Ever wonder what life would be like if you could make your student loans disappear?
It’s possible, but it isn’t magic.
Or likely. (Sorry.)
But considering the mounting pile of outstanding student debt in the U.S. — at $1.75 trillion, student loans were the largest non-mortgage source of household debt in 2021 — you should consider every option for wiping out yours, right?
If your student loans have become more than you can handle, seeking forgiveness or discharge of your debt could be an option. Check out this guide to student loan forgiveness so you’ll know all your options.
- 1 What Are Student Loan Forgiveness Programs and How Do They Work?
- 1.1 Student Loan Forgiveness Based on Your Job
- 1.2 Student Loan Discharge That Isn’t Based on Employment
- 1.2.1 6. Income-Driven Repayment Program Cancellation
- 1.2.2 Pay As You Earn Plan (PAYE)
- 1.2.3 Revised Pay As You Earn (REPAYE) Plan
- 1.2.4 Income-Based Repayment (IBR) Plan
- 1.2.5 Income-Contingent Repayment (ICR) Plan
- 1.2.6 7. Parent Plus Loan Forgiveness
- 1.2.7 8. Student Loan Disability Discharge
- 1.2.8 9. Student Loan Death Discharge
- 1.2.9 10. Student Loan Bankruptcy Discharge
- 1.2.10 11. Closed School Discharge
- 1.2.11 12. False Certification Discharge
- 1.2.12 13. Unpaid Refund Discharge
- 2 Student Loan Forgiveness Programs FAQ
What Are Student Loan Forgiveness Programs and How Do They Work?
Student loan forgiveness programs are government-backed avenues for having your loans forgiven, depending on your situation. The programs are only available for borrowers with federal loans who meet certain criteria.
Before we dig into individual programs, let’s cover the ground rules.
First, a word about words: Forgiveness, discharge and cancellation essentially mean the same thing when you’re thinking about your student debt. They mean you no longer have to pay the remaining balance on your federal loans. But the terms are usually applied in different circumstances:
- Forgiveness is usually used in cases where you qualify because of your job or employer.
- Discharge typically refers to other reasons for not paying the debt, such as your financial situation.
- Cancellation is a more general term that often covers both.
Forgiveness programs generally fall into two categories: eligibility based on employment and eligibility unrelated to employment.
We’ve broken down the programs by work and non-work qualifications. We’ve also included “scam alerts” throughout because there are plenty of unscrupulous individuals and companies out there who prey on borrowers overwhelmed by student loan debt.
With that in mind, let’s dive in.
Student Loan Forgiveness Based on Your Job
If you’re committed to a life of helping others, whether it’s by working for the government or a non-profit or by choosing a public service profession, you could qualify for student loan forgiveness.
You’ll have to ensure that your loans qualify, stay current on your payments throughout the process and stick with a job that qualifies for loan forgiveness. If you change career tracks and switch to a non-qualifying job, you’ll be responsible for paying the remaining amount you owe.
Scam alert! It’s illegal for anyone — including companies that offer to “help” you repay your student loans — to ask for your federal student aid user name and ID. Never give out that info.
Here’s a brief rundown of programs that offer forgiveness based on employment:
1. Public Service Loan Forgiveness
The Public Service Loan Forgiveness program is probably the most well known, but for all the wrong reasons.
In the past, the program was poorly managed and only accepted a very small percentage of applicants – as of November 2020, only 2.6% were approved for forgiveness, while 35% had yet to be processed.
The PSLF program got a reboot in 2021, however. Previously ineligible loans and repayment plans became eligible, including FFEL (Federal Family Education Loans). And some overly restrictive rules were done away with.
To qualify for Public Service Loan Forgiveness, you’ll need 10 years worth of qualifying loan payments under your belt. Use the PSLF Help Tool to find out if you meet other requirements to qualify.
Scam alert! When it comes to federal student loan repayment applications, there’s nothing a company can do for you that you can’t do for free on your own.
2. Teacher Student Loan Forgiveness
No one goes into teaching for the money. But when student loans leave you thousands of dollars in debt, scraping out the payments on a teacher’s salary can be downright overwhelming.
Fortunately, there’s a specific Teacher Student Loan Forgiveness program for those who work in underserved communities and/or subject areas.
To qualify for Teacher Loan Forgiveness, you need to have one of the following loans:
- Subsidized Federal Stafford Loans (aka Direct Subsidized Loans)
- Unsubsidized Federal Stafford Loans (aka Direct Unsubsidized Loans)
- Federal Direct Consolidation Loans
You’ll also need to be employed as a full-time teacher at a low-income school for five complete and consecutive academic years. At least one of those years needs to be after the 1997-1998 school year. You can search the school directory at the Student Financial Aid website to find out if you work at a participating school.
Forgiveness will be dependent upon where you teach, what you teach and how long you teach, and the maximum amount you can receive is $17,500.
3. Nursing Student Loan Forgiveness
Getting a healthcare-related degree isn’t cheap – and the related debt can be quite a burden – so nursing student loan forgiveness offers some help.
In addition to a couple of specific loan-forgiveness programs for nurses, you can also find debt relief through programs at some hospitals. Eligibility requirements can include holding an advanced degree, having a specific loan type or working in a specialized department.
Other medical professionals, including doctors, can find student loan relief at the national and local level through the Association of American Medical Colleges.
4. Military Student Loan Forgiveness
It won’t be easy, but joining the military after college is another way to have your student debt forgiven.
If you served in a hostile fire or imminent danger pay area, you qualify for the National Defense Student Loan Discharge, which is part of the Perkins loan cancellation program (the Perkins loan program ended in 2017).
Loans are discharged according to the following classifications:
- Up to 50% for four years for borrowers whose active duty service ended before Aug. 14, 2008.
- Up to 100% for five years for borrowers whose active duty service includes or began on or after Aug. 14, 2008.
After a year of service, you can also qualify for the Armed Services Education Loan Repayment Program. The benefits vary based on which branch you serve, but they’re all designed to help armed forces members get out of student loan debt much faster. Here’s the list of benefits for each branch.
Other potential forgiveness options include Public Service Loan Forgiveness Program, outlined above, and the Total and Permanent Disability Discharge.
5. Perkins Loan Forgiveness
The Perkins loan program ended in 2017, but you’re still on the hook for paying off any of the Perkins loans you took out. If you work in public service — including teaching, law enforcement and the military — you could qualify for a partial or total discharge of your Perkins loan.
Depending on your career, you could receive 100% loan cancellation for five years of service, which is distributed in annual increments.
Student Loan Discharge That Isn’t Based on Employment
Not taking the employment path to loan forgiveness? Then you’ll likely be seeking forgiveness based on your economic status or a catastrophic circumstance.
6. Income-Driven Repayment Program Cancellation
Income-driven repayment plans set your monthly student loan payment at an amount meant to be affordable based on how much you earn. At the end of the repayment period, any remaining debt is forgiven.
But it’s not as simple as it sounds.
For one thing, you’ll pay more in interest over the life of your loan on an income-driven repayment plan compared to a standard loan repayment plan. And forgiveness will take a while: Income-driven repayment plans span 20 to 25 years.
Still, these plans can make paying on your student loans more manageable and help you avoid defaulting.
To qualify, you’ll need to apply for one of these plans. Each has its own rules.
Pay As You Earn Plan (PAYE)
Any borrower with eligible direct federal loans can apply. FFEL Program and Perkins loans are eligible if they’re consolidated. You’ll be eligible for discharge after 20 years of repayment.
Revised Pay As You Earn (REPAYE) Plan
Any borrower with eligible direct federal loans can apply. FFEL Program and Perkins loans are eligible if they’re consolidated. You’ll be eligible for discharge after 20 years of repayment for undergraduate loans or 25 years if the debt includes graduate loans.
Income-Based Repayment (IBR) Plan
Any borrower with eligible direct federal loans, including FFEL Program loans, can apply. Perkins loans are eligible if they’re consolidated. You’ll be eligible for discharge 20 years if you took out your first loan after July 1, 2014, and 25 years if you took out your first loan before July 1, 2014.
Income-Contingent Repayment (ICR) Plan
Any borrower with eligible direct federal loans can apply. FFEL Program loans, Perkins loans and Plus loans made to parents are eligible if they’re consolidated. You’ll be eligible for discharge after 25 years of repayment.
7. Parent Plus Loan Forgiveness
Because Plus loans for parents are so restrictive in terms of repayment options, receiving forgiveness is particularly difficult. In fact, it’s nearly impossible until you consolidate them, thus making them eligible for an Income-Contingent Repayment plan.
But if you’re a parent who’s still dealing with your own student loans, this is not the time to combine forces, as your own student loans have more options for payment plans and forgiveness.
Scam alert: Loan forgiveness typically takes years. Steer clear of a company that promises you fast loan forgiveness or says it has “special access” to federal programs you’ve never heard of.
“If parents have loans for their children and their own loans for their own education, they should never ever combine them together in a consolidation loan,” said Heather Jarvis, an attorney who specializes in student loans. “[The student loans] would essentially be contaminated by the parent loans.”
For more details, check out this step-by-step explanation about how to wipe out your Parent Plus loans.
8. Student Loan Disability Discharge
Struggling with student loans is stressful enough without also dealing with a disability.
If you develop a total and permanent disability after taking out federal student loans, you are eligible to have your debts forgiven. If you’re a military veteran, the discharge will be automatic, but if you’re a civilian, the process can take three years to qualify for the discharge.
Here’s how a TPD discharge could wipe out your student loan debt.
9. Student Loan Death Discharge
It’s not a pleasant topic to consider. But if a borrower dies owing federal student loans, the loan gets canceled, according to the Federal Student Aid Office of the U.S. Department of Education. Parent Plus loans are discharged if the parent or the student dies.
Check out this article for more info about what happens to student loans when you die.
10. Student Loan Bankruptcy Discharge
You may have heard that student loans cannot be discharged in a bankruptcy. That’s true… most of the time. But if you’re able to prove that repaying your federal student loans would result in an “undue hardship,” you could qualify for a student loan bankruptcy discharge. Don’t get too excited. It’s extremely rare.
11. Closed School Discharge
If your school closes before you’re able to complete your program, you may be eligible for a 100% discharge of your federal direct loans, FFEL program loans or Perkins loans. You’ll need to ask your loan servicer for a loan discharge application.
For more details about the program, check out the Department of Education’s closed school discharge program.
12. False Certification Discharge
If you think your school falsely certified your eligibility for federal student aid, you could qualify for a false certification discharge.
13. Unpaid Refund Discharge
If you withdrew from a school, but the school didn’t return the funds to your loan servicer, you could be eligible for an unpaid refund discharge.
Student Loan Forgiveness Programs FAQ
What are examples of student loan forgiveness programs?
How does student loan forgiveness work?
With student loan forgiveness, discharge and cancellation, you are no longer required to make loan payments. You’ll need to qualify first, and – in most situations – you’ll need to have a proven, loan payment record over a long period of time.
How do I apply for student loan forgiveness or discharge?
Each loan forgiveness program has different qualifiers and applications. Visit the Federal Student Aid website to find out if you qualify and how to apply.
Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Senior staff writer Robert Bruce contributed to this article.