Student loan forgiveness programs: What they are and how to qualify

1
Monkey Business Images/Shutterstock

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for

For students willing to work in specific jobs or meet other requirements for several years, student loan forgiveness can be a huge relief — and lead to tens of thousands of dollars in savings.

The key to making the most of student loan forgiveness is understanding how your program operates and following the directions closely. Here are some of the top forgiveness programs and how they work.

What is student loan forgiveness?

Student loan forgiveness typically refers to a variety of programs that can ultimately erase some or all of your student loan debt. These programs all have their own unique requirements and approval standards, and some of them are available only for specific professions (i.e., teachers, military, etc.).

While not all forgiveness programs will work for every student, most borrowers can find a program to help them get at least some of their student loan debt wiped away.

How to get student loan forgiveness

While the rules vary, qualifying for student loan forgiveness typically requires you to:

  • Have a specific type of student loan (most programs accept only federal student loan borrowers).
  • Work in a specific job, a high-need field or a low-income area.
  • Agree to work for a specific length of time.
  • Make on-time payments on your student loans while working toward forgiveness.

To qualify for loan forgiveness with your chosen plan, make sure that you understand the ins and outs of your plan and what it takes to qualify. Read the fine print and reach out to the administrator of your student loan debt relief plan if you have any questions along the way.

Student loan forgiveness programs

Student loan forgiveness programs are typically dependent on service in a particular occupation, like a job in the nonprofit sector or a qualified public service position. The following programs require a time commitment before your debt is discharged, but you could see your debt forgiven after five to 25 years.

Public Service Loan Forgiveness (PSLF)

Public Service Loan Forgiveness (PSLF) is geared toward graduates who are willing to work in a qualified public service position for a period of 10 years. The program requires full-time employment with a U.S. federal, state, local or tribal government, or a not-for-profit organization, although your time does not have to be spent working for the same employer.

You have to make 120 on-time payments on an income-driven repayment plan to qualify, and you must have either Direct Loans or a Direct Consolidation Loan for your monthly payments to count.

If you can meet all the requirements for this program, you can have your remaining loan balance forgiven after 120 qualifying payments.

Teacher Loan Forgiveness

Teacher Loan Forgiveness is offered to teachers who have “been employed as a full-time, highly qualified teacher for five complete and consecutive academic years” at a low-income school or educational service agency. At least one of those years must be after the 1997-98 academic year, and the loans must have been made before the end of the five years you spent in qualifying teaching service.

If you’re able to qualify for this relief, you can receive up to $17,500 in loan forgiveness, depending on the subjects you taught. Mathematics, science and special education teachers can qualify for the highest level of forgiveness through this program. Teachers in other subjects can receive up to $5,000 in loan forgiveness.

Nurse Corps Loan Repayment Program

If you’re a licensed registered nurse, an advanced practice registered nurse or a nurse faculty member with qualifying nursing debt, you may be eligible for the Nurse Corps Loan Repayment Program. Additional requirements include working full time in an eligible high-need nursing area and a degree from an accredited school.

Upon qualification for this program, you can have 60 percent of your loans forgiven after two years of service. Once you complete the first two years in this program, you can apply for a third year and receive another 25 percent in loan forgiveness.

Income-driven repayment plans

Income-driven repayment (IDR) plans can lead to forgiveness of your remaining student loan balance after years of reduced payments. The most common plans are Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), Income-Contingent Repayment (ICR) and Income-Based Repayment (IBR).

Each of these plans requires you to pay a percentage of your discretionary income for 20 to 25 years before receiving loan forgiveness for the remaining balance. To qualify for income-driven repayment plans, you must have eligible federal student loans and recertify your income every year.

Student loan forgiveness for military members

If you’re a current servicemember or veteran, there are plenty of ways to get the government to pay off some of your loans.

One option is the National Defense Student Loan Discharge benefit, which can help military members get some or all of their Perkins Loans canceled if they qualify for hostile-fire or imminent-danger pay. If their military service ended before Aug. 14, 2008, they can qualify for up to 50 percent forgiveness; if their military service ended on or after that date, they can qualify for up to 100 percent forgiveness.

If you’re a member of the National Guard, you may also be eligible for the Student Loan Repayment Program, which may grant you up to $50,000 in student loan forgiveness after completing an eligible service contract.

