For students willing to work in specific positions or jump through other hoops for several years, student loan forgiveness can represent a huge weight lifted — and lead to tens of thousands of dollars in savings.
Unfortunately, student loan forgiveness programs are often complex, with so many rules and so much red tape that many students wind up missing out. With that in mind, the key to making the most of student loan forgiveness is understanding how your program works and making sure you follow the directions to a T. This guide outlines some of the top forgiveness programs and what you should focus on to make them work in your favor.
What is student loan forgiveness?
When someone uses the term “student loan forgiveness,” they are usually referencing a conglomerate of programs for students that can ultimately lead to the forgiveness of all or part of their student loans. These programs all have their own unique requirements and approval standards, and some of them are even geared toward a very specific niche in the working world (i.e., teachers, military, etc.).
While not all forgiveness programs will work for every student, most students can find one program that could help them get at least some of their student loan debt wiped away.
Student loan forgiveness programs
The following student loan forgiveness programs could help you get out of debt faster, but make sure you understand the rules before you apply.
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. This program requires full-time employment with a U.S. federal, state, local or tribal government or a not-for-profit organization, and you have to make 120 on-time payments on an income-driven repayment plan to qualify. You also need to have Direct Loans or a Direct Consolidation Loan before your monthly payments start to count.
If you can meet all the requirements for this program, you can have your remaining loan balance forgiven after 120 qualifying payments. Also note that forgiveness under PSLF is not considered taxable income.
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, according to the U.S. Department of Education. Further, at least one of those years must be after the 1997-98 academic year. The loans you’re seeking forgiveness for 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.
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 able to qualify for this program. Additional requirements include working full-time in an eligible high-need nursing area and having attended an accredited school.
Upon qualification for this program, you can receive 60 percent of your “total outstanding, qualifying, nursing education loans over the course of two years.” Once you complete the first two years in this program, you can apply for a third year and another 25 percent in forgiveness for your original nursing school loans.
Income-driven repayment plans
You can also apply for income-driven repayment plans that can lead to ultimate forgiveness of your remaining student loan balances. Specific plans that qualify include Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), Income-Contingent Repayment (ICR) and Income-Based Repayment (IBR). Each of these repayment plans requires you to pay a percentage of your “discretionary income” for 20 to 25 years before ultimately forgiving balances that remain.
To qualify for income-driven repayment plans, you must have eligible federal student loans. Note, however, that forgiven loan amounts after 20 to 25 years will be taxed as regular income, which could lead to a hefty tax bill.
Student loan forgiveness for military members
If you’re a member of the military or a 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 a military member get some or all of their loans cancelled if they qualified for hostile-fire or imminent-danger pay. If their military service ended before August 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.
Since this program is only available for Federal Perkins Loans and these loans are no longer available to new borrowers, however, this program should only be explored if you have old Perkins loans that you’re still trying to pay off.
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 if you complete an eligible service contract.
Forgiveness programs for doctors
If you are a doctor, you may be able to receive some relief on your student loans if you can qualify for a loan forgiveness program. Most programs in this niche require you to work in a high-need area for a specific length of time, but the forgiveness amounts you can qualify for tend to be high. As an example, the National Health Service Corps Loan Repayment Program offers up to $50,000 in 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.
Also note that several branches of the military, including the U.S. Army, the U.S. Navy and the U.S. Air Force, all have loan forgiveness programs for health professionals who serve in the military.
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 geared specifically toward their students. Numerous state-based loan repayment assistance programs also exist, so make sure to check which state options may be available to you.
On a national level, students can consider the Attorney Student Loan Repayment Program, which could help you see up to $6,000 of your loan balances wiped away each year, up to $60,000. The John R. Justice Student Loan Repayment Program is another option if you’re a public defender. This program lets attorneys in this position qualify for up to $10,000 per year in student loan assistance with maximum forgiveness of $60,000.
How to get student loan forgiveness
If you’re wondering how to get rid of student loans, programs that offer forgiveness could be the answer you’re looking for. However, you shouldn’t run toward forgiveness without arming yourself with information.
While the rules vary, qualifying for student loan forgiveness typically requires you to:
- Have a specific type of student loan, keeping in mind that most forgiveness plans are only applicable to federal student loan debt.
- 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 you work toward forgiveness.
To qualify for loan forgiveness with your chosen plan, make sure you understand the ins and outs of your plan and what it takes to qualify. Read all the fine print and reach out to the administrator of your student loan debt relief plan if you have any questions along the way.
Things to consider when applying for student loan forgiveness
Student loan forgiveness programs can help you save money on your student loans in the long run, but there are plenty of pitfalls to watch out for. Here are some factors to consider before you pursue one of these programs.
- Loan forgiveness could be considered a taxable event. Some loan forgiveness programs, including income-driven plans, will leave you with a tax bill after the program is complete, since forgiven loan amounts are considered taxable income. This doesn’t mean a program isn’t worth pursuing, but you should know the tax status of your forgiveness program so you can plan accordingly.
- 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 cannot, but they will charge you money anyway.
- Forgiveness typically doesn’t apply to private student loans. Note that 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. Also consider whether participating in a forgiveness program is worth it when you need to spend 10 to 25 years in some cases to achieve forgiveness. If you are earning a good income, you might be better off paying off your loans as quickly as possible so you don’t have monthly payments hanging over you.
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 forgiveness on federal student loans 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 a co-signer lined up. Private lenders can offer lower interest rates than federal loans do, and you can choose a repayment plan that works for your needs and your budget.
Pay more than the minimum
If you want to ditch your loans as fast as you can, also consider paying more than the minimum payment 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 slowly knock down your loan amount and pay less and less toward interest each month.
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