Student loan debt has been the monkey on my (and my husband’s) back for a long time. We’re finally getting hopeful that we can shake it off. Besides the great strides we’ve made in repaying these loans, we’ve also learned about a possible loan forgiveness program that could be a game-changer for us. For the past few weeks we’ve been working on his application, and we’re keeping our fingers crossed for a good result.
If that student loan monkey is weighing you down, too, know that there are a cornucopia of student loan forgiveness, cancellation, and discharge programs available for federal student loans. Today I’m only going to touch on a few. I encourage you to take a look at the full list to see if there are other programs you might be eligible for, and to get all of the details about the programs listed below:
Public Service Loan Forgiveness: If you are employed by a government or not-for-profit organization, you may be able to receive loan forgiveness. To qualify, you must work full time for a qualifying employer, have Direct Loans (or consolidate other federal student loans into a Direct Loan), repay your loans under an income-driven repayment plan or Standard Repayment Plan, and make 120 (or 10 years of) payments. As long as you meet the criteria, it’s possible previous payments will apply. If you’ve looked into this program in the past and thought you didn’t qualify — particularly if you are working in a church or for a religious organization — you may want to check again as some of the rules have recently changed. There is also a limited PSLF waiver, where borrowers can receive credit for past PSLF payments that did not qualify. This waiver is only available through Oct. 31, 2022. Use Federal Student Aid’s PSLF Help Tool to learn more about the program and get started.
Teacher Loan Forgiveness: If you teach full-time for five complete and consecutive academic years in a low-income elementary school or secondary school, or an education service agency that serves low-income students, you may be eligible for forgiveness of up to $17,500 on your Direct Subsidized and Unsubsidized Loans and your Subsidized and Unsubsidized Federal Stafford Loans. Be sure to read all of the information on the linked page above, as there are specific qualification guidelines related to your loans, your status as a highly qualified teacher, the school or agency you worked for, and the length of time you worked for the school or agency. It’s important to note that you may qualify for both Teacher Loan Forgiveness and the Public Service Loan Forgiveness programs; however, the five years you use to qualify for Teacher Loan Forgiveness cannot also be used to apply for the Public Service Loan Forgiveness program. To apply for teacher loan forgiveness, complete the Teacher Loan Forgiveness Application and submit it to your loan servicer after you have completed the required five consecutive years of qualifying teaching.
Closed School Discharge: If your school closed while you were enrolled or shortly after you withdrew, you may be eligible to have 100% of your Direct Loans, FFEL Program Loans, or Perkins Loans discharged. This program has confused some folks whose school closed after they graduated. If you completed all of your coursework before the program closed, you are not eligible. Similarly, if you are able to transfer credits or hours to another school and complete your education there, you also may not be eligible. If you meet the eligibility requirements for loans obtained to attend a school that closed on or after Nov. 1, 2013 but before July 1, 2020, and you have not enrolled in another school that participates in the federal student loan program within three years, you will receive an automatic closed school discharge. However, if you are eligible, you can request a discharge sooner by contacting your loan servicer.
Borrower Defense to Repayment: This program is designed for people whose school misled them, engaged in misconduct, or violated certain state laws. You need to not only demonstrate evidence of the school’s misconduct but also how this misconduct directly impacted you financially. If eligible, you can have up to 100% of your direct loans discharged — including previous payments made on these loans. If you think you might be eligible, I’d encourage you to take a closer look at the program application to see if you can demonstrate the school’s misleading in one or more of the areas mentioned. NOTE: There are some specific schools, like Corinthian colleges, where the Department of Education has created more detailed pathways to loan discharge after the schools’ misconduct.
Income-Driven Repayment Plan: While not quite as expeditious a path as the programs above, this is another route to loan forgiveness. There are four different repayment programs, each with different payment structures and qualifications; however, no matter which payment program you choose, any remaining balance left after 20-25 years of payments (depending on the program) will be forgiven. Use the Federal Student Aid Loan Simulator to find out which repayment plan is best for you. Ready to apply? Fill out the Income-Driven Repayment Plan Request.
It’s important to note that in some cases the amount forgiven may be considered taxable income, so you’ll want to check into the details of any financial liability you might have if your loans are forgiven, discharged, or canceled.