Forgiveness programs for doctors

If you’re a doctor, you may be able to receive some student loan relief by qualifying for a loan forgiveness program. Most loan forgiveness programs for medical professionals require you to work in a high-need area for a few years, but the forgiveness amounts you can qualify for tend to be high.

For example, the National Health Service Corps Loan Repayment Program offers up to $50,000 of forgiveness in exchange for two years of work in an approved position.

Other loan forgiveness programs for doctors include the Indian Health Service Loan Repayment Program and the U.S. Department of Health and Human Services Health Resources and Services Administration Primary Care Loans program.

Several branches of the military, including the U.S. Army, the U.S. Navy and the U.S. Air Force, have loan forgiveness programs for health professionals who serve in the military. Doctors are also eligible for PSLF if they work for a qualifying employer.

Loan forgiveness programs for lawyers

There are also quite a few forgiveness programs aimed at lawyers with student loan debt, although some of them are administered through specific law schools and are limited to their students. Numerous state-based loan repayment assistance programs also exist, so check which state options may be available to you.

On a national level, students can consider the Attorney Student Loan Repayment Program, which could forgive up to $6,000 of student loan debt each year and up to $60,000 in total. The John R. Justice Student Loan Repayment Program is another option if you’re a public defender. Approved applicants can qualify for up to $4,000 per year in student loan assistance, with a maximum forgiveness amount of $60,000.

Loan forgiveness programs for AmeriCorps

People serving full time in AmeriCorps are eligible for Public Service Loan Forgiveness. Additionally, the Segal AmeriCorps Education Award is granted to individuals who meet and complete the approved terms of national service in the AmeriCorps program. This award can be put toward your education costs at any approved postsecondary educational institution or GI Bill-approved programs.

You can also use the funds from the award to repay any qualifying student loans. The amount is equal to the maximum amount of a Pell Grant, which is $6,495 for the 2021-22 award year, and can change from year-to-year.

Individuals who have completed their service in an approved AmeriCorps program can also be eligible to have up to 100 percent of interest payments accrued during their time of service paid for by the Office of the National Service Trust (also known as the Trust). This is only possible for those who have successfully completed their term of service and have earned the Segal AmeriCorps Education award.

Student loan discharge programs

Student loan discharge is when you’re no longer required to make your payments due to unforeseen circumstances like a school closure or a total or permanent disability. There are a few instances where your student loans could be completely discharged. Here are some examples and what you should know about discharge eligibility programs.

Perkins Loan cancellation

Under certain circumstances, your Perkins Loan can be discharged. Here’s how to qualify for Perkins Loan cancellation:

  • You’re a special education teacher or teacher in a field of expertise that has a shortage of qualified teachers in your state.
  • You’re a teacher in a school that serves students from low-income families.
  • You’re a volunteer or hold another eligible job under the Perkins Loan cancellation program. These jobs include firefighters, law enforcement officers, public defenders, speech pathologists and more.

The application for the cancellation can be made to your school’s Perkins Loan servicer. Your school or servicer can walk you through the application process and guide you through the specific documentation necessary. If you qualify, you may be able to cancel up to 100 percent of your Perkins Loan.

Closed school discharge

If you currently have a Direct Loan, a FFEL Loan or a federal Perkins Loan, you may be eligible for 100 percent discharge of your federal student loans if:

  • Your college closed within 120 days of your withdrawal.
  • Your school closed while you were enrolled.
  • You were on an approved leave of absence when your college closed.

Contact your loan servicer if any of these circumstances apply to you. Your servicer can provide you with information about the application process for getting your loans discharged and what to do if your application gets denied.

Borrower defense to repayment charge

If your school misled you, engaged in misconduct or violated certain state laws, you may be eligible for federal student loan forgiveness.

If you are eligible, you may be able to have all or part of your federal Direct Loans forgiven, or you could be reimbursed for the money you’ve already paid toward your loans. In order to qualify for borrower defense, you can apply through the online application on the Federal Student Aid website. You may need to submit extra electronic documentation during the application process, so review the required documentation before applying.

Total and permanent disability discharge

If you’re totally and permanently disabled, you may be able to qualify for federal student loan relief on the basis of your disability. Applicants need to complete and submit a TPD discharge application, along with any required documentation, and send it to Nelnet, the disability discharge servicer. When you apply, you’ll likely need to provide documentation from one of the following:

  1. A physician.
  2. The Social Security Administration.
  3. The U.S. Department of Veterans Affairs.

You can also be released from any TEACH grant obligations if you meet one of the above requirements.

For more information on how to contact Nelnet and apply for a TPD discharge, you can visit the Federal Student Aid’s TPD information resource center.

Discharge due to death

Federal student loans will be fully discharged after the borrower’s death once proof of death is submitted. If your parents took out a PLUS loan on your behalf, that can also be discharged with the acceptable documentation.

If you’re planning on applying for a student loan discharge due to death, typically you’ll need to provide a death certificate or a certified copy of the certificate. Contact your loan servicer for the documentation and submission requirements.

Things to consider when applying for student loan forgiveness

Student loan forgiveness programs can help you save money on student loan repayment in the long run, but there are some pitfalls to watch out for. Here are several factors to consider before pursuing one of these programs.

  • Scams are out there. Nearly every industry has its share of scammers, and the student loan industry is no exception. Watch out for “debt relief companies” that promise to make your loans disappear. They can’t do anything that you wouldn’t be able to do on your own, but they will charge you money anyway.
  • Forgiveness typically does not apply to private student loans. Most forgiveness programs are for student loans backed by the federal government. If you have mostly private student loans, forgiveness programs may be harder to find.
  • Some forgiveness programs take a decade or longer to complete. Consider whether participating in a forgiveness program is worth it in the long run — with some programs, you’ll need to make payments for 10 to 25 years. If you have a good income, you might be better off paying off your loans as quickly as possible on your own.
  • Student loan forgiveness is not an option if you have already defaulted on your loans. Once you default on your loans, you lose all federal protections and benefits.

What to do if you don’t qualify for student loan debt forgiveness programs

If you have private student loans or your career doesn’t make it possible to qualify for a traditional loan forgiveness program, then you’ll need to pursue other options. Consider these strategies to pay off your student loans once and for all.

Switch up your repayment plan

If you don’t qualify for federal loan forgiveness but you need a lower monthly payment, see if you can play around with your repayment plan. Federal loans offer plans that let you repay your balance for up to 30 years, which could significantly lower your monthly bill.

Refinance your student loans

Refinancing your student loans can be a smart idea if you have good or excellent credit or if you have a co-signer. Private lenders can offer lower interest rates than federal loans can, and you can choose a repayment plan that works for your needs and budget.

Pay more than the minimum

If you want to ditch your loans as fast as possible, consider paying more than the minimum each month. You’ll need to notify your loan servicer and specify that you want your overpayment to go toward the principal of your loan balances and not toward your next payment, but you’ll save money over time as you pay less and less interest each month.

Take advantage of coronavirus student loan relief

The federal government has currently paused student loan payments and interest charges on federal loans through Sept. 30, 2021, so borrowers with federal student loans may use this time to either get ahead of their loans without the burden of interest or put those payments toward private loans instead. If you’ve been making payments on your federal loans since March 2020, you can call your servicer and get a refund on those payments.

Some private lenders have also offered loan forbearance programs in response to the pandemic, but interest may still accrue during this time.

Next steps to consider

If you qualify for student loan forgiveness or discharge, conducting the proper research and ensuring that you have the approved documentation on hand can help you get the forgiveness you need. The application process can vary based on the situation, so contact your loan servicer if you have any questions.

If you’re still having trouble paying your student loans but don’t qualify for a forgiveness program, refinancing your student loans can save you money by lowering your interest rate and consolidating multiple loans into a single monthly payment.

Learn more:

Written by
Holly D. Johnson
Author, Award-Winning Writer
Holly Johnson began her career working in the funeral industry, which may make you wonder why she works in personal finance now. Yet, the funeral industry taught the author everything she needs to know about the value of one's money and time. Johnson left the mortuary business a decade ago in order to explore her passion for personal finance and travel the world, and since then, she and her husband have built a debt-free lifestyle that has them on the path to retire very wealthy in their 40s. Holly's love of budgeting also led to the creation of her debt payoff book, “Zero Down Your Debt: Reclaim Your Income and Build a Life You’ll Love."
Edited by
Student loans editor