Graduating from college can open many doors, both professionally and financially. However, for many borrowers, a college degree can come with significant debt. Thankfully, there is help in the form of federal student loan forgiveness.
Only certain borrowers qualify for federal student loan forgiveness programs, though, so it’s important to know whether you fall into a qualifying category. This article will explain what you need to know about loan forgiveness, the types of loans it covers, and any eligibility requirements.
Who May Qualify for Federal Student Loan Forgiveness?
There are several federal programs that offer student loan forgiveness based on certain criteria, such as employment.
- Public Service Loan Forgiveness (PSLF) Program: The PSLF program is designed for borrowers with Direct loans. To qualify, you need to be employed by a government or non-profit organization. This forgiveness program targets people who have decided to use their education for public service jobs. However, in addition to having a qualifying employer, you also need to have made at least 120 qualifying payments each month with a qualifying repayment plan. If you want to seek forgiveness under this program, you’ll need to verify that you have set up your repayment plan correctly.
- Teacher Loan Forgiveness Program: This program provides forgiveness for those who have decided to use their education to benefit low-income schools. Specifically, you need to teach full time in a qualifying low-income school on either the elementary or secondary school level. You can also work for a qualifying educational service agency. If you fulfill these requirements, you can receive up to $17,500 in forgiveness on your Direct loan program or FFEL Program loan.
- Closed School Discharge: If you were enrolled in a school that closed while you were enrolled or very soon after you withdrew, you might qualify for forgiveness on 100% of your federal student loans, including Direct loans, Federal Family Education Loan (FFEL) Program loans, or Federal Perkins loans.
- Perkins Loan Cancellation and Discharge: This forgiveness program is only available for those with Federal Perkins loans. You must be a teacher in a school serving low-income families, a special education teacher, or a teacher in the field of math, science, foreign language, bilingual education, or where the state has a shortage of qualified professionals. You might also qualify with certain types of volunteer service.
- Discharge Due to Total and Permanent Disability, Death, or Bankruptcy: Those with Direct loans, FFEL Program loans, and Perkins loans may qualify for discharge from making loan payments if they become totally and permanently disabled or if they have to declare bankruptcy. If the borrower who took out the loans dies, the loan can also be discharged.
- Borrower Defense to Repayment, Unpaid Refund, and False Certification Discharge: Sometimes, schools may take certain actions that qualify borrowers to receive loan discharge. Specifically, if the school doesn’t do something your federal student loans were intended to pay for as it relates to your education at that school, you might qualify for discharge. Similarly, if the school mistakenly certifies you as eligible for the loan when you weren’t, your loans can also be discharged. Also, if you withdraw from a school and the school doesn’t fulfill its requirement to return the loan funds to the student loan servicer, you can receive a discharge for the portion of the funds not returned.
- Other relief options: Recently, the U.S. Department of Education and the Biden administration passed additional relief measures to help student loan borrowers. Specifically, those who borrowed federal student aid money to attend certain schools that have been listed as defrauding students can receive forgiveness. Those with military service can also receive some forgiveness on loan interest, although they’ll still be responsible for the remaining balance.
If you have a parent PLUS loan, you should explore discharge options in the event of the death of the student, if you become permanently and totally disabled, if the loan gets discharged in bankruptcy, or if the school engages in activities like falsely certifying for the loan or closing while the student is studying. If one of these events occurs, you can apply for a discharge. Upon acceptance, you’d no longer be responsible for the loan.
How to Apply for Student Loan Forgiveness
If you think you might qualify for loan forgiveness, it’s important to begin the process of applying. Know that you’ll likely have to keep paying the loan while your application is being reviewed. A successful application can result in all or a portion of your loan forgiven, depending on the type of forgiveness you apply for.
Follow these steps to get started on your application.
Determine If and What Forgiveness You’re Eligible For
While we have provided a summary of the qualifications necessary to obtain loan forgiveness through one of the federal programs, you’ll want to carefully review the criteria and exclusions so you can determine if you fit the eligibility requirements.
There are a few places where you can research your eligibility. One of the best resources is the government itself since federal student loans are forgiven by the federal government. StudentAid.Gov can be a great place to get started. Remember to read not only about the qualifying criteria for a particular loan but also any applicable exclusion criteria.
As you see how you fit into a particular category, start to compile any evidence you have of your qualifications for forgiveness. This information will benefit you later on when you prepare your application.
Contact the Loan Servicer for Further Guidance
Once you’ve determined whether you qualify for loan forgiveness, reach out to your loan servicer. They will play an important role in the loan forgiveness process, as they will be able to tell whether you’ve paid the required monthly payments on your repayment plan.
Your loan servicer is the outside company that manages your loan for the government. Remember that the loan itself comes through the federal government, so it works differently than with a lender for private student loans. However, the servicer handles much of the day-to-day operations of administering the loan and collecting student loan payments.
In addition to holding the records regarding your student loan repayment program, the loan servicer is also tasked with helping you manage your loan. They can help you understand the process of applying for loan forgiveness and offer further guidance.
Of course, the one exception to this process would be Perkins loans, which actually come through your school. The Perkins loan is considered a federal student loan, but it’s awarded by your school based on the amount of funds available. If you have a Perkins loan and want to apply for loan forgiveness, you’ll want to reach out to your school. If the school designated a specific loan servicer, then you will reach out to them instead.
Submit Your Application
Finally, you will submit your application for loan forgiveness. You can find the forms you need here. Find the form that applies to your specific situation and collect any evidence and documentation you need.
As you prepare to submit your application, speak with your loan servicer so you’re clear about your responsibilities while you wait for the approval of your application. In many cases, you’ll need to continue making payments on your loan balance while you wait. There might be instances, however, where you don’t need to. Make sure you keep your loan in good standing while you wait for the final word on whether you will receive loan forgiveness.
What If You Don’t Qualify for Loan Forgiveness?
If you don’t qualify for loan forgiveness, you still have other options that can help you pay off your federal student aid (FSA). For example, you can pursue a Direct Consolidation loan. This loan allows you to consolidate multiple federal student loans into a single loan, which can make budgeting and management easier for many borrowers.
If you can’t pay your student loans right now, you can also speak with your loan servicer about loan deferment. This will allow you to pause payments on your loans so you have time to get in a better position financially. Keep in mind that, with a deferment for some types of loans, you may still need to pay the interest that accrues during the deferment period. If you make payments on the interest during the deferment period, you can minimize the growth of the loan. However, if you don’t, the interest can capitalize or get added to the principal amount of your loan, which results in a greater amount that will have to be paid off over the life of the loan.
If you’re currently experiencing financial hardship, the federal government has also instituted some relief measures for this challenging time. Specifically, until Jan. 31, 2022, student loans will:
- Have 0% interest
- Have “administrative forbearance,” which means that payments aren’t collected
- Defaulted loans will not be collected on
You can speak with your loan servicer to make sure you’re prepared for payments to resume once this relief period ends.
CollegeFinance.com Is Your Source for Student Loan Forgiveness Information
CollegeFinance.com can help you understand student loans and what forgiveness options you might qualify for. Learn more about available loan options and how to navigate student loans to finance your education by browsing our library of resources.