If you qualify, loan forgiveness absolves you of your responsibility to repay your student loan, and you may even be able to get back part or all of your previous payments.

  • Eligibility requirements Your school must be closed during enrollment or within 120 days of withdrawal (if loans were first issued before July 1, 2020). If your loans are disbursed on or after this date, you qualify if your school closes within 180 days of withdrawal. You are also eligible if you are on approved leave when your school closes.
  • Eligible Loans Federal Direct Loans, FFEL Loans, or Federal Perkins Loans

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Discharge from total and permanent disability

If you cannot work because you are completely and permanently disabled, you may qualify for the remaining balance on your student loans.

  • Eligibility requirements You must be able to provide documentation from the U.S. Department of Veterans Affairs, the Social Security Administration, or a physician proving complete and permanent disability. The government may monitor your money and deficit for three years and return the loans if you do not meet the requirements.
  • Eligible Loans Federal Direct Loans, FFEL Loans, Federal Perkins Loans

Discharge due to death

If you die, your federal student loans can be forgiven without any obligation to your heirs, as long as the person you designate provides a death certificate to your loan officer. Also, if your parents take out a Parent PLUS loan to finance your education, these loans will be forgiven if you or your parent passes away.

  • Eligibility requirements A family member or other representative must provide proof of death. Ask your loan service officer if they have additional requirements.
  • Eligible Loans Federal Direct Loans, FFEL Loans, and Perkins Loans are eligible. Parents PLUS loans may be eligible if you or one of your borrowing parent dies.

Discharge from the certificate

A federal student loan can be forgiven when the school incorrectly certifies your eligibility for the loan. If you qualify for this type of discharge, you will no longer be obligated to repay the loan or related loan fees, and you will receive a refund of your previous loan payments.

  • Eligibility requirements Your loans may be forgiven if your school incorrectly certified your eligibility based on your ability to benefit from its training, if the school certified your eligibility for the loan when you had ineligibility or if the school signed in your name the loan application or promissory note without your permission.
  • Eligible Loans – Direct Loans and FFEL Loans

Discharge of unpaid refunds

If you drop out of school after Take out a federal student loanThe school may be required by law to return some or all of the loan money to your loan officer. If the school fails to return the loan funds after withdrawal, you may be eligible for a waiver up to the amount owed to your school for service.

  • Eligibility requirements Your school must have failed to return the requested loan funds to your loan service officer. Contact the loan service for more details.
  • Eligible Loans – Direct Loans, FFEL Loans, Parental Loans PLUS

Discharge the Borrower of Defense Loan

You may qualify for this discharge if your school misleads or violates state laws. In this case, you may get a discharge of some or all of your federal student loan debt.

  • Eligibility requirements The school must have engaged in misconduct directly related to the student loan or educational program you received through the loan. You will need to provide documents proving any financial harm due to the school’s conduct, and the documents should support your belief that you qualify for loan forgiveness.
  • Eligible Loans Direct loans

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