Focus on Loan Forgiveness Programs

According to the Office of Federal Student Aid, there are also some circumstances in which you could have your loan discharged. Not all applicants will qualify for loan forgiveness or discharge. Moreover, student loan forgiveness programs are in a state of flux at the time of writing. In recent years, the Department of Education has been extremely limiting in the number of forgiveness applications it will approve. However, the global pandemic has invoked ongoing discussion about possible new legislation aimed at relieving the student debt burden during this time of economic downturn. This means that loan forgiveness policies and programs are, today, subject to quick and sudden change.

We invite you to visit Inflection Weekly for updates on loan forgiveness programs and other important policy issues in higher ed.

Otherwise, read on for a closer look at existing student loan forgiveness programs and find out how you can apply.

How Do You Get Your Student Loans Forgiven or Canceled?

Student loan forgiveness is typically based on your participation in certain programs, including repayment programs and employment-based forgiveness opportunities. These federal loan forgiveness programs are aimed at relieving the burden and improving the financial outlook for borrowers who fall into an array of categories. If you think you might qualify, begin the process by contacting your loan servicer or visit the Office of Federal Student Aid and find the forgiveness program application that applies to you.

What Programs are Available for Student Loan Forgiveness?

Loan forgiveness programs have become a popular topic of political debate as various public office-holders look for ways of addressing the student loan debt crisis. As a result, loan forgiveness programs are subject to change, expansion, or elimination based on current policy orientation. However, at the time of writing during the 2019-2020 academic season, the following are current loan forgiveness programs.

REPAYE/PAYE/IBR/ICR Plan Forgiveness: It may be possible for you to enter into an income-based repayment plan. There are a number of income-based repayment plans, each with its own terms and structure. In most cases though, with an income-based repayment plan, if your loan remains unpaid in full after 20 or 25 years, the remaining balance will be forgiven. Be aware that you may be responsible for income tax on the forgiven sum.

State Loan Repayment Program (SLRP): Many states also offer their own student loan forgiveness programs. Terms and eligibility will vary. Visit The College Investor to learn more about possible forgiveness programs in your state of residence or the state where your college or university is located.

Federal Perkins Loan Cancellation: The need-based Federal Perkins Loan program was discontinued by the Trump Administration in 2018, which means no new Federal Perkins Loans are being granted. However, prior recipients of the Perkins Loan who become full-time nurses, medical technicians, disability intervention providers, speech pathologists, and others may be eligible for total loan cancellation.

Visit the Federal Student Aid portal to find out if you are eligible for the Perkins Loan cancellation program.

What Employment Qualifies for Student Loan Forgiveness?

In addition to repayment-based forgiveness programs, there are numerous Professional Loan Repayment Programs related to specific professional pathways. For instance:

• The Public Service Loan Forgiveness (PSLF) Program is reserved for Direct Loan borrowers who become public service employees, including government, not-for-profit, and AmeriCorps/Peace Corps employees, as well as military personnel. Loans may be forgiven only after the borrower has made 120 qualifying payments without defaulting.
• The healthcare profession offers an array of programs such as the NURSE Corps Loan Repayment Plan and the National Health Service Corps Loan Repayment Program (NHSC LRP).
• The Teacher Loan Forgiveness program forgives partial student debt for teachers who remain in the profession, and at a designated underserved school, for a duration of more than 5 consecutive years.
• Attorneys can apply for the Attorney Student Loan Repayment Program (ASLRP) or the John R. Justice Student Loan Repayment Plan. Many of these programs are geared toward graduate students with higher debt burdens.
• Military personnel from specialized branches may also qualify for the Department of Defense Repayment of Loans program. Applications may be obtained through your corresponding Military Personnel Officer or representative.
• Participation in any number of professions may qualify you for loan forgiveness through a recognized professional association. Join and reach out to national or international associations in your profession to see if you might qualify for a specialized loan forgiveness program.
• Professional associations and employers may also be willing to support you through their own international Loan Repayment Assistance Programs (LRAP). Consult a representative with your professional association or directly through your employer to learn more. You can also browse by checking out this LRAP search tool at Student Loan Hero.
• Visit the Federal Student Aid portal for the most current updates on existing or emergent loan forgiveness programs.

What’s the Difference Between Loan Forgiveness and Loan Discharge?

Student Loan forgiveness, which may be used interchangeably with loan cancellation, typically refers to a program provided through the federal government in which the borrower’s debt is forgiven after meeting certain repayment or employment conditions.

Discharge, by contrast, is more often applied to conditions in which the borrower is unable to repay the amount, or applies in cases where the debt is invalidated by a school’s fraud or closure.

Situations in which a borrower may receive discharge for being unable to pay include bankruptcy, total disability, or death. Military veterans with disabilities are often eligible for this disability discharge on both public and private student loans.

In the case of school fraud or closure, borrowers may be eligible for loan discharge under the conditions of:

• False Certification Discharge
• Unpaid Refund Discharge
• Borrower Defense to Repayment

Visit the Office of Federal Student Aid for applications to each of these forgiveness or discharge programs.

Is There Loan Forgiveness for Private Student Loans?

The programs outlined above refer largely to federal student loans. Private loans are not eligible for forgiveness under these terms. If you are struggling to repay private student loans, you may have a few other options:

• Reach out to your loan servicer to find out if the terms of your loan can be modified due to financial hardship. Some lenders may be willing to grant you a temporarily lower monthly payment or even a lower interest rate.
• Consider loan refinancing if you are managing multiple loans—especially a combination of private and federal loans. Check out our Focus on Refinancing Student Loans to see if you might qualify for and benefit from student loan refinancing.
• Deferment and forbearance may also be options if you are experiencing financial hardship. Deferment temporarily suspends payment responsibilities and pauses interest growth, whereas forbearance temporarily suspends payment responsibilities while interest continues to accrue. If you are facing financial difficulty, reach out to your lender as soon as possible. Late or missed payments, or a defaulted balance, could prevent you from receiving these benefits.

Take a look at our Focus on Repaying Your Student Loans to learn more about deferment and forbearance.

How Do I Know If I Qualify for Student Loan Forgiveness?

If you think you might qualify for loan forgiveness or cancellation, start the process by contacting your federal loan servicer. The Office of Federal Student Aid provides a portal to the companies which currently serve federal student loans.

You may be eligible to embark on an income-driven repayment plan, which could put you on the path toward forgiveness. Or you may be involved in a profession such as nursing, military, or public service that could qualify you for employment-based forgiveness. Your loan servicer should be able to provide you with more details on how to apply.

If your loan servicer is unable to provide you with sufficient information or application access, reach out directly to the Office of Federal Student Aid with questions at 1-800-4-FED-AID (1-800-433-3243).

What If My Loan Forgiveness Application is Rejected?

Unfortunately, the Department of Education has, in recent years, become extremely selective about approving applications for loan forgiveness. For instance, according to Forbes, in 2018, only 640 borrowers were approved for public service loan forgiveness out of 132,000 applications. At an approval rate of under .5%, most applications were rejected on the grounds of ineligibility, or because of missing or incomplete information.

In all likelihood, this doesn’t fully account for a 99+% rejection rate, and instead suggests that the Department of Education has largely contracted the federal student loan forgiveness program in recent years. This does suggest that those who wish to apply must make every effort to avoid missteps by:

• Enrolling in an income-driven federal student loan repayment plan
• Completing an Employment Certification application both when starting a new job, and annually
• Consolidating federal loans to reduce complications

If you are rejected for student loan forgiveness and you are facing financial hardship, contact your loan servicers to ask about deferment or forbearance.

To learn more about assistance programs and loan repayment options, check out our Focus on Repaying Your Student Loans.

If you think student loan refinancing might be right for you, learn more about the benefits and terms of eligibility from our Focus on Refinancing Your Student Loans.