Taking on student loan debt while you are completing your education makes much sense. But once you graduate, are you eligible for college loan forgiveness?
Private student loans do not qualify for college loan forgiveness programs, but if you meet certain requirements, you can get rid of your federal student loans through one of several loan forgiveness programs.
The Department of Education (DOE) offers several forms of college loan forgiveness to recent graduates. The federal government wants to incentivize certain career paths or methods of giving back to the community.
While you may need to make monthly payments on your student loans for a few months or years, qualifying for a DOE forgiveness program can eliminate the remainder of your loan debt.
How to Get Rid of Your College Debt Through the Federal Government
According to the federal government, college loan forgiveness, cancellation, and discharge are effectively the same thing. Each of these processes eliminates your federal student loan debt. However, they do mean slightly different things.
- Discharge: This process involves serious personal problems, including college closure, death, some forms of bankruptcy, and total and permanent disability. You, or your surviving loved ones, must prove that you are unable to pay the remainder of your federal student loans.
- Forgiveness or cancellation: This process involves the federal government removing any remaining student loan debt you still have after you meet certain job requirements. For example, if you volunteer with the Peace Corps for two years or more, any student debt you have remaining can be forgiven. These terms are effectively the same.
Federal loans that qualify for college loan forgiveness include:
- Direct subsidized and unsubsidized loans.
- Federal Family Education Loan (FFEL) program.
- Perkins loans.
- Direct consolidated loans.
If you have an FFEL or Perkins loan, you must first consolidate these loans through the direct consolidation loans program; then, you will qualify for forgiveness program options.
Depending on your needs and the program you apply to for college loan forgiveness, you may receive partial forgiveness and pay only the remaining balance, or you can get full loan forgiveness, so you do not need to pay anything on your federal student loans. If you have private student loans, you will need to continue paying these.
Federal College Loan Forgiveness Programs
Each federal college loan forgiveness program has different eligibility requirements. Here are the current options for loan forgiveness or cancellation:
- Public Service Loan Forgiveness (PSLF): This program was created as part of the College Cost Reduction and Access Act of 2007 as a method to incentivize more students to enter and complete college, earning degrees and receiving important job training.
Several careers qualify you to have some or all your student loans forgiven, including:
- Emergency management.
- Public safety.
- Law enforcement and military service.
- Public interest law services.
- Public education.
- Working with individuals with disabilities.
- Elderly care.
- Public health.
- Library services.
- Other school-based services.
- Government organizations at the federal, state, local, or tribal level.
- Specific nonprofit organizations under 501(c)3 of the Internal Revenue Service (IRS) tax code.
If you have worked in a position in any of the above fields since you graduated from college, you can apply to PSLF if:
- You work full-time for the organization or agency, either 30 hours per week or what the job considers to be full-time.
- Have a direct loan (subsidized, unsubsidized, or consolidated).
- Have an income-driven repayment plan set up.
- Have made 120 qualifying payments based on your repayment plan.
- You have not defaulted on your loan in the past.
To start the process of receiving PSLF, you must submit an employment certification form either every year or when you change employers. Information on this form will let you know whether you are making qualifying payments on your loan.
Qualifying monthly payments are defined by the DOE as those made:
- After October 1, 2007.
- Under a qualified repayment plan.
- For the full amount due on your bill.
- No later than 15 days after the due date on the bill.
- While you were employed full-time.
Your qualifying payments do not need to be consecutive. In some cases, like if you are a Peace Corps volunteer or in military service, you need to set up deferment of your payments. You will not be penalized during this time for not making payments and can pick up making qualifying payments when the deferment or forbearance period is over.
The six-month post-graduation grace period works like a deferment period. However, you cannot make multiple payments in one month by paying more than the amount listed on your bill. While you can use this approach to pay down your student loans faster, it does not qualify as two payments.
With the number of qualifying monthly payments, PSLF takes ten years to complete. The standard loan repayment plan is ten years, so setting up income-driven repayment can lower your monthly payments in a manageable way.
PSLF may not be a good option if you can pay off your federal student loans in ten years or less. You will pay less interest over time by sticking to the standard repayment option, if possible.
Those qualifying for PSLF likely need periods of deferment, accommodations for making little to no money while working full-time, or other financial circumstances. Jobs that benefit the public good do not typically pay well, and the federal government incentivizes this type of work through the PSLF.
- Teacher Loan Forgiveness: Teaching full-time for five consecutive academic years in a low-income school or educational services agency qualifies you for this type of loan forgiveness. This program may not forgive all of your student debt. It offers up to $17,500 in forgiveness for direct subsidized and unsubsidized loans or Stafford loans.
According to this college loan forgiveness program, teachers are those who meet specific training and certification requirements, teach directly to students in a classroom setting or offer classroom-style teaching in a non-classroom setting. Special education teachers qualify for this program, although they are often in nontraditional settings with their students.
To qualify, you must:
- Have at least a bachelor’s degree.
- Receive state certification to be a teacher.
- Have no waivers of your certification for emergency, temporary, or provisional reasons.
Each state has a different certification process, and some may offer different avenues for public school versus charter school or private school teachers. As long as you meet these standards in the state where you live and teach, you qualify for the Teacher Loan Forgiveness Program.
You must teach at one of the schools or educational services listed in the Annual Directory of Designated Low-Income Schools for Teacher Cancellation Benefits (Low-Income School Directory). This is published by the DOE every year and is available online.
While many teachers qualify for the lower amount of college loan forgiveness ($5,000), some types of teaching qualify for the larger amount of $17,500. Teachers may be eligible if they work in:
- Special education.
- NURSE Corps Loan Repayment Program: The Health Resources and Services Administration (HRSA) pays up to 85% of unpaid nursing education debt for qualifying registered nurses. The U.S. suffers from a nursing shortage, so the program helps nurses entering high-need areas, including:
- Registered nurses.
- Advanced practice registered nurses (APRNs).
In your first two-year contract, the program can reduce 60% of your current college loan debt. After this first contract, entering your third year of nursing employment, you can have an additional 25% of your student debt eliminated.
- Military Service Forgiveness: Most members or veterans of the U.S. Armed Forces qualify for PSLF, but you can also investigate Department of Defense (DOD) repayment of your student loans. In some circumstances determined by the DOD, part or all of your college loans can be repaid by this federal agency.
State Loan Repayment Assistance Programs (LRAPs)
Some scammers use the term Loan Repayment Assistance Program (LRAP) to steal private information or money from people who want to get rid of their student loan debt.
There are 24 legal and useful LRAPs, across several states, according to the American Bar Association (ABA):
- Washington, D.C.
- Nebraska (two LRAP programs)
- New Hampshire
- New Mexico
- New York
- North Carolina
- Kansas (in 50 of the 105 counties)
Nearly all of these programs require that participants work in public interest law. Some receive funding from state legislatures, while others involve private sector funding.
While the ABA lists information on each of these programs, states are mandated to administer funds through LRAP programs in different ways. There are various requirements depending on where you live or go to school.
Several Routes to Managing Your Student Loans
If you enter a form of public service after graduating college, you will likely qualify for one of these loan forgiveness programs. Each program requires some amount of payment on the loan. You may not receive full loan forgiveness, and you may have to wait a few years to know whether you qualify.
College loan forgiveness is a great option for federal loans, but if you do not enter public service, realize you can pay your regular monthly payments on a standard repayment plan, or receive enough financial windfalls, you do not need to go through this paperwork